Downloadable PDFs

Financial Director magazine – Incisive Media

Financial Director September 2010 cover

Financial Director cover

Financial Director cover

 

 

 

 

 

 

Click on any of these links to immediately download selected high-resolution PDFs of my writing, design management and editing on Financial Director.

 

Cover feature – non-executive directors – Financial Director February 2011

 

Profile, Ian Theodoresen, Financial Director November 2010

 

Profile, Julie Southern, Financial Director May 2011

 

 

The June 2010 cover image, ‘A rich man’s game’ was an original artwork I commissioned by Andrew Thorpe

PDFs from Campden FB, Legal Week and assorted futures and options titles coming soon

Suarez, campesinos and la lengua fuerte

The furore surrounding Luis Suarez’s punishment for allegedly calling Patrice Evra ‘negrito’ got me thinking about things getting lost in translation. We might never know if Suarez knew what he was saying would be considered inappropriate or if it was intended to cause offence, but it made me think immediately that perhaps those at the Football Association judging the case hadn’t heard of diminutivos – turning a word or a name into a diminutive term, the intent being to informalise and frequently in Latin America as a way to give someone you know well and like a nickname that reflects your liking of them – or their relatives the augmentivos, having the same effect but adding ‘ote’ among other suffixes to make something bigger. (Though clearly, the latter isn’t quite as cute or endearing if you’re a woman in her thirties and don’t want to be nicknamed as big; sometimes augmentivos are pejorative).

"Campesino" women transporting goods at Villazon, Bolivia.

When I was staying in Cochabamba, a city in Bolivia, as a charity volunteer living with a local family, it wasn’t long before my host mother and sister started to refer to me as Melcita, meaning ‘little Mel’ (in Spanish, add ‘cita’ to anything female or ‘cito’ to anything male and you make it a diminutivo); it was a big term of endearment, a way to reflect that I was more than a lodger, but part of the family, loved and liked and welcome. It was amusing when the host family of another English volunteer were really unsure how to do this with their visiting friend: her name is Charlotte, the ‘ote’ ending of which already sounds to a Latin American ear unaccustomed to such names like it has been given an augmentivo, but a male one – and one that essentially means ‘Big Charlotte’. She wasn’t big or butch. The name itself was lost in translation as they weren’t sure how it was pronounced, and from there great confusion sprung in terms of how to acknowledge her high standing among the family in their traditional way.

Negrito is the name my teenage host sister gave to her little dog, which was black and extremely dear to her. It reflected love and friendship. Suarez undoubtedly didn’t intend to reflect any love for his opposite number, but it isn’t a bridge too far to consider that he used the word entirely without malice as a nickname, a slang term. Even Suarez’ club has published a blog (you can read the Liverpool blog here ) explaining the use of the word ‘negrito’ in some Latin American countries where it is commonly used to mean something like ‘buddy’ – and this can of course, be used in a positive or a negative way on the pitch. But I think it unlikely it was a racist slur because I would consider the mouth from which it emanates as the deciding factor, not the environment in which it is said.

Suarez’s case made me think of another example of Latin American-British misapprehension. While in Bolivia I got a real bee in my bonnet about the use of the word campesino, and I think there are some parallels. Campesino’s literal translation in the dictionary is ‘peasant’ and you hear it used by inhabitants of the county, its continent and people all over the world to describe the bowler-hatted, countryside-dwelling folk they’ve seen on the odd BBC documentary. No one bats an eyelid and no one thinks about the word’s meaning or gravitas. At that time I was working among other British people – school leavers or young university types who were on their gap year doing some volunteering – and campesino was a well used word among those guys when talking about the iconic indigenous people of the country. I was pretty much alone in being driven to distraction by it.

In my mind, campesino doesn’t mean peasant; well, it does, in the dictionary, but let’s say that in the case of the group I’m referring to, perhaps it’s more accurate to say that the meaning of that word got lost in translation when coming from the mouths of my compatriates, to the extent that it became erroneous and slightly offensive. It struck no one as weird that an 18-year old white middle class medical student from the Cotswolds was referring to those living in their host country as peasants. Maybe it was the juxtaposition of those two worlds that made the use of the word stick in my mind. I thought we (the foreign visitors) didn’t have the right to bandy that word about so freely as if we had some ownership of it.

The wonderful thing about the English language is how is it constantly gestating, mutating and evolving in meaning as the world around us changes. This means that we can’t afford to be black and white about the meanings of words as that isn’t how the world works. So though the Oxford English Dictionary explains the word peasant to mean ‘A person who lives in the country and works on the land, esp. as a smallholder or a labourer; a member of an agricultural class dependent on subsistence’, it goes on to say: ‘Now used esp. with reference to foreign countries (or to Britain and Ireland in earlier times), and often to denote members of the lowest and poorest rank of society’ – which is more useful. To me, someone like myself referring to anyone as a peasant is the same as calling someone a chav; it’s derogatory and subjugatory. The word itself hasn’t the power; it is the wielder and the direction of travel the word takes. In the same way that you hear black rappers calling each other ‘niggaz’, the word carries different meanings used by different people. But the difference is that the rappers are transforming a word invented to subjugate them into a word that, used between them with shared understanding of a shared culture, finds its original poisonous meaning defused and re-purposed for a use designated and controlled by its rightful owners. They can choose to use the word or not, and perhaps take power back by electing to use it. (I used to hate being referred to as a geek in my youth, as it was a weapon against me from other kids who I felt really trampled by: in my adult life I’m very proud of being a geek and am happy to have anyone refer to me as such). I can see no justifiable reason why I, for example, would want to utter the  N-word in any incantation. It would immediately be transformed back to its original meaning coming from me, and could never be defused.

If we were to string together the word campesino with its siblings in other parts of the world, we would get a better sense of its weight and how the user is the person with the power to use and abuse it. As a word denoting someone we think is a lower rank or social class than ourselves, we could start in the UK with good old chav, or pikey; in the States we could refer to hillbilly or yokel. But in either place, how would you feel if someone called you a peasant? It might depend on who was saying it and in what context, but it’s not usually a compliment. For Suarez, though, negrito is stand-uppable as a non-racist comment. It might well have been meant to cause offence, but probably not racial offence.

I think with football clubs hiring so many star players from far-flung locales the odd brush with cultural confusion is likely, and I wonder if the clubs do anything to prepare their imported employees to be aware of sensitivities such as the one Suarez allegedly inflamed. Zero tolerance with racism is absolutely right in all cases, but how can this be proven to be an insult, or one based on Evra’s colour, as the FA ruled, especially if the club cannot demonstrate that it has taken all possible steps to prepare Suarez to know that any riff on the word ‘black’ when not meant with racist intent is likely to still be taken that way by the authorities? How can we judge this as if the comment came from the mouth of a person born and raised in the UK with a lifetime knowledge of our particular issues and boundaries?

In terms offence caused, far as I can see, the deepest wound in the Suarez debacle is the ridiculous over-reaction of the FA. I’d go so far as to call them ‘ los tontotes’ – big stupids (and if that Spanish is messed up, well, sue me).

Campden FB: Profile, Australian petfood business, VIP

I realise that my website is quite Bolivia-heavy (being my passion) so I have dug out this profile interview from 2007 (in the middle of my round the world backpacking jaunt) that I did in Brisbane, Australia, with the founder of a huge petfood company there whose family came from Scotland. The interview was for Campden FB. Tony Quinn was all about fly-swatting away lots of juicy private equity offers at that time, but I have just read that he may be just about to cave in to one – after all, he’s allegedly worth some AUS$265m and I’ve been to his condo in Surfer’s Paradise where I can report that he is sitting extremely pretty.

 

A global pawprint – can VIP Petfood take kangaroo dogfood all the way?

Family-run VIP Petfoods has made a fortune down under. Having built up a large share in the Australian economy, the firm is about to expand worldwide. But how does it plan to change its USP in order to be accepted by western markets? Melanie Stern finds out

Tony Quinn doesn’t recall the number of private equity suits that have called by his offices to wave dollars in his face. But he knows they always leave empty handed. “They’re a pain, really. They don’t understand me,” the entrepreneur concedes. “I’ve only met one who knew anything about our business and our industry anyway. And I don’t need their cash. The other day I worked out that I could live until I was 293 before I run out of money. So I think I’ll be fine.”

Quinn is certainly not backwards in coming forwards about money. But the figures do stack up for the pet food company he founded less than two decades ago, VIP Petfoods, one of Australia’s best-recognised home-grown consumer brands, headquartered in Yatala, a prime industrial district on the Gold Coast. According to the global pet food magazine, PetFood Industry, VIP is the world’s ninth-largest growth leader in its industry – outdoing its most potent blue-chip rivals, including Mars Inc, the family dynasty that owns petfood arm Masterfoods; Nestlé, which makes the well-known Purina brand; and Procter & Gamble, maker of Eukanuba and IAMS brands. VIP has almost doubled in size and output inside five years since 2000 and is valued by PetFood Industry at US$27 million. This hasn’t gone unnoticed by VIP’s major rivals, some of whom have already visited Quinn’s offices in their search for smaller players to swallow.

Tony Quinn on Queensland’s Top Rich List – please note I am not affiliated with this video

 

In an economy as young as Australia’s, VIP stands out as one of the country’s fastest-growing success stories, remaining wholly family-owned despite the ongoing flirtations of the private equity world. Its key product, fresh chilled pet food for dogs and cats, produces turnover in excess of AUD$120 million each year. Its edge – the ingredients that go into VIP pet food make the meat deemed high quality enough to be stocked in the same supermarket aisle as meat for human consumption. Three of the firm’s eight factories in Australia process some 17,000 kangaroo carcasses a week, kangaroo being lean game meat reared entirely in the wild. This is mixed with real vegetables, not vegetable reconstitutes or extracts, and tonnes of cooked eggs are added by hand on the production line. In a climate where consumers have cottoned on to the often unsavoury content of human food, millions of dedicated pet owners in Australia are happy to fork out more for pet food they feel is natural and wholesome. In turn, powerful retailers, such as Woolworth’s, like the margins and have wholeheartedly endorsed the product. Its premium dog rolls – heavy tubes encased in gaudily-coloured shiny plastic with the VIP name emblazoned in super-large type on the front – are always stacked in a sort of pyramid of promise among the steaks and barbeque packs, glistening so invitingly that it seems a shame they’re destined for the dog’s stomach. None of VIP’s rivals enjoy this luxurious point-of-sale. Placement in the same chilled compartment as meat for human consumption was one of the first major battles Quinn had with retailers that put his firm on the road to market dominance. It also turned out to be a marketing masterstroke, placing the brand directly in front of key consumers, inheriting an unspoken promise of quality being stocked next to prime Australian meat sold for family barbeques, and working its way into the Australian psyche.
In 2007, VIP enjoys a stunning 85% market share in a business segment worth around AUS$4 billion to the Australian economy. “To be honest, it’s probably more, but we tend to stick to saying 85 because any more would be embarrassing,” Quinn adds. Again, a brazen quip, but not unqualified by the facts. Australians are generally pet mad. According to the Pet Food Industry Association of Australia, the country’s body of market operators, the petcare industry is one of the largest segments of the national economy, with around 64% of households having one or more dogs and cats. According to a report by Euromonitor, the Australian market is so big that growth has now begun to plateau, settling at 4% back in 2004. Australia is saturated with a handful of multinationals and a gamut of local players of a size that would not usually raise a blip on the radar of a firm like Mars, but whose customer loyalty and brand recognition make them serious players.

Additionally, aware of the presence of Asian commerce and the real threat it poses to businesses here, Aussie consumers consciously look for and loyally buy Australian. “Proudly Australian Made and Owned” labels adorn almost every supermarket item, giving local producers a stronger stance against otherwise all-powerful foreign rivals. However, for a company the size of VIP, there is little more growth to be achieved at home. “There is still a lot of testing and market research to do, which is a bit unlike me because I’ve always just decided on something I wanted to do and I’ve done it, and it’s worked very well,” says Quinn. “The international thing needs a totally different thought process to the domestic one, not least because products like kangaroo or crocodile meat outside of Australia probably wouldn’t be wise. But having said that, I think pet owners in, say, California or Germany would love it because it’s unusual. It’s a big job.”

VIP already exports to some parts of Asia, including Thailand, Korea, China and Japan, but these are small contracts for a few thousand pallets a month to organisations such as greyhound racing clubs. “With fresh pet food, two things sell it: one is the desire for modern society to believe their food is fresh. There are always a lot of questions over how fresh the food we eat really is, so we’re riding on the back of that phenomenon. Secondly, our generation, the over 50’s, enjoy being part of the feeding process. When you give your dog some fresh pet food, and it’s squishy, it’s not from a tin, you can cut it up, you feel part of feeding the dog. But I don’t think my grandchildren will feel like that,” he says.”I think the future will be 86% of the market consuming dry food. So it is important for VIP to create more dry foods and more products that are different, and have some kind of way to be different from that market, including how we market them. There are a few outlets that you can easily deal with that sell pet food. In Australia, it’s basically supermarkets and pet food stores but we might look at things like hardware stores or petrol stations. It is not only the places we sell but the point-of-sale too – we are thinking about things like making our own dispensing machines that can give out a 6kg bag of feed. We need to cater for women and for weekly purchases. They can put it on their loyalty card maybe.” Ideas aren’t in short supply for Quinn.

In 2006, the firm started trading in the US, building a factory in Philadelphia and forming a subsidiary with a consortium of partners (Quinn obviously doesn’t mind doing business with the private equity boys if he can keep them at arm’s length) which is run by Tony’s youngest son, Klark. The Quinns have hedged their bets with a 6% stake in the venture, the rest being venture-backed. A plant in Canada was also opened this spring.

But to make an international venture work, VIP has to change its USP from fresh chilled pet food to dry pet food, which is what its rivals have made money in and something VIP has, until now, only run as a sideline. Quinn concedes that dry pet food was one of the firm’s smallest and slowest-growing sectors last year, but it will be essential to its success in the US. Changing to dry pet food is a big risk, particularly since the firm recently completed a very successful trial period selling into 700 national Wal-Marts, Giant Eagle and Kreuger’s stores. “Industry guys are watching us, seeing what we’re doing, and they’re wondering if they should be doing the same thing. But they’re mostly in dry foods,” Quinn says. “Eventually, fresh pet food will just be a niche since it’s too difficult to make and export.”

Under Quinn’s patronage, VIP has become the leader by way of innovation, from developing new types of pet food, being the first to make commercial success out of products made from natural ingredients, and adapting to consumer needs or financial trends by developing mid-range and premium lines. The latter is where VIP is strongest. But Quinn believes the two will begin to merge soon, leaving him without that edge. Additionally, fresh chilled pet food is impossible to replicate across global markets and goes off before containers reach ports anyway.

“In five to 10 years time, the gap between super-premium and mid-level dog food – the private label stuff – will disappear and it will be difficult for consumers to distinguish between them,” he says. “That’s when we need to be doing products that are so unique no one else is doing it. That’s the project we are most heavily involved in at the moment.”

Organic growth and true innovation are especially important now as shortcuts, such as acquisitions, are costlier since the multinationals have been buying them up. Green’s, a local Queensland family business, was bought by Nestlé last September for US$90 million. VIP had been conducting due diligence on the firm as a potential buyer for its dry foods expansion, but the price tag proved unpalatable. The Nestlé purchase of Australia’s number-three petfood firm was, Quinn says, defensive. “For them it was an insurance policy because their brands are losing out, losing space on the supermarket shelves,” he explains. “They had to do something since they’re in the top one or two globally in pet food, and to be de-listed from that spot and from their position in the Australian market … so to pay $90 million to avoid that …” Mars also turned its back on its own company policy to defend its dominance in the pet food market when it bought Doane Pet Care, two moves heralding the changes in the market as a whole. “Up until that point Mars wouldn’t make private label brands because it was against their company policy,” Quinn adds. “But the whole world is changing and we as manufacturers need to embrace this private label phenomenon. And our market today is driven to a big degree by the greed of the retailers and their need for more margin and control. After all, it is their real estate, and they can do as they like with it, so the best road for them is private label. That will have a terrible effect on our business globally because it will stifle innovation and opportunity.”
For now, untroubled by the ever-growing power of multinationals, the family is pulling together with its management to fashion its new USP for global growth. The second generation is already well ensconced in the business; Tony’s wife Christine works closely with him in the executive office; eldest daughter Kelda runs the Perth plant with Tony’s brother, Sinclair; his eldest son Kent is in the US; son-in-law Kynan runs the meat production side of the firm, while Tony’s youngest son Klark “is the make-it-happen man” – only in a family do such titles exist. “I think his future may be in marketing our firm, using his profile,” says Tony. And there is validity in their arrangement. “I think for the size that we are now, we’ve remained very innovative as a family. My eldest son, Kent, I rely on as my right-hand man. If I come up with an idea, it’s easier for me to tell him about it because he understands the language I use, rather than having to go to engineers. You get fed up with that and you move on. But I come up with a lot of ideas, and that’s where the guys use me and they make them happen.”

Even Tony’s parents put their two cents in now and again. His father, Jim, is a Queensland legend, a Scottish émigré who founded a dog school that went on to train and supply dogs to the State for the police force. A team of non-family managers oversee the firm alongside the Quinns, though as he admits, like so many other growing family businesses, that partnership can be “a mission, psychologically – but we have some great people who take care of everything for us.” That said, the Quinn name is at the heart of the brand. Quinn’s principal advertising channel is its involvement in V8 racing. The firm runs its own racing team and participates in a string of high-profile races year-round, both at home and abroad. As we speak, his team are competing in the Dubai Carerra Cup. Klark, 28, heads up the team as the driver. The cars are plastered with the VIP logo and Tony says this garners several million dollars in TV advertising time, which he is confident (though there has been no audit, so there are no figures) that this converts itself into sales. As the firm expands overseas, this will continue to be an important promotional tool. “People ask us, ‘Motor racing, how did you work that one out?’ We have audited it and it cost us AUS$380,000 to run the team for a year but we receive $1.7 million in television time for it,” explains Tony. “From a brand point of view, motor racing has been exceptional but, if you’re down the back, you’re wasting your money. It has worked well for us in Australia and New Zealand, and it will be the same in the US.”

Meanwhile, VIP has already seen its investment in the US venture triple in value, so the signs are good. Yes, private equity is in there, but Tony is confident Kent has influence in what he sees as a VIP business under control. “The Americans want to move in on our Canadian business already, tying it into the US business so they can benchmark it for future sale,” he says. “I said to them: ‘Next you’ll be wanting to benchmark the Australian business’ and he said to me: ‘Funny you should say that’. I was offered an awful lot of money by a private equity firm for the business last year. But so long as the kids want to do it and I have a good team here, let’s keep on doing it.”

Dimbleby Cancer Care – a wee story

This is a short piece I wrote for the inaugural edition of the newsletter published by Dimbleby Cancer Care, a cancer charity established by the family of famous British journalist David Dimbleby in his memory which today does vital work in supporting those going through cancer. I’ve enjoyed their services throughout my treatment and as the charity is founded in the memory of a fellow journalist, there was every reason to try and offer something to them as they try to generate more publicity and coverage. Their PR man asked me to contribute a story about my own experience and it was a great experience to change tack writing-wise while doing something good.

Have a read.

Best laid plans

Even when my oncologist told me to cancel the two holidays I’d booked for my summer off, I didn’t grasp that the routines and schedules making up my life were to disappear. On the day of my initial diagnosis I was four weeks into my sabbatical, in which I’d be enjoying four months travelling through Europe with my partner – and then October through to the summer as a full-time Master’s student. The plan thereafter was to go to Latin America – where we’d met five years before – him, to teach, me to extend my journalism career on my favourite continent, maybe staying for two years.

Of course, it’s true what they say about best laid plans: I had left my job as editor of a financial magazine, telling everybody in a blaze of glory that I was dumping the daily grind for a once-in-a-lifetime opportunity. Then, eight weeks to the day after I put my last issue to press, I was signing in at the chemotherapy day ward for my first session of ABVD, mother and boyfriend in tow.

It was only then that I was told I was stage three: rather than the 2-4 months of chemo and radiotherapy I had originally been pitched, I would need six full months of chemo.

This was a problem for my scheduling. Four months would have only touched the start of my course. But six months took out the rest of the year. The biggest issue I had with cancer’s way of interrupting my masterplan was that it put a question mark over my university place. On my first day in the ward, I asked my oncologist if he thought it realistic that I could enrol and have chemo at the same time. He reminded me that often people continued working. As I breathed a sigh of relief, Liz, the Macmillan nurse present, sucked air through her teeth. “It’s not always like that,” she said. “I think it might be unrealistic.”

I was surprised how two very different views could come from people working so closely with cancer: which one was right? I signed up to the web forums and asked if anyone had successfully gone through university while on chemo. But no clear answer came. I soon realised that I’d be starting my course halfway through the treatment; I’d been warned that this was the point where ‘chemo brain’ would set in and the cumulative effect of ABVD would start to grip me. Did I want to plough on with my schedule, accepting that I might not be well enough to do my best? Or be more pragmatic, accept my fate, and defer for one year.

Come September I deferred.

I was gutted. I’d been so happy when I resigned. I’d told the world and his wife about my plans. I’d already put time into becoming part of the university community: those people would forget me and that time would mean nothing. Without something big to look forward to, cancer was now my only focus.

A friend recommended me for a freelance job and I accepted: I shouldn’t have. The time it demanded ended up being disastrous. Deadlines are king and journalists are paid to hit them, however much they move: whenever something came in with a 24-hour turnaround, the email would hit my inbox as I sat in the chemo ward with another infection, waiting for another blood test in-between chemo appointments. It was too much and I had to bail out. I bitterly turned down work in order to focus on my health, not my career. But in time I started to enjoy the freedom. Ironically, I did get the time off that I’d hoped leaving my job would give me. And I used it to look after myself much more than I otherwise would.

As summer came, I found it so relaxing to wake up, open the kitchen doors to our garden, have breakfast, check a few emails and while away the day without an agenda. With my immune system weakened, I didn’t feel confident leaving my little part of town, but friends came to visit or stay over.

By the end of the summer I realised a schedule had evolved out of my new lifestyle. After my fortnightly chemo, the next 5 days were given over to recovery, with all the worst effects colliding at once. But by Wednesday I started to feel well and by the weekend I was back on my feet. Once I realised that I had every other week to feel close to normal, I planned things so I had something to look forward to in my ‘off’ week.

A new addition to that schedule has been the Dimbleby Cancer Centre, where I have massage and counselling. As my body struggles against the effects of my treatment, I really look forward to a gentle massage which takes the pressure off a little. My last appointment at Guy’s was just hours after hearing that my grandma had passed away, succumbing to ovarian cancer. Deciding whether I was well enough to go to Glasgow for the funeral, it was invaluable to have that massage which helped me to calm down, think things through and decide to get on the next train. And having much less money coming in now, the fact that the services DCC offers are free really helps.

As I reach the last few treatments, having that week to look forward to and do something of value – not just sit around waiting – is really important. Cancer has not been the diary-obliterating hell I imagined. I have time to think, to take a walk, to cook – and to read up for my course. I can look forward to starting my Master’s next October and getting on with my life – a long way from the day when my oncologist, trying to lighten the mood when he told me to cancel those holidays, quipped: “you’re mine now”.

Curfews and culture: staying with a host family in Bolivia

This is another feature I wrote for the Cocha-Banner while staying in Bolivia, about the cultural sensitivities families hosting European gap year visitors encounter and how those visitors can learn about their host country by spending more time with the family. I was inspired by my own host mum, Angelica (organised through Projects Abroad), who is absolutely wonderful but in hosting a European girl like me came across similar cultural issues all of the families doing that did – namely that it’s not usual for girls to be going out boozing to all hours and coming home whenever they like in a country like Bolivia. At the time I was feeling a bit self-righteous about how close I’d become to my host family compared to many other volunteers who appeared to be more interested in getting drunk with their English buddies than observing the cultural realities of living with a Bolivian family. I found having to tell my host mum when I was coming home for lunch or after going out quite hard at first – I had already been living in London away from my folks for seven years by then, so I wasn’t used to that – but if you live in someone else’s home they have a right to know when to expect you home, and as they are made responsible for you by the organisation organising the homestay, I found my host mum would wait up for me if I was late.

The reality is that being a girl in a place like Bolivia entails some of the more traditional ways of thinking, simply to protect us and be sure we’re ok – responsibility for which falls on mothers, and for the duration of your stay, you become their child whatever your age. But after a while I found electing to spend more time with my host family and living on their terms gave me a whole other insight into Bolivian life – which after all, is the whole point of the exercise.

Have a read.

We are more than a place to stay: Melanie Stern hears from host families who say the best volunteers are those who try to really integrate

For sure, Bolivia is a long way from home wherever you come from – 6,205 miles from London to La Paz, if you are interested. Who could forget that fact while trying to wash your hair in a cold trickle of water alleged by your hostel to be a shower, rubber flip-flops safely under your feet just in case of electric shocks. But Projects Abroad Bolivia volunteers are among some of the luckiest travellers around. They get to move into a family home while on their placement, share their lives with a local family, improve their Spanish without having to endure classrooms and textbooks – and maybe best of all are the three things all backpackers dream about while staying in hostels – a bed of their own (minus bed bugs), three square meals a day (all home cooked, no nights sat on the toilet), and a shower that covers your whole body with water so hot, it could be a shower of sweet, sweet sunbeams sent from heaven.

But staying with a Projects Abroad family means much more than just the creature comforts. Travelling and working in Bolivia is almost impossible without a little Spanish, and for many people, learning by chatting with Bolivian people is the best way create a working knowledge of the language. Living with a local family is a unique opportunity to get inside Bolivian culture too – to eat local food, to learn local customs, and live the way Bolivians live – and most of all, to enjoy all the things that make Bolivia one of the most seductive, diverse and different countries you´ll ever visit. That said, it´s not always easy for European and North American people to adapt to the Bolivian way of life, and it isn´t always easy for the families either. But both are looking for the same experience: to learn about other cultures, to make friends from other countries, and enjoy the differences.

Maaria Ichazu, host mum

Marcia Ichazu, one of Projects Abroad ´s newest host mums, has been welcoming European students from one of the local language schools into her apartment off Avenida America for five years. “I live alone so I like having people stay because we can talk and I can learn about their cultures,” Marcia says. “I love it because they teach me so much about the world.” Luckily for her visitors, Marcia speaks excellent English. Most host mums speak no English – though their children sometimes do – so volunteers do not have an escape route from practicing their Spanish. The volunteers living with Franz Torrico, a host dad whose house in the centre of town adjoins his architecture business, are in perhaps the best environment of all to learn the language, as Franz also teaches Spanish. His mother, sister and her 2 year old son live with him in a warm, close-knit Bolivian family setup typical in Bolivia. “I always have our volunteers cook the family something typical of their country, so we can see how they eat – and my nephew is already learning a few words of English, so we enjoy the cultural exchange,” Franz says.

Eating together is one of the most important ways that families and volunteers bond, particularly in Cochabamba, where the city motto is ´live to eat, not eat to live´, and many host mums cook up fabulous dishes native only to Cochabamba. Sitting around the table at the same time every night with your host family is a great way to practice listening to and speaking Spanish, picking up the things that teachers aren´t employed to teach you – but that can help smooth your way to making Bolivian friends and exploring Bolivian life without the comfort blanket of your compatriot volunteer friends.

One of the things that both volunteers and host families have to work the hardest at is the little habits and differences in life for, say, and English girl and a Bolivian girl of the same age. Late nights and too much Taquiña and are all part of the travelling experience, but they can prove interesting for Bolivian host mums who feel responsible for their temporary daughters, and are not always accustomed to giving their own children the amount of freedom that foreign visitors take for granted. One of Projects Abroad ´s most experienced host mums, Cristina, recalls one or two instances where diplomacy skills came in handy. “One of the girls from England was used to going out really late, getting really drunk and not coming home on time. She found it hard to live here and I was not used to these issues either,” Cristina admits. “Usually my volunteers tell me where they are going and when they are coming back, and I do like to know because I feel responsible for them while they live in my house. I alw ys wait until the last one is in bed, even with my own children. But everyone here lives their own life to their own schedule, they have a key – and I don’t care where they go or with whom. I like everyone who stays here to experience independence because they are often away from their family home for a long time, but I hope if my daughters go abroad one day and stay with a family, they will be looked after the same way as I look after the girls here.”

Some volunteers have to adjust to calling ahead if they are going to be late home, if they are going to miss lunch, and even small touches like the difference in personal or physical space – from kissing their host mum goodbye in the morning to the way Bolivian families spend much of their time together at home, not locked in their bedrooms or glued to the Playstation – make forging a relationship something that needs equal will and effort on both sides. Families are also surrendering a little of their privacy and space, so both parties can understand how it feels. “There are volunteers who miss their homes and families, and there are others whose only words with us are good morning and good night, but sometimes you just have chemistry with someone,” Cristina says. “I have to say that most of the volunteers become part of our family.”

Apart from being more interesting, trying to integrate with your host family and Bolivians in general can have lasting rewards. One of Cristina´s former volunteer guests met her husband, a Cochabambino, while living there. Now living back in Germany, the couple are coming to Cochabamba this year for a second blessing, and to visit Cristina. She and Cristina have kept up contact through emails and photos, and Cristina says that she hears from a few of her former guests regularly. Marcia reports that she got on so well with one particular Finnish girl who stayed; she visited Cochabamba three times since leaving to see her. Marcia’s daughter is flying to Finland to stay with her on holiday.

Cristina, host mum

Some volunteers find that partying with their volunteer group eats into the time they could be spending with their host families or with other Bolivian people: for some, it is easier to stick to the familiar after a long day working with people who only speak Spanish. This is when the differences between European or North American life and Bolivian life show up, and volunteers miss out on a once in a lifetime chance to make lasting friends in the country in which they are working. “If the volunteer never opens the door to you, it doesn’t matter how much time you spend, there is no way to make a connection,” Cristina thinks. “My family and I keep our lifestyle in a way that volunteers can choose to share it with us, or not, with our food, our culture and customs. We always open ourselves to volunteers so they have a chance to learn about the way Bolivians live, if they want to. Sometimes when you have a really good relationship with one of them, it feels like your daughter is leaving home. So there are some that never will be part of us, and some others that become part of our heart forever.”

Los Tiempos: An end to the second-hand clothing market boom?

This was my first piece for Los Tiempos and remains probably my proudest moment. Looking back I can’t recall how I managed to interview and write a newspaper feature in Spanish.

This was the assignment that introduced me to what is now an all-consuming topic in my mind, and it showed me that I could grasp and accurately analyse the contemporary economic issues of a country I knew nothing about. It’s my feature on the legislation to make Bolivia’s trade in used clothing illegal, looking at what people thought of the ban and what might happen as a result (clue: in Bolivia, bringing a law in doesn’t mean something is going to stop).

Have a read.

The end of used clothing: The middle classes must buy Bolivian to legitimise our economy, manufacturers say

This morning, house-wives from all over Cochabamba – from campesinos, to working class mums, to well-married women of more means with fashion-conscious teenage children to satisfy – have both hands thrust into billowing stalls of imported second hand sweaters and pants up and down La Pampa market. These women have the same mission as mothers all over the world: to see that their families are dressed in as close to the best quality clothing they can afford. As two particularly eager ladies, one in an American-style sun visor, hold a smart blue polo shirt up to the light to inspect the handiwork on the seams, they know they won´t have to part with more than a couple of bolivianos if they want to buy it. But these particular women have made two interesting selections: a Fruit of the Loom sweater, manufactured in Korea under license by a well-known American label, and a pair of Everlast boxing pants, also a famous American brand, most probably manufactured in a third world country.

But this will soon come to an end.

This week sees the deadline for Morales´ 2006 supreme decree, stipulating that all importing of foreign used clothing will become illegal. Those selling these items have another ten months´grace to cease trading. But by next March, twenty years of burgeoning government-sponsored trade in imported used clothing will finish.

Protagonists of the change – Bolivian clothing manufacturers – say it is the responsibility of Bolivia´s middle classes, those who can afford to choose between imported cast-offs and Bolivian-made clothing, to support the creation of a self-sufficient national industry by buying Bolivian from now on.

Cochabamba´s Camara de Pequena Industria (CADEPIA) is the figurehead of this change under the governmment´s “Made In Bolivia” campaign, which aims to legitimize the economy by stamping out contraband and foreign imports in order to strengthen Bolivian companies. “Because of low prices, people from the middle classes and even upper classes have started to buy imported used clothing, which is sometimes unworn, damaged stock too,” says Daniel Santiesteban, CADEPIA´s director. “They like it because they want famous brands, good quality and good design. But these items don´t have a ´real price´ because someone else already paid for the cost of manufacture. How do we compete with that?”

Used clothing from abroad originally entered the country as charitable donations handled by religious groups. Pushed by demand from Bolivia´s poor, it became a business, and importing used clothing from other countries – commonly America – was later mandated by law to quell contraband and illegal imports.

According to data from the Instituto Boliviano De Comercio Exterior, Bolivia suffers around US$30 million in lost trade to the used clothing market each year. If ordinary Bolivians who can afford to buy new Bolivian-made clothing make the switch, there is data to support the idea that they will be party to creating some 60,000 jobs in this industry. CADEPIA´s Santiesteban believes that with this support, his constituents will invest time and money in training Bolivians to work in their factories, and will be able to buy state-of-the-art machinery – so that Bolivia can begin competing inside and outside its own borders, not least with China – currently swamping Bolivian markets like La Pampa with contraband clothing and other items. “Even some Bolivian manufacturers that copy clothing sew fake Chinese labels into their products because this stuff is so popular,” he adds. “It is the same quality as imports and people still buy it. We just need an equal footing to compete legitimately.”

But ordinary Bolivians, rich and poor, and not convinced and many think this trade will simply move underground, not disappear. “I prefer these second hand clothes because Bolivian-made clothing, is not good quality and they all look the same. There isn´t a lot of variety to choose from,” says the La Pampa woman in the Yankee-style sun visor, without taking her eyes off the job. “A lot of the clothes I find here seem new, and even if they are slightly damaged, if you look carefully you can usually find something new with only a small problem that I can easily fix at home.

“I think this trade will go on without the government´s support because Bolivians want it to.”

Cocha-Banner: Veteran Peace Corps volunteers reunite

Cocha-Banner is a monthly magazine produced by the journalism volunteers at the office of British gap year company Projects Abroad in Cochabamba, Bolivia, with some input from the students of San Simon university just across the road from the PA office.

It is put together by the volunteers, who source and write articles, edit their own and some copy from San Simon and distribute the magazine across the city. It’s a good way for the volunteers to get portfolio built – as most of them are British journalism students – and to delve into the life of the city and of Bolivians, when gap year placement life can often end up revolving around your compatriates and the local Irish pub rather than pushing you to really explore. 

I worked part time on it while I was working at the city’s daily broadsheet newspaper Los Tiempos, helping out the economics and culture editors, doing  a lot of editing and writing a style guide for the editor Ximena. I wrote this piece for Cocha-Banner when another volunteer had filed a piece on the Peace Corps that was basically unpublishable and Ximena asked me to step in. I was dispatched to the American embassy to a reunion of former Peace Corps volunteers who had worked in the area in more politically heady days. Their stories were fascinating.

Veteran volunteers reunite to celebrate 50 years of Peace Corps

In the office of Javier Garza, director of Peace Corps Bolivia, a group of former Peace Corps volunteers compare notes on their observations of the country they last lived 40 years ago. A lot has changed. “There was not much here back then,” remarked Vincente Antonio, a retired university teacher who volunteered as an agricultural extension assistant in Capinota in the mid 1960´s. “Cochabamba has really developed and has a lot more infrastructure now than the last time I was here. When I arrived here last week, I wanted to take the train to La Paz – but someone told me that line stopped working 20 years back.”

They would not admit it, but Vincente and the other 10 or so returned volunteers in Cochabamba last month to celebrate the Peace Corps´ 50th year in Bolivia, played a part in the chain reaction that led to these changes – for Cochabamba city and the department. The agency has stationed well over 200 volunteers across the country over the last 50 years – with a 19- year hiatus following the Corps´expulsion in 1971 on the back of an anti-American uprising – mostly working in rural areas with farming communities and remote settlements, building essential utilities like latrines, teaching locals how to manage their finances, and creating an infrastructure for other strong community development projects.

Many volunteers came from farming communities and families themselves, and were funded by Heifer International, an Arizona-based organisation that has been working to bring sustainable farming programs to poor communities across the world for 60 years. Most of the volunteers were familiar with Heifer from back home, many getting involved through their local church, and had grown up working and living among agricultural work. Starting out though, these 132 fresh-faced, wide-eyed kids leaving their home country for the first time in 1964, fresh from the familiarity of college, friends, families and US culture, and at the beginning of their adult lives, Vincente and his fellow volunteers could not have had any clue what they were about to get themselves into.

“I was in my last year at Washington University and I played a lot of football, but in the last year I was injured and could not play. I was really depressed. So my academic advisor told me I should sign up for the Peace Corps, to blow the cobwebs out of my head,” Vincente recalls. “I signed up to be sent to the Philippines since I have a lot of family there – so naturally, they sent me to Bolivia. But at that time, all I knew about Bolivia was llamas.”

On the ground, though, the volunteers found they picked up Spanish and learned local customs pretty quickly, and many now say their current professions and ways of thinking about the world are directly due to their experiences in Bolivia – proof that the Corps´ stated aim of two-way cultural exchange, to help educate Americans about the outside world, really works. “When I went home I was invited to speak a lot at universities and other organisations about my experience, so I got a real chance to tell people back home about Bolivia,” Vincente says.

Allie Hammond, another returned volunteer who joined up while studying at the University of Winsconsin – historically the Corps´ most fruitful recruiting ground – admits she was in it initially for the chance to see some of the world. “I thought working for the Peace Corps sounded like an interesting prospect and I thought volunteering would be an interesting way to travel, for a girl who grew up in a small, close-knit farming community,” head,” Vincente recalls. “I signed up to be sent to the Philippines since I have a lot of family there – so naturally, they sent me to Bolivia. But at that time, all I knew about Bolivia was llamas.”

On the ground, though, the volunteers found they picked up Spanish and learned local customs pretty quickly, and many now say their current professions and ways of thinking about the world are directly due to their experiences in Bolivia – proof that the Corps´ stated aim of two-way cultural exchange, to help educate Americans about the outside world, really works.

“When I went home I was invited to speak a lot at universities and other organizations about my experience, so I got a real chance to tell people back home about Bolivia,” Vincente says. Allie Hammond, another returned volunteer who joined up while studying at the University of Winsconsin – historically the Corps´ most fruitful recruiting ground – admits she was in it initially for the chance to see some of the world. “I thought working for the Peace Corps sounded like an interesting prospect and I thought volunteering would be an interesting way to travel, for a girl who grew up in a small, close-knit farming community,” to find a much quieter Cochabamba than today’s bustling University City, and Peace Corps volunteers were often so far away from the action they simply could not make the trip into town. “We were sort of discouraged by the Peace Corps form having too many parties or coming into the city,” Allie recalls.

“We were assigned to our areas and that was it. There were times when we had to come into town, but I was about an hour away, so I would only come in to do something quickly and go back in the evening.” Cara, being much further away, only came in every few months, usually just to buy some books for the library with money sent from the US. Volunteers simply had to stay in their communities, make friends, gain trust, improve their Spanish and integrate.

This was not always easy. Being Americans in a country whose relationship with its Northern cousins has long been, at best, shaky. At first, accusations of all kinds of dark motives for being in Bolivia were thrown at the volunteers: not least because the Peace Corps had been thrown out of Bolivia before and mistrust was high on the agenda. Every volunteer has a tale about accusations that they were supposedly spying on Bolivians for their President. “I would be riding the bus and someone would come up and ask me if I was with the CIA,” Cara reveals. Vincente adds that a man in his village accused him of the same crime – and when Vincente returned to see the villagers on this reunion trip, 40 years later, the same man accused him again. “I think people mostly just could not understand why we would want to be in Bolivia when we came from the States,” he adds.

That said, neither Vincente, Cara nor Allie believes their nationality really got in the way of their work, or their relationships with the people with whom they worked. They even suggest that having to work on these attitudes meant that the bond of trust created later was that much better – and in turn, volunteers got to enjoy closer friendships with locals than they might have otherwise, and learn so much more about each other’s cultures.

And when the odd stickler would not take no for an answer, a touch of that famous American homestead hospitality came in handy. “I was at a village party and I got on really well with everyone there, because they knew me, but there was just one guy who had just arrived back from studying in Chile who kept telling me I was a spy. After awhile I just said to him, listen, I am not going to convince you and you are not going to convince me.

Why don’t we just dance?”

Travels of a T-shirt

At the moment I’m reading The Travels Of A T-shirt In The Global Economy, by economist Pietra Rivoli.

It’s pretty dense, not just going into the details of the life of a t-shirt – to illustrate the life cycle of the product through sale, re-sale, the way it travels across continents – but right back to the issue of cotton subsidies in the States and right into all the by-products of said cotton, which give you a really detailed and broad palette of thoughts around the concept of the garment and its place in the world. So, yeah, give it a read. I’m reading it as part of my research into the global second-hand clothing market.

Campden FB: Profile, the Lee family of Lee Kum Kee

Just having a browse of my old work as deputy editor of Families In Business magazine, now called Campden FB. I had a LOT of fun persuading a lot of highly secretive, press-shy, filthy rich business families to step into the light for an hour and let me ask them what happened round their kitchen and boardroom tables. The one I’ve selected here, from 2006, was super cool for me; I’d not done much on Asia and it gave me a fresh perspective on family business, on business on the other side of the world (this was before I’d done any backpacking) and made me think. Just last year I was in my local Chinese food shop when I came across an aisle of Lee Kum Kee sauces; I was pretty excited and I bought their plum sauce as a souvenir. Incidentally, it’s exactly like the sauce you get with peking duck and pancakes, which makes it a blockbuster in my mind. Have a read.

Tasting Times

How do you inspire a generation with its own career aspirations and dreams to want to join and lead the family business? That’s the task for Chinese sauces giant Lee Kum Kee, as David Lee tells Melanie Stern

There is a saying in Mandarin: “Si Li Ji Ren”. The translation: put others first, before yourself. This runs right to the heart of what it is to be Chinese, to consider at all times other people’s needs and feelings before your own, to never lose yourself or cause another to lose mianzi (face) by expressing one’s own opinion or desires too directly.

And then there is European and North American culture, positively self-centred and garishly outspoken in comparison, right down to the smallest gestures. Still, somehow, millions of Chinese managed to have successfully navigated these nuances, settled and built businesses on these continents. But only recently have their children had to begin navigating the delicate path between the opportunities afforded by the country of their birth, and the traditions nurtured by their immigrant parents.

The 14 members of the Lee family’s fifth generation, inheritors of food and sauces giant Lee Kum Kee are in such a position. Lee Kum Kee is one of China’s most resilient laozihao with operations across the globe, headquartered in Hong Kong. Turning 118 years old this year, still 100% owned by the family and principally run by brothers Eddy, David, Charlie and Sammy, the third and fourth generations currently running the company hope the firm can continue under family/owner-management beyond their own tenure.

Meanwhile, though, those of the fifth Lee generation who are old enough (there are 14 children between the ages of 3 and 23) have pursued studies and interests far removed from the business,including art and hospitality. After much consultation with family business academics to come up with a way to introduce this generation to the family business, David Lee (pictured) was chosen to lead the family’s newly-formed Family Training Centre.

It falls to David to connect the hearts and minds of the young Lees with the business, while concurrently nurturing their individual passions and ideas whether they lie within the family business or not. As chairman of Lee Kum Kee’s US and European operations (he is in his 26th year of service at the firm) and one of the fourth generation brothers running the business overlooked by their father Lee Man Tat, David admits leading the business has not prepared him for leading the family. “I read an interview with Carlos Ghosn recently in which he said that being a good husband and father was much harder than being a good chief executive,” he tells Families in Business. “I have the same feeling; this task is much harder than I thought it would be. When you’re doing business you can move quickly. But with the children, that just doesn’t work. It takes time and patience.”

With the diverse interests these malleable young minds present to the family, the Lees knew the plain-vanilla sales trainee-to-­management route was too restrictive a prospect with which to provide inspiration. They put in place a structure formalising the key operations of the business and the family. A family council encompasses the business, as well as the family office, a philanthropic foundation, family investment function and the family training centre – each run by a family member. The fifth generation can choose to get involved in any of these routes.

“No one has to work directly in the business if they don’t choose to,” says David. “Our new model is all about contribution to the family, and how we can help the next generation contribute. We can only try to inspire, to provide the right environment and opportunities for them – we can’t force them.”

He quotes a Mandarin saying, translating as ‘win, win win’: “You win, I win, together we win. It’s a very important idea for Chinese people”.

David himself, like his brothers and his father before him, had a less democratic introduction to the family business. In 1982, his father asked him to leave his job at RJR to turn debt collector for Lee Kum Kee’s non-paying American clients who had almost plunged the firm into to a credit crisis. “I dropped everything,” David recalls, founding the firm’s US office and recalling the debts. “I was a one man band.” Three years later David had set up another office in New York. Stepping in when the family needed it could not have proven to be a more important step for the firm’s overall growth. It led to David becoming one of the architects of the business as it stands today, having opened factories in the US and Malaysia, run international marketing operations, and overseen growth on both sides of the Atlantic that proved to be crucial in diversifying the business out of China and Asia. That’s not to mention steering the firm’s finances through the 1997 Asian financial crisis and its fallout.

That said, David shies away from talking about his own achievements, or even about the business’ products – many of which are market leaders the world over, to say nothing of the Lee Kum Kee brand, ubiquitous in China and one of the best known in its field globally. He prefers to focus on the family unit and its evolution.

“We decided the family was more important than the business when we were looking at our new structure,” he explains. “We say that if the family isn’t doing right, the business will only get hurt. So the family is the priority. Our mission is to ensure the continuity of the company by becoming the model or family enterprise, to embrace Chinese culture and create a meaningful legacy.”

This aim was a catalyst in the decision to find a non-family group chief executive officer, “So the family could focus on growing family talent for the future”, says David. This July, Stephen Lui Song Tien, a chemistry professor with three decades of corporate experience from running a Hong Kong healthcare firm to playing Chinese ambassador to the British Chamber of Commerce, succeeded to the role. Aside from the two non-executive directors Michael Sze, an independent non-executive director for Swire Pacific, and Eddy Fong, Stephen is the only non-family person at board level with Lee Kum Kee.

The Lee family’s business wouldn’t be around today if it were not for a classic error made by David’s great-grandfather. Legend has it that he was the inventor of oyster sauce, a popular base for much Chinese cooking. The proprietor of a small oyster restaurant in the ‘Nan Shui’ Guangdong Province along the South Sea Coast of China, Lee Kum Sheung invented the sauce by putting on a pot of oysters to cook and then simply forgetting they were there. Returning much later to the pot and noticing his mistake, he took a spoonful of the thick, potent-smelling paste that the oysters had boiled down into, and noticed that the results weren’t that bad. Lee started making more of his happy mistake, selling it in ceramic jars, and it quickly caught on as a staple flavouring for simple Chinese foods, later becoming ubiquitous throughout China and today, the world. There are many brands of oyster sauce now, but Lee Kum Kee is the largest. “Wherever there are Chinese, there are Lee Kum Kee products”, says the family.

The firm sells several types of oyster sauce, soy sauce, chilli sauces and a range of products reflecting cuisine across different Chinese provinces. Lee Kum Kee has launched several versions of oyster sauce over the years that have each boosted its brand and popularity. The 1972 launch of Panda Oyster Sauce capitalised on Chairman Mao’s gift of a pair of the cuddly-looking creatures to Richard Nixon, in his efforts to secure diplomatic relations with the US over the annexing of Taiwan. The 1992 launch of XO Sauce, a premium brand marketed to resemble the Cognac grade XO, considered very chic in Hong Kong, is Googleable to the tune of 267,000 entries.

The Lee Kum Kee brand is trusted enough to have clinched a prestigious deal in 2005 with Disney, surely among the most risk-averse of firms, as the official sponsor of Disneyland Hong Kong. Mandated to create a wide-ranging menu of Chinese and international-fusion foods palatable for local and foreign visitors to the park, the deal looks heaven sent for a firm whose mission rests on the concept of bridging world cultures through Chinese food.

But the concern surrounding soy sauce products and chloropropanols remains pertinent for Lee Kum Kee and its peers. The chemical is said to pose a problem when soy beans are fermented by industrial processes, known to allow the naturally-occurring bacteria to enter the food chain, rather than by natural fermentation, deemed to eliminate this issue – but at a far greater cost and much slower production time. As demand for products moves skyward, competition forces businesses to be ever more time and money-efficient, and food industry regulators move the goalposts with abandon, running Lee Kum Kee is an expensive matter. And the Lee family can never take their eyes off the ball.

So far, though, they’ve managed not to. Like so many other companies, Lee Kum Kee pays a lot of lip service to striving for excellence. But one can’t argue with the firm’s long list of awards, many of which recognise long-standing efforts in quality control and the Lee family’s management clout. In 1995, the firm became Hong Kong’s first to gain ISO 9002 accreditation from the Hong Kong Quality Assurance Agency and British Standards Institution, achieving ISO certification upgrades in 2003 in Hong Kong and the US; in 1998 the company received accreditation from the prestigious American Institute of Baking. The Federation of Hong Kong awarded Q-Mark licenses, the equivalent of ISO, to four of Lee Kum Kee’s sauces in 2004 and 2005. Various gongs recognising the potency of Lee Kum Kee’s brand in Asia and the rest of the world have been thrown their way too, not least the 2002 Yahoo! Emotive Brand award for the names Hong Kong consumers most associate with cosy childhood memories.

Having taken good care of the business, the Lee family is now focused on the common element running through all its achievements – itself – and strengthening it in any way possible to lead the company through its next 118 years.

Regular family retreats are booked to encourage open discussion of problems and foster a strong meritocracy. These provide the best opportunity for Lee elders to spend time with the younger generation. “We have another family retreat coming up shortly. When we’re there I’ll ask my father to tell stories to the children about the hardships he has experienced in his time. A company this old always has stories of people making sacrifices and we shouldn’t waste our past. My dad is also learning from us too, understanding how we do things, and we’re all coming up with ideas. But there are certain principles that just hold true and my dad can tell the children about that.” When asked to name a couple of leaders he admires, it’s his dad, Lee Man Tat, who provides the inspiration. “He’s so open minded,” Lee says warmly. “And at 77 years old he has a passion for this family and our business that I’m totally moved by. He has so much energy and I have to admit, I don’t think this company would be here now without him. I know he dreams about the company every night. We can all learn from that. But I know our children won’t, and can’t, be exactly like him because, they’re from a different era.”

Reorganising the family in preparation for a generational shift has been refreshing, says David, but challenging for everyone concerned. The family council and a new structure is in place, giving the children different options. A two-year rotation of family members and executive positions is in force to provide variety and ensure everyone is prepared to handle the different aspects of the business. A shiny new family constitution decrees that the fifth generation must complete 3-5 years’ employment outside the business, and have at least one promotion to show for it, before they join. The IMD has been fully briefed. Now all that is left is simply for the passage of time to do its thing.

“We’ve so many new rules and regulations for the next generation now, if they want to enter the business,” Lee says. “I’ve already noticed their different strengths, but we shouldn’t start grooming them unless they show a genuine passion for our business.”

Financial Director: the end of quarterly reporting?

I wrote this article for Financial Director‘s December 2011 issue – as always, 800 words was about half what I could actually have written. It took four days of chasing down the office of the EC commissioner for internal market and services, Michel Barnier, before I finally managed to collar his spokesperson to check the facts against the leaked document on which the story was predicated.

No Quarter Given

As crisis-inspired soul searching goes on, many fundamental planks of the governance landscape have been meditated on and yet more chapters of fresh regulation have sprung forth.

But there is one — modest – proposal on the table that finance directors might be thankful for. A draft directive from the European Commission (EC), seen by Financial Director, points to the Commission amending the 2007 Transparency Directive by removing the requirement for listed companies of any size to publish quarterly and interim management statements (IMS). Aimed at easing access for SMEs to regulated European markets, the EC believes the cost of putting quarterlies and interims together outweighs the value of these reports, and that reporting at the year-end and the half-year is sufficient to protect investors.

After mulling a separate disclosure regime for SMEs, the EC’s policy option is to abolish both requirements for all issuers, from the FTSE-100 to fledgling quoted companies. It will allow companies to voluntarily continue issuing IMSs “if there is strong demand from investors” and, according to the draft, the European Securities and Markets Authority will issue guidelines to specify what information should be included.

In any case, SME compliance is less than perfect. A 2009 Financial Services Authority study revealed around 5% of issuers failed to produce an IMS the first time it became a requirement, while companies in the FTSE Fledgling Index were the worst performers by market capitalisation, with just under 90% failing to file any IMSs at all.

That could be due to regulatory fatigue. Some think the pressure to do so produces superfluous reporting. “We see a lot of IMSs simply restating previously issued information, just because companies have to issue something,” James Godwin, head of regulation at junior stockmarket Plus tells Financial Director.

Chantal Hughes, spokesperson for EC commissioner for internal market and services Michel Barnier, confirmed that the commissioner hopes to make legislative recommendations on them early this November. Regulatory sources in the UK believe the draft accurately reflects what will become legislation.

In the UK, there are two clear camps of opinion over the change. While regulators and exchanges believe it is the wrong way to go, finance directors are gladdened to see someone removing a task of questionable value from their to-do lists.

Pim Vervaat, group FD at FTSE-250 plastic packaging manufacturer RPC, is happy to see the end of quarterly reports – although RPC just issues interims – and sees no argument in the cost to sub-FTSE-100 businesses.

“It is good to end the requirement. We keep our IMS relatively short; there is no extensive cost or effort involved,” he tells Financial Director. “I would have to sound out shareholders as to what their views would be if we discontinued the IMS, but I suspect they quite like a quarterly update.”

The FSA believes quarterlies and IMSs should remain in place as useful tools to control short-termism and maximise investor protection, citing a number of occasions when the publication of IMSs instigated “significant” share price movements. “They do have an impact on the market and thus investors’ decisions,” it says. “[The IMS] also serves an important role in reminding issuers of their obligation to provide regular information to investors. Similarly, the London Stock Exchange does not think the administrative cost is ‘a determining factor’ for SMEs accessing regulated European markets.”

Those speaking for the listed SME community agree those arguments are overdone – and that conversely, smaller businesses are actually the most in need of updating their investors more regularly.

“The smaller the company, the greater the perceived threat to investor protection, so regular information inbetween year-end and half-year is helpful. It is useful to know when something price-sensitive is happening; in the case of SMEs, that could be something as small as a conversation with a supplier,” says Godwin. “The prospects of small companies can change overnight and there is a danger of investors investing on the wrong terms if they don’t have access to that regular information anymore.”

As an Aim-listed business, Godwin says Plus is not required to issue either, but made the choice to publish IMSs in the fourth and 10th months of its financial year. He does not see any savings for SMEs in ending the requirements.

While Matthew Howes, a principal at The FD Centre, believes quarterlies and interims put “considerable” burden on smaller businesses, he suggests continuing as an internal exercise, rather than for publishable investor information.

“From an investor’s perspective, full reporting every quarter adds little firm information, so it’s a good thing to scrap it. It won’t affect governance,” Howes says.

“I don’t recommend using it for investor information. But detailed quarterly reporting is useful as an internal management tool, for looking at a broader strategic horizon. In that sense, it aids governance.”