Ruth Alas interviews Ruth Oltjer

Citation

(2014), "Ruth Alas interviews Ruth Oltjer", Cross Cultural Management: An International Journal, Vol. 21 No. 2. https://doi.org/10.1108/CCM-01-2014-0002

Ruth Alas interviews Ruth Oltjer

Article Type: Executive Corner From: Cross Cultural Management, Volume 21, Issue 2

Ruth Oltjer, a founder and CEO of Chemi-Pharm AS, represented Estonia at the Ernst & Young World Entrepreneur of the Year 2013 awards ceremony, held in Monte Carlo's Salle des Etoiles on June 5-9, 2013. The Ernst & Young World Entrepreneur of the Year is the world's most prestigious business award for entreperneurs. Ruth Oltjer is, by education, a medical doctor. She used to work with disinfectants which caused her allergies so she started to search for allergen-free alternatives. She found suitable products from the UK and first started to buy these for herself. Good word spread like a wildfire and soon demand increased to the extent that establishment of a company was inevitable. She established AS Chemi-Pharm, producing disinfecting and cleaning agents and specific treatment products in 1997. Today the company has more than 100 different products on its product list and more than 5,000 loyal customers all over the world. Nowadays, the focus of Chemi-Pharm is especially on markets with high MRSA infection rate. The number, which shows the risk of hospital infection. Ruth Oltjer believes that if Chemi-Pharm can help those countries to improve hospital hygiene by providing them with efficient and safe disinfection products and training of medical personnel, the hospital infection rate could be reduced significally and lives of thousands of people will be saved. About four years ago AS Chemi-Pharm began research and development in a field of cosmetics. A year ago it launched its first batch of natural luxury-brand Domina Elegans (for women). Soon it will launch a new men's product series and something totally "pioneering" in cosmetical industry - anti-aging cosmetics with plant-derived stem cells. More than half of Chemi-Pharm's production goes abroad; at the moment it has export relations with the following countries: Latvia, Lithuania, Finland, Sweden, Poland, Russia, Ukraine, Austria, Slovenia, Romania, Greece, Malaysia, Singapore, Indonesia, Pakistan. The most common fields it currently supplies are the sectors of medicine, veterinary and food industries and negotiations are being held with Malaysia, Indonesia, Singapore, Sweden and the USA concerning its cosmetical production.

Doing business in the ASEAN region: challenges and lessons

Ruth Alas: How do you learn about local culture?

Ruth Oltjer: when we started doing business in Asia we relied on the ten commandments that Professor Michael A. Witt highlighted in his article. The ten principles for doing business in China. These apply to all Asian countries:

1. do your homework;

2. beware of industrial dynamics;

3. take your time;

4. chinese society is collectivist;

5. mistrust and opportunism are endemic;

6. trust is interpersonal and takes time to build;

7. notions of "out-of-bounds" behavior do not necessarily match;

8. Chinese society is hierarchical;

9. government in China is decentralized and in important respects, bottom-up; and

10. be conscious of the large picture.

If you mold these principles wisely, you have no problem in entering the market.

Learning a culture of the target market is a key factor. Sometimes even small things can count, for example, how to meet and greet, how to hand out your businesscard. Cooperation-models can totally differ from those we are familiar with. Also, assumption that neighboring countries should have similar culture, can not be necessarily true. In order to better understand the local culture of our target markets, we have started business from learning courses. We have contacted to local universities and ordered a special program for our people. These seminars have been extremely useful. Another helpful aspect to consider is to try to find a local person or representative, who can be your personal guide and assistant in foreign country. To acquire details of foreign culture takes time. In general, the farther the country from your home, the more you have to invest your time to learn the culture. Patience is highly recommended while developing relationships in foreign country.

Ruth Alas: How do you consider cultural differences?

Ruth Oltjer: to be sure, differences can be expected - and often are discernible when widely separated individuals and groups, with different histories and cultures, practice business. But such differences are generally a matter of degree rather than of kind. Cultural differences should be considered as much as possible. Business models might differ significantly even in neighboring countries. For example, in Malayisa there should be Retired Colonel arranging business relations between local and foreign enterprises. In Malaysia, basically all business-relations with foreign countries, should be done through bhumi putra, the noble born malai, who has powerful status in whatever business. Company decisions are typically reached in a top-down manner, with only the very top of the pyramid involved in decision-making. Mistrust puts limits on delegation, and supervisory control at each level is high. Mid-level managers typically have little power to make decisions of consequence, and their main role is to pass on orders from the top and ensure execution. This is the reason why we have been meeting with the CEO-s, ministers and high officials only. Besides differences in business models, it is always useful to understand and follow a local "dress code". Malaysia and Indonesia are Islamic countries and therefore, for example, wearing a bare-shouldered dress is considered as a sign of impoliteness. At the same time, in their neighbouring country, Singapore, following high fashion design, is highly recommended.

Ruth Alas: Which lessons have you learned?

Ruth Oltjer: as Peter A. Coclanis wrote If the passionate debates of the 1990s regarding "Asian values" have quieted down, assertions of culturally determined differences between "Asian" and "Western"" business organizational strategies and structures are still going strong. Making binary distinctions between the characteristics of "Western"" and "Asian" (typically "Chinese") business organization and behavior is common. Discussions involve impersonal corporations vs family-run firms, transaction-based relationships vs guanxi (personalized connection or influence) networks, contracts vs trust, individual vs group orientation, short term vs long run thinking, transparency vs opaqueness, etc. or, more to the point, Western vs Asian business characteristics. These discussions are still going on and there is no firm business or relation models for businesses to follow in ASEAN region. But there is one factor that always emerges and that is the importance of local support. In the Asean, member states are trying their best to harmonize laws across the region. But the complex foreign investment regulations and trade barriers continue to dampen international companies' confidence in doing business in Southeast Asia.

Another challenge is [...] events that interrupt the supply chain, natural events that are beyond our control. For example, the flood in Japan affected their automotive industry, which affected the supply of materials all over the world. We have had mostly positive experiences. So, first rule is to learn basic things about the local culture and second rule, try to find right person who knows local culture, law, religion and business models. So, first rule is to learn basic things about the local culture and second rule, try to find right person who knows local culture, law, religion and business models.

Ruth Alas: What would you suggest to other managers?

Ruth Oltjer: in Asia, the most important is to have patience. Many companies want to get on the ground quickly. Time pressure can create problems later on. It tends to result in sloppy planning and analysis. It shifts the attention from finding the right partner to finding any partner, regardless of partner fit. Moreover, it weakens your hand in negotiations. Your counterpart will know how to use your time constraints against you, and you will walk away with a worse deal. If you take your time, you get better partners and long-term partnerships.

Always get to know the improvements made by governments to enhance business. For example, Malaysia made dealing with construction permits faster by improving the one-stop center for new buildings and by reducing the time to connect to telephone service. In addition, authorities reduced the number of days it takes to register property transfers.

Indonesia made getting electricity easier by eliminating the requirement for new customers applying for an electricity connection to show a neighbor's electricity bill as a way to help determine their address.

Ruth Alas: Which management techniques have you found to be universal: working in all countries?

Ruth Oltjer: it can be called "Patience & Consistence"

Ruth Alas: Which methods you had to change according to local culture?

Ruth Oltjer: unlike in the west, the creation of personal friendship is a prerequisite of doing business. Building friendship takes time, which is another reason to avoid rushing into things. Besides numerous invitations to sports and other events, one key element in building trust is long dinners during which everything but business is discussed.

So far, our business model has been applicable in all countries we have entered. Still, we have noticed that training and teaching activities in foreign countries should be arranged a bit different way. Appears, that instead of seminars and lectures, interactive communication "works" much more effectively. For both of the parties.

Ruth Alas: How would you describe knowledge transfer from abroad to home country: Have you learned something in other countries and started to use it in your home country?

Ruth Oltjer: the top-down model has proven very useful also in the European countries. We have molded our approach to partners to a two way system. We have put together down-up and up-down approach. We have found that the results come quicker and the cooperation is more long term. We have learnt a lot based on foreign market's specific requirements (different bacteria, viruses, medical systems, laws, religion, etc.). As a result, in many cases, our products should have been modified in order to meet all local needs. And the last, but not least, communication with foreign countries has taught us to think even more openly and to act with higher flexibility. The more we know about different cultures, the smaller the world becomes.