Sunday, May 15, 2022

What Can Small Beast Teach Us?

 

The last two weeks have been good for one of the most covid-affected parts of business – networking. My current employer, who is a sponsor and honorary auditor of the Irish Chamber of Commerce in Singapore, sent me for two functions in the last two weeks.

It was great fun to be able to “press the flesh” and meet new friends. As with all functions, it was good to be able to eat, drink and be merry.

 


 Taken from the Irish Chamber of Commerce Linkedin Page

On the personal front, it was good to be able to attend functions. However, what really struck me about these events was the fact that gave me a hope that there is an emerging global trend – namely the coming together of smaller nations to work together for common prosperity.

The first event I attended was a cooperation between the Belgium-Luxemburg Chamber of Commerce, the Irish Chamber of Commerce and the Finish Business Council. The second event was a collaboration between the New Zealand and Irish Chambers. The one feature that every country mentioned here cannot be described in any shape or form as a “power” but have somehow managed to become prosperous and pleasant places.

I mention this because at the time of writing, there’s been plenty talk about the revival of superpower rivalries. We have the example of the Russian conflict in Ukraine, which has the revival of the “West” lead by the USA moving to contain Russia, which from a European perspective was “East.” In the economic sphere, it’s West, represented by the USA and Australia against China, which is as “East” as it gets.

If you were to look at the geopolitical world as a jungle, you could say that you had elephants in the shape of the USA and China and to an extent India.

Then we have the hippos, which are the larger regional economies like Germany, France and the UK on the European continent and Japan and South Korea in Asia and Australia. Russia is seen as the bear, which goes to try to show that its cute but is in fact quite vicious.

As can be seen in nature documentaries, everyone gets out of the way when the larger animals fight because the damage in between can be extensive.

https://www.youtube.com/watch?v=u7JF5tuBEIE

 


 When these two giants charge against each other – everything between gets crushed

However, in the geopolitical jungle, its never a case of two giants colliding. The elephants of the geopolitical jungle have a way of bringing their other allies into the conflict. If you look at the current conflict in Ukraine as an example, you have the American Elephant with a few European hippos trying taking on the Russian bear along with its Belarussian mini-me.

So, what do the smaller beast do when the elephants and hippos charge at each other? One of the answers may be to adapt the “insect strategy” and learn to work with partners of a similar size.

The Republic of Ireland is an example. When I was growing up in the UK in the late 80s and 90s, the Irish existed to be the butt of jokes like what’s 50 metres long and has an IQ of 50 – the answer being 50 Irishmen lining up for the bus.

However, when I returned to the UK in 1997 for university, the joke was on the British. Ireland joined the EU and became the “Celtic Tiger,” attracting high tech investment. People who had fled Dublin for London suddenly ran back to Dublin because there was simple more action there. While the Irish economy went into recession and has lost some sparkle, the Republic of Ireland is a developed country enjoying high standards of living by many measures. When Ireland first proclaimed Independence in April 1916, its largest export was effectively starving masses and the only noteworthy product was Guineas. Today, the largest export is computer services and Ireland is home to many pharmaceutical companies.

https://www.lawsociety.ie/gazette/top-stories/2021/12-december/computer-services-remain-irelands-largest-export

Change hasn’t been confined to economics. Ireland is famously Catholic and conservative. It is ethnically homogenous with 92 percent of the population classified as White. Yet, in 2017, the Irish elected an openly gay man of Indian origin to be Prime Minister and that was prior to having two ladies as President. Neither the US or UK have elected a gay person to the top job and in Singapore, which is only 74 percent plus Chinese, we still argue that we’re not ready to have a prime minister from outside the ethnic majority, even if we claim that we succeed because we are “regardless of race or religion.”

What happened? Well, unlike their British cousins across the Irish Sea, the Irish didn’t make too much of trying to have a say in EU politics. Instead, they focused on trade within the union. They kept taxes attractive low enough to attract investment from Europe and the USA and Ireland opened itself to the world. Sure, the UK remains Ireland’s largest trading partner but Ireland is no longer the sore thumb of the UK. It small and friendly but at the same time works within the EU. The logic is simple – invest in Ireland and you have access to a much larger market.

Another small nation worth studying is New Zealand, which is effectively a boot on the corner of the globe. Unlike Australia, nobody thinks of New Zealand unless it comes to rugby (All Blacks) and Lord of the Rings scenery. However, New Zealand is a prosperous place (52nd largest economy in the world or 32nd if you look at the per capita figures).

What’s more interesting is the fact that unlike Ireland and the Asian Tigers, New Zealand is not a “sexy high-tech” economy. The largest export of New Zealand is milk. So, how does a country of only five million plus tucked away in the corner of the world build prosperity (In the words of the General Manager of Fonterra’s South and East Asian operation “New Zealand is not advantaged in terms of geography when it comes to world trade)?

If Ireland is an example of why one should open up to the world, New Zealand is many ways the living example of – it’s not what you have but what you do with it that counts. New Zealand does not need to be the master of everything but in the area where it is dominant, it is in a league of its own.

Take the All Blacks, New Zealand’s dominating rugby team. The statistics speak for themselves. The All Blacks have a 75 percent winning record against all their major competitors, making them the most successful sports team in any sport. If you study the All Blacks, you’ll notice how New Zealand makes the most of what it has.

Likewise, there’s the export of milk, where New Zealand is to milk what Kuwait is to oil. One of its most interesting enterprises is Fonterra. Like the New Zealand RugbyFootball Union, Fonterra is an example of how New Zealand’s limited resources are brought together in the most effective manner. What is particularly interesting is the fact that Fonterra is not a corporation but a farmer’s cooperative, which brings together New Zealand’s multitude of dairy farmers to work together.

The big beast of the geopolitical jungle will always dominate in the sense that they have the size and economies of scale. However, small nations need not be caught up in the struggles between the larger nations and maintain a sense of independence. The insect strategy of working together and using what you have to maximum effect is one that many small nations need to look at.

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Maira Gall