SME MY October 2020

OCTOBER 2020 MALAYSIA EDITION CUSTOMER EXPERIENCE - THE NEW MARKETING 10 OCTOBER 2020
MALAYSIA
EDITION
RM 5

TADASHI YANAI: GOING INTERNATIONAL:
DEMOCRATISING UNIQUE FASHION THINGS TO CONSIDER



CONTENTS16 OCTOBER 2020

IN SME MAGAZINE THIS MONTH

16 30
CUSTOMER EXPERIENCE: GOING
THE NEW MARKETING INTERNATIONAL

Marketing and customer service are Expanding overseas is one of
not separate entities anymore, but the big goals for many SMEs.
part of a whole customer journey. But how can this be done
But what makes a good customer properly, without sinking in
experience? time and costs?

26 AND MORE…
TADASHI YANAI:
DEMOCRATISING
UNIQUE FASHION

26

22
THE CHANGING
AUTINODMUOSTTIRVYE

OCTOBER 2020

60 46

REGULARS
04 NEWS
12 IDEAS BAR
14 STARTUP GUIDE
16 COVER STORY
22 INDUSTRY
26 PERSONALITY
30 FEATURE
38 FRANCHISE
40 TRADE
46 TECHNOLOGY
50 COLUMN
58 BUSINESS TRAVEL
60 LIFESTYLE
58 63 SUBSCRIPTION
64 PERSPECTIVE

GROUP PUBLISHER / EDITOR-IN-CHIEF Dato’ William Ng
EDITORIAL Editor-at-Large Jennifer Lee Associate Editor (Indonesia) Tony Kusuma Assistant Editor (Singapore) Kevin Tan
Assistant Editor (Malaysia) Ong Xiang Hong [email protected] Writer Jordan Low [email protected]
MARKETING + BUSINESS DEVELOPMENT Operations Director Dato’ Ryan Ooi [email protected] Associate Publisher Rozita Shuib [email protected]
Assistant General Manager Tan Yong Keat [email protected] Head of Marketing Jason Ong [email protected]

Administrator (Indonesia) Nurasiah Jamil [email protected]
ADVERTISING SALES Senior Account Manager (Malaysia) Eleen Wong [email protected] Account Manager (Singapore) Candice Lee [email protected]

Account Manager (Indonesia) Richard Sugiarto [email protected]
SPECIAL PROJECTS Senior Project Managers Daniel Loo, Sam Hew Project Managers Ivy H’ng Assistant Project Managers Ivan Kong, Jansen Chan, Jason Ooi, Jay Wu

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Senior Accounts Executive Carmen Foo Accounts Executive Choh Li Pin

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4 NEWS

DIGITALLY MATURE SMEs COULD ADD BILLIONS TO INDONESIA’S GDP

I ndonesian’s SMEs could potentially contribute an additional digitally mature SMEs have the potential to enjoy up to a 16 percent
US$164 billion to the country’s GDP in 2024 if they are able to increase in revenue and a 14 percent increase in productivity, allowing for
become more digitally mature, stated a recent study. According greater contribution to Indonesia’s national economy. Indonesia’s economy
to the 2020 Asia Pacific Small Medium Business Digital Maturity Study by is heavily reliant on SMEs, who account for more than 60 percent of the
technology company Cisco and International Data Corporation (IDC), nation’s GDP and employ the vast majority of the workforce.

PMEANTERTARDAETEHGELLPOSBAOLVMERA1R3K,8E0T0 COMPANIES

T he Malaysia External Trade Development Corporation
(MATRADE) has helped 13,813 local companies
penetrate the global market during the 2015-2019 period
through 466 export promotion activities and exporter development
programmes. Deputy International Trade and Industry Minister,
Datuk Lim Ban Hong said MATRADE also promoted 337
Malaysian brands from various sectors during the period. Datuk
Lim said among MATRADE's initiatives in helping local businesses
enter the global market include holding a Mid-Tier Companies
Development Programme in collaboration with consulting firms
that provide advisory services related to export affairs to the
programme participants.

E-COMMERCE USERS IN ASEAN SURPASSES 2025 TARGET

T he COVID-19 pandemic has become a catalyst for the
ASEAN market to adopt e-commerce earlier than
forecasted. Chief Operating Officer of Malaysia Digital
Economy Corporation (MDEC), Datuk Ng Wan Peng said prior to
the pandemic, MDEC forecasted ASEAN e-commerce users to
reach 310 million by 2025. “COVID-19 has prompted more people
to go online and now the number has reached 340 million,” she
said. Datuk Ng said the number of e-commerce users in ASEAN
which had surpassed the 2023 target showed there was a lot of
potential in the market. “When more go online that means
businesses can sustain as well as keep jobs for those in the logistics
and delivery industry,” she said.

5

“BUY MALAYSIA” CAMPAIGN KICKS-OFF AS A TIMELY BOOST TO ECONOMY

T he Malaysian government’s efforts to intensify the Buy one to stimulate and boost domestic economic growth. The ultimate
Malaysian Products Campaign this year is timely, goal is to raise the awareness of consumers regarding the existence
considering the current economic situation which has of local products and encouraging their purchase over foreign
been affected by the COVID-19 pandemic. Domestic Trade and imports. With the campaign putting focus on local products and
Consumer Affairs Ministry (KPDNHEP) secretary-general Datuk businesses, it also paves the way towards helping local
Seri Hasnol Zam Zam Ahmad said that the move was a necessary entrepreneurs, especially SMEs in developing their businesses.

MALAYSIAN COMPANIES TO BENEFIT FROM TAIWANESE VISUAL DESIGN EXPERTS

T aiwan Design Research Institute (TDRI) was honoured to across the country, reaching a wider audience through social media
play host to the Taiwan x Malaysia Business Matching despite the pandemic setbacks. This year also marks the second time
Session – a continued effort by TDRI to bridge the TDRI has initiated the Taiwan x Malaysia Business Cooperation in
communication gap between businesses and design. Held online this collaboration with Malaysia’s homegrown and award-winning design
time around, the business matching gathered applications from all agency, Tsubaki Studio.

6 NEWS

JAPAN'S SUGA VOWS TO PUT GROWTH AHEAD OF FISCAL REFORM

Y oshihide Suga, on course to become Japan's next prime necessary for social welfare, national security and fiscal reform," Suga told
minister, said he would maintain incumbent premier Shinzo a debate hosted by the ruling party on Wednesday. "We must first revive
Abe's policy prioritising economic growth over efforts to fix the economy, because only then can we push through fiscal reform." The
the country's tattered finances. Suga, Japan's chief cabinet secretary, also remarks reinforce market expectations that an administration led by Suga
said he would continue to focus on revitalising regional economies, which will not trigger big changes to the pro-growth economic policies Shinzo
he described as among key pillars of "Abenomics". "A strong economy is Abe championed during his nearly eight-year stint as prime minister.

COVID-19 ACCELERATES INDIA’S HYPERLOCAL ECONOMY

T he COVID-19 pandemic has entirely changed the markets everyone from consumers to companies are keen to adopt hyperlocal
and the way businesses operate their business. Throughout channels for survival. India in particular is one nation which has seen a
the world, we have seen the entire retail paradigm shift from huge rise in the reliance on the hyperlocal market. With consumer
megamalls, shopping strips, and brick & mortar to e-commerce and behaviours being shaped by the COVID-19 pandemic, Indian consumers
hyperlocal economical units. As the economy was in freefall during have been gravitating to their pet local stores due to the trust that has
lockdowns, businesses started relying on e-commerce and on locally been built up over years. The hyperlocal model hence became the most
available produce and resources to replenish demand. As a result, relevant in the current health scenario.

7

ARE SMEs UP FOR A NEW ENERGY CHALLENGE?

E nterprise Singapore (ESG) has recently launch its inaugural sustainability, and workflow. ESG has stated that shortlisted SMEs and
Energy Open Innovation Challenge (EOIC) 2020, in startups will have the opportunity to cooperate and collaborate directly
partnership with a multitude of energy companies such as with the four energy companies in order to develop, refine, and test their
Chevron, ConocoPhillips, ExxonMobil, and Shell. This challenge seeks to solutions both in Singapore as well as globally. In order to help with the
engage with both SMEs and startups. The EOIC is calling for these SMEs development of these solutions, ESG will be offering eligible SMEs and
and startups to provide innovative and revolutionary ideas that address 19 startups with up to S$1 million in grant support so they can build their
challenge statements spanning areas such as asset management, robotics, track record, scale the business and create good jobs.

AON ANNOUNCES SINGAPORE COALITION TO HELP MOVE THE ECONOMY FORWARD

A on plc leading global professional services firm providing a which recently held its virtual kickoff meeting, consists of key employers
broad range of risk, retirement and health solutions, today from a broad set of sectors focused on re-introducing fundamental aspects
announced the formation of a coalition of leading Singapore of society and the economy: working, traveling and convening. These top
companies to strengthen communities and move toward societal and Singapore organisations will collaborate to outline a set of guidelines for
economic recovery in the wake of the COVID-19 pandemic. The coalition, businesses and communities to help restart the economy safely.

8 NEWS

TAIWAN’S OPHTHALMOLOGY INDUSTRY ANTICIPATES POSITIVE FUTURE

T Taiwan is well-known for its highly effective COVID-19 response (TAITRA), Taiwan’s foremost trade promotion organization, stated that
and is now ranked among the top countries for its quick Taiwan’s ophthalmology industry which accounts for 0.3 percent of global
recovery. Taiwan’s medical proficiency in ICT technology has sales has great potential. Taiwan has the most outstanding performance in
created a significant advantage in the ophthalmology industry. Mr. Walter contact lens industry. The export ratio of this “invisible champion” is about
Yeh, President & CEO of the Taiwan External Trade Development Council 75 percent, accounting for global sales of 1.53 percent.

STAMP DUTY EXEMPTIONS FOR M&AS AMONG SMEs

M alaysia’s government is providing a stamp duty exemption
to Malaysian-owned SMEs for merger and acquisition
(M&A) activities, aimed at building up the capacity of
local companies and supporting SMEs who have been affected by
the current economic landscape. This new incentive is an effort by
the Ministry of Entrepreneur Development and Cooperatives
(MEDAC) through SME Corp Malaysia, in collaboration with the
Inland Revenue Board of Malaysia and the Companies Commission
of Malaysia. Catering to Malaysian-owned SMEs in all sectors,
MEDAC Minister Datuk Seri Wan Junaidi Tuanku Jaafar said
incentive was created to help build the capacity of local companies
and encourage mergers among SMEs to form new companies or the
acquisition of SMEs by other SMEs to become bigger business
entities, both by way of legal instruments and contracts.

BPI-PHILGUARANTEE PARTNERSHIP FORESEES MORE SME LENDING

B ank of the Philippine Islands (BPI) and its microfinance arm,
BPI Direct Banko, Inc. foresee an increase in lending to
micro-entrepreneurs and SMEs, after the two signed a
partnership deal with Philippine Guarantee Corp. (Philguarantee) on 5
August 2020. This made BPI the first bank to sign with Philguarantee.
Under the agreement, government-owned Philguarantee, who offers
credit guarantee programs, will grant BPI a combined guarantee of
P6.5 billion (approx. US$134m) for new and additional loans to micro
entrepreneurs and SMEs who need assistance amid the COVID-19
pandemic. This program has Philguarantee covering 50 percent of the
new loans to be used as working capital by eligible SMEs.

9

STAYCATIONS GALORE FOR SINGAPOREANS THIS DECEMBER

I t has been announced that Singaporeans who are aged 18 and December and can be used to offset ticket purchases and hotel stays until
above this year will each receive S$100 in digital vouchers to the end of June next year. Permanent residents will not be eligible for the
spend on staycations, tickets to leisure attractions, and local vouchers. Adult Singaporeans will also be able to purchase up to six
tours in order to help stimulate the local tourist industry. The subsidised tickets for attractions and tours. These tickets will be discounted
SingapoRediscovers Vouchers will be accessible via SingPass from by up to S$10 for those under 18 from December to the end of June 2021.

VIETNAM’S SMEs TO BENEFIT FROM ALIBABA.COM’S OVERSEAS INITIATIVE

A libaba Group’s B2B e-commerce platform, Alibaba.com, has through digitisation amid the re-surfacing COVID-19 epidemic in
recently launched a new initiative that seeks to help companies Vietnam. The new initiative seeks to support Vietnamese SMEs in several
in Vietnam to go online and reach brand new pools of global key areas. These include faster onboarding onto Alibaba.com’s platform
buyers. As an international extension of the 2020 Spring Thunder in order to gain access to greater global reach, gaining access to digital
program initiated by Alibaba Group, Alibaba.com’s ‘Project Sprout Up’ is solutions aimed at accelerating business growth, and personalised services
a timely and tailored digital solution aimed at helping local SMEs compete to help SMEs develop their online trade capabilities.

10 NEWS

JAPAN’S ‘FLYING CAR’ TAKES OFF WITH A PERSON ON BOARD

J apanese company SkyDrive, among the many “flying helicopters, evtol (electric vertical takeoff and landing) vehicles offer
car” projects around the world, has carried out a quick point-to-point personal travel, at least in principle. They could
successful test flight with one person on board. In a do away with the hassle of airports and traffic jams and the cost of
video shown to reporters, a contraption that looked like a hiring pilots. Battery sizes, air traffic control and other
motorcycle with propellers lifted several feet off the ground, and infrastructure issues are among the many potential challenges to
hovered in a netted area for four minutes. Unlike aeroplanes and commercialising them.

COVID-19 SPURS DIGITAL SHIFTS THROUGHOUT ASIA

E ven the most stubborn and traditional businesses are Even before the outbreak of the coronavirus, Japan had been
being forced to consider their digital options as struggling with a distinct shortage of information technology
COVID-19 continues to turn the global economy on its professionals. This is in part due to low wages within the industry
head. Companies in Japan and Singapore in particular are looking as well as a comparatively slow uptake on digital transformation.
to beef up their digital talent as they move their operations online. COVID-19 has forced businesses to work harder on the problem.

11

AMAZON STEPS-UP SUPPORT FOR EMBATTLED SMEs

I n 2020, Amazon has been one of many large (DRB) administered by the Infocomm Media Development
corporations who have provided support to thousands Authority (IMDA). In addition, as part of Amazon's continued
of local retailers and helped many of them to build global commitment to support SMEs during COVID-19, Amazon
thriving businesses by selling on their Amazon.sg; and is keen to do announced that it will invest US$18 billion to help SMEs
more. Now, local retailers selling on Amazon.sg who meet the worldwide sell to customers, including investments in logistics,
eligibility criteria can also receive the Digital Resilience Bonus tools, services, programs, and people.

CHINA’S ECONOMY IS MAKING A COMEBACK ALBEIT UNEVENLY

C hina was able to begin its economic recovery process fairly managing director at Hong Kong-headquartered BOCOM International,
early compared to other nations. This recovery trend has part of China’s Bank of Communications. Unfortunately, recovery is
continued into the second half of 2020, albeit unevenly. Said slower in lower-tier cities where SMEs play a larger role. Hong states that
recovery is being helped along by a combination of modestly loose the SMEs of China are facing a situation that is no different from the rest
monetary policy, financial industry growth, and improved customer of the world; with smaller businesses struggling to secure bank credits
demand in wealthier, high-tier cities, said Hao Hong, head of research and despite looser restrictions and government assistance.

12 IDEAS BAR

BY
JORDAN

LOW

KOBO NIA EREADER

E ven dedicated e-readers can get rather pricey. Despite that, popularity for such products are increasing due to people being
stuck at home because of COVID-19. The Kobo Nia eReader is a new technology solution for avid readers that will enable
them to enjoy their favourite books from anywhere thanks to a compact, travel-friendly and low-cost design. Weighing in at
just 172 grams, the device offers 8GB of storage to allow users to bring large volumes of reading material with them
wherever they go.
TECHKLO SELF-CLEANING LITTER BOX
C ats are great companions for busy
workers who can’t spend much time at
home. The 'TechKlo' self-cleaning litter
box is an automated piece of equipment
for cat owners that will enable them to
keep their living space clean and free from unwanted
odors without the need to perform any manual work.
The unit acts as a self-contained system for cats that
will offer them a dedicate place to do their business,
while also working to keep waste out of the way. Its
automated systems can be set on a schedule or
prompted on demand to scoop out waster and store
it in a sealed section for easy disposal.

DEL CLEAN UVC DISINFECTOR

T he DEL Clean UVC
Disinfector is an enterprise-
ready appliance that will
provide hospitals and
businesses alike with a way to
keep common surfaces completely free of bacteria.
The large handheld device works by being activated and
will start to bathe surfaces in UVC light in order to eradicate
99.9 percent of the dangerous pathogens that could be lurking.
The 28-inch wand allows for entire workstations, equipment and
technology to be sanitised in a matter of seconds, and is an effective
alternative to chemical cleaners in a post-COVID-19 world.

13

ROBOTIC EXOSKELETONS

T he future is fast approaching and German Bionic is
proof of that. The technology company recently
revealed the fourth iteration of its Cray x Exoskeleton,
which has been designed for industrial workers. The
new unit can offset the users by over 27 kilograms,
which was made possible by using carbon-fibre materials in the new
design. The new design is powered by two high-performance servo
motors, which can run for eight hours on one charge. In the future,
products such as these can help alleviate issues with physically
demanding jobs while also protecting the long-term health of workers.

DECENTRALISED CYBERSECURITY

A n alternative approach to centralised
cybersecurity, proponents of
decentralisation argue that highly
centralised solutions are fragile and
extremely susceptible to environmental
changes. Arguably, the more players involved, the more
robust a security system can be built; a configuration that
is absent in a centralised system. Another virtue of
decentralised cybersecurity is that it increases the number
of points of failure. While this might seem ominous, it
really means that attackers are forced to compromise
more components and functions in order to penetrate a
system. Companies can also consider a mix of centralised
and decentralised systems to ensure security.

ARLO ESSENTIAL SPOTLIGHT

rlo Technologies is an industry leader in connected cameras, and the new product continues this direction. The Essential

A Spotlight Camera can film an area in1080p HD video. The unit also features two-way audio, night vision, as well as
motion detection alerts. Tejas Shah, the SVP product and chief information officer for Arlo Technologies, spoke about
the new unit, "The Essential Spotlight Camera fits in anywhere, and can be coupled with Arlo's Smart AI computer
vision technology which filters unnecessary alerts and also works with other Arlo cameras, doorbells and Floodlight to
create the perfect security solution."

14 START-UP GUIDE I nvestors have seen the with track records of success. The trends
future when it comes to guiding investment in 2020 are go electric, go
BY the almighty car, and it autonomous, or go ride-hailing.
ONG XIANG revolves around
electrification, Ride-hailing companies account for
HONG driverless vehicles, and the top five among the list of highly funded
ride-hailing. startups globally — Uber and Lyft in the US,
For about a decade, Didi in China, Grab in Singapore, and Ola
investors have been pouring an increasing in India — with US$63.2 billion in startup
amount of money into automotive startups. funding cumulatively. Of that, US$47.6 billion
In 2018, these investments totalled US$27.5 is divided between the three behemoths in the
billion. That is 30 percent higher than the space — Uber, Didi, and Grab.
previous year, but twice the level of 2015 and
20 times that of 2010, according to consulting And while the timeline for deploying fully
firm Oliver Wyman. autonomous vehicles keeps getting readjusted,
As revolutionary automotive technologies that hasn't slowed growth in the automotive
move closer to mass commercialization, startup ecosystem. Companies are still
investors are becoming more selective, often working toward the goal of level 5 autonomy,
funnelling investment dollars to startups while many others are tackling challenges
around electric vehicles, cybersecurity,
processor hardware, and other pain points in

the automotive industry. Operating System (AVOS), an innovation based on the principle of flexibility, is capable of
Though many of the startups configuring multiple sensors, such as cameras, LiDAR and radar, and sensor fusion. It combines
deep learning with rule-based decision-making algorithms, providing safe and comfortable control
represent a challenge to legacy modules for braking, steering, and other systems.
automakers, they are also crucial to the
automotive industry as they represent Currently, the company offers Woxiaobai, an autonomous sweeper robot that sprays roads
a bridge to the next generation of and walkways, and Wobida, a delivery rover that can carry up to 220 pounds at a time. To date,
mobility. As a result, some automakers the company claims its autonomous vehicles have logged over 1.2 million miles combined in
are among those purchasing direct Malaysia, Singapore, Dubai, Germany, the US, Japan, and Russia for customers including BAIC,
stakes in startups. SAIC, and Dongfeng.

Other car companies have chosen CUTTING INEFFICIENCIES IN THE AUTO MARKET
to forge strategic relationships that will
help support these nascent businesses Aside from the glamour of self-driving cars, there is also a space for transforming car dealerships.
and guide the development of their Traditionally, buying a car was mostly an offline affair – and it still is.
innovative technologies. Ultimately, as
investors become choosier and flock But some startups are moving the dealership online. Indonesia-based Mobilkamu is one of
to the biggest, most commercially them. It works closely with new car showrooms throughout Jakarta to ensure that its customers
viable startups, car companies and are provided with the best solution to their needs when buying their dream car.
global technology giants may end
up buying outright enterprises with Through proprietary technology, Mobilkamu has introduced a seamless experience in buying
promising technologies still far from a new car by removing the need for end consumers to interact with too many parties. This also
commercialization to ensure they have creates high values for car sales agents, financing companies, and car dealerships to operate more
sufficient funding to eventually move efficiently thus making the price more affordable.
into the mass market.
To date, Mobilkamu has established partnerships with over 80 car dealers across Jakarta, as
SAFER ROADS USING AI well as a diverse range of financial partners, such as Bussan Auto Finance, BCA Finance, Mega
Auto Finance, Mandiri Tunas Finance, and Bank Jasa Jakarta.
Dubai-based Derq built a platform
powered by AI and predictive analytics DERQ IDRIVERPLUS MOBILKAMU
helping eliminate crashes, save lives,
and create safer and smarter roadways. C EO Georges C EO Zhang F ounded by
With a unified view of all road users, Aoude is an Dezhao is a Wilton
the AI can predict their movement MIT grad PhD and Halim,
24/7, leveraging inputs from existing with a PhD post-doctoral Mobilkamu
infrastructure and existing or easily and a master's degree researcher at Tsinghua was designed to solve a
deployable cameras and other sensors. in aerospace engineer- University, where he has problem in Indonesia’s
ing. While doing his also mentored in the new car market, where
A real-time analytics platform PhD in autonomous areas of innovation and the only option for
feeds a live dashboard available to vehicles (not just cars, entrepreneurship. He was customers buying a
road owners and operators and sends but also satellites and a major drafter of national new car is to go directly
alerts to connected (incl. autonomous) drones) he worked on standards for intelligent from dealer to dealer to
vehicles and infrastructure through developing technology automobiles and the find the best deal.
vehicle-to-everything (V2X) technology. to make roads safer Development Roadmap of Furthermore, they also
and smarter. "There Intelligent and Connected faced difficulties in
For example, Derq's technology was a clear gap in the Vehicles in China before sourcing financing
can use roadside cameras to detect if market," said Aoude. setting up Idriverplus. options.
a driver is approaching a jaywalker.
It will then send audible and visual
alerts to the driver to warn them of the
danger. The system can also spot bad
drivers. Roadside cameras or radars
can track every car approaching an
intersection, and Derq's AI can predict
their trajectories – so if a car is about
to run a red light, Derq's software can
warn other motorists.

THE HOLY GRAIL OF MOTORING

A long list of companies, backed by
institutions around the globe are
currently in a race for the holy grail of
motoring – fully autonomous vehicles.

Idriverplus, founded in 2015,
is one of them. It is deeply involved
in developing a “brain” that allows
vehicles to be self-driving. It is one of
the few Chinese domestic companies
providing multi-functional solutions for
autonomous driving systems.

The company’s Automated Vehicle

16 COVER STORY

BY
ONG XIANG

HONG

17

hen was the last time you had a truly great
customer experience? Chances are, it wouldn’t take
W you long to answer this question. You would
probably recall a story of how an experience with a
company left you happy and satisfied.

Same goes for the reverse – if you’ve had a bad
customer experience, you probably wouldn’t hesitate
to spit out the annoyance and frustration you felt.
Thus it goes without saying that companies
need to maximise good customer experiences
and eliminate bad ones. A positive customer
experience not only results in making your
customer happy, but it can also lead to additional revenue. The best marketing
money can buy is word of mouth – a customer who will promote your business to
friends and family, free of charge.
In fact, negative customer experiences can cause much more damage than you think.
According to a survey conducted by Dimensional Research, 95 percent of respondents
who have had a bad experience said they told someone about it, compared to 87
percent who shared a good experience. Respondents who suffered a bad interaction
were 50 percent more likely to share it on social media than those who had good
experiences (45 percent vs 30 percent) and 52 percent more likely to share it on an
online review site such as Yelp (35 percent vs 23 percent).
Furthermore, bad experiences were more likely to be shared across each of the
social circles identified. Friends or family (in person) were most commonly told, by 81
percent of those with bad experiences and 72 percent with good experiences, followed
by co-workers (in person – 57 percent and 40 percent; respectively).

In short: bad news travels faster than good news.

But of course, review scores are not the end all and be all. Building a culture around
customer experience results in a more profitable organisation, as well as a more
resilient organisation.

BUT WHAT IS CUSTOMER EXPERIENCE?

Put simply, customer experience, or CX is the product of an interaction between an
organization and a customer over the duration of their relationship.

During this interaction, multiple touchpoints factor into CX, and these touchpoints
occur on a cross-functional basis. In terms of CX, these touchpoints are critical
interactions within the customer journey that help define key moments in the process.
Such touchpoints can be as diverse as advertising, to your website, storefront, ordering
system, customer contact centre, and returns process.

Cumulatively, these touchpoints become the customer journey – detailing how
customers engage with your brand across their lifetime.

Understanding this journey is central to mastering CX. You need to see the
customer journey from their perspective. Customers’ progression to each touchpoint
is dictated by your brand, and your brand alone. Customers don’t know or care who in
a company owns the individual experience of billing, onboarding, service calls, and so
forth. From their perspective, these are all part of one and the same journey.

18 COVER STORY

EVERY FUNCTION’S ROLE IN CUSTOMER EXPERIENCE

MARKETING

Capture the tastes and standards of every one of
its targeted market segments, then tailor
all consumer communications
accordingly.

OPERATIONS

Ensure that processes, skills, and
practices are attuned to every

touch point.

19

HUMAN Therefore, mastering
RESOURCES CX means looking at the
customer journey as a
Put together a communications and training whole. Many organisations,
strategy that conveys the economic rationale for whatever reason, fail to
deliver a compelling customer
for CX and paints a picture of how it experience. Sometimes,
will alter work and decision- this can be down to narrow
making processes. thinking – a manager of one
department may be very good
DEVPERLOODPUMCTENT at handling operations, but
fails to connect with other
Design experiences after observing how customers parts of the organisation to
use products and services, learning why they deliver a fuller experience.
use offerings as they do, and figuring Other times, when thinking
out how existing products might about CX, organisations focus
be frustrating them. only on touchpoints, missing
the bigger picture.
SALES
Only by looking at it through
Analyse touch-points in detail, then translate their eyes, along the journeys
present patterns of customer experience and they take, can companies begin
to understand how to improve
issues gleaned from recent transactions the customer experience in a
into action plans that are shared meaningful way.
with customers.
HOW DOES CX CREATE VALUE
FOR MY ORGANISATION?

It is beyond any doubt that
companies reap great rewards
when they create meaningful
CX. Leaders in CX like
Amazon, Apple, and Google
are moving the CX goalposts
– hence customer expectations
have also shifted. They now
expect the same instantaneous
service and satisfaction levels,
even from the most niche
markets and suppliers.

Moreover, according to
research by McKinsey, successful
projects for optimizing the
customer experience typically
achieve revenue growth of 5 to
10 percent and cost reductions
of 15 to 25 percent within just
two or three years. Companies
offering an exceptional customer
experience can exceed the gross
margins of their competitors by
more than 26 percent while they
make their employees happier
and simplify their end-to-end
operations.

The customer journey is a
framework that an organisation
can build itself upon. Employees
across functions can be mobilised
to deliver value to customers,
consistently and in line with its

20 COVER STORY

purpose. The most famous example of phone call, field visit, or other individual service interaction. What was driving them
a shared vision for a customer journey to leave was the customers’ cumulative experience across multiple touchpoints and
is the motto of the Walt Disney over time. Average customer satisfaction fell to almost 40 percent across the entire
Company: “We create happiness by customer journey.
providing the finest in entertainment
for people of all ages, everywhere.” By thinking about CX in a holistic manner, organisations can prevent such
mishaps and increase customer retention rates. Building a big picture of customer
To illustrate this point, Disney’s needs, expectations, and desires during each part of the journey is required – as
customer journey obviously starts well as building an understanding of what is economically feasible and what is
during childhood – think Aladdin, not. Priorities need to be set for the most important gaps and opportunities in an
Beauty and the Beast, or classic Disney organisation’s CX.
characters like Mickey Mouse and
Donald Duck. But as the child grows WHAT MAKES A GOOD CUSTOMER EXPERIENCE?
older, their journey continues with
Disney – entertainment franchises The secret to a good experience isn’t the multiplicity of features on offer. Microsoft’s
like Marvel and ESPN are Disney Windows, which is rich in features, may provide what a corporate IT director
acquisitions. Other Disney touches considers a positive experience, but many home users prefer Apple’s iOS operating
resonate with their motto: park system, which offers fewer features and configuration options. A customer’s
employees are referred to as Cast experience with an Apple device begins well before the purchaser turns it on – in the
Members to reinforce the magic theatre case of the iPhone, perhaps with the minimalist, impactful advertisements.
of Disneyland, while Disney’s Magic
Band makes visiting the park magical When the user finally unboxes the device, the origami-like (and recyclable)
for kids and convenient for adults. packaging enfolds the iPhone as though it were a Fabergé egg made for a czar. A small
sticker, “Designed in California, Made in China,” communicates the message that
Consider also another example Apple is firmly in charge but also interested in keeping costs down. Even Windows
provided by McKinsey. A media users appreciate the device’s intuitive feel and find that navigating the App Store is
company measured customer easier than, say, installing a program on Windows. Every Apple product is designed
satisfaction for years, and its call with the overarching purpose of making the time one spends with Apple an enjoyable
centres, field services, and website experience.
experience consistently scored over
90 percent. Yet many customers were A successful brand shapes customers’ experiences by embedding the fundamental
leaving due to poor service and worse value proposition in offerings’ every feature. For BMW, “the Ultimate Driving
treatment over time. As managers Machine” is much more than a slogan; it informs the company’s manufacturing and
probed further, they found that most design choices. In 2000, Mercedes-Benz introduced a system that automatically
customers weren’t fed up with any one controls the distance between a Mercedes and the car in front. BMW would not
consider developing such a feature unless it amplified rather than diminished the
driving experience.

21

Whether it is a business or a consumer being studied, data about its experiences advertising, packaging, product
are collected at touch points: instances of direct contact either with the product or and service features, ease of use,
service itself or with representations of it by the company or some third party. What and reliability. Yet few of the people
constitutes a meaningful touch point changes over the course of a customer’s life. For responsible for those things have
a young family with limited time and resources, a brief encounter with an insurance given sustained thought to how
broker or financial planner may be adequate. The same sort of experience wouldn’t their separate decisions shape
satisfy a senior with lots of time and a substantial asset base. customer experience. Neither do
they have a unified idea of what
Not all touch points are of equivalent value. Service interactions matter more customer experience means.
when the core offering is a service. Touch points that advance the customer to a
subsequent and more valuable interaction, such as Amazon’s straightforward 1-Click Within product businesses,
ordering, matter even more. Companies need to map the corridor of touch points and for example, product development
watch for snarls. At each touch point, the gap between customer expectations and defers to marketing when it comes
experience spells the difference between customer delight and something less. to customer experience issues, and
both usually focus on features and
UNDERSTANDING HOW CUSTOMER EXPERIENCE specifications. Operations concerns
RELATES TO OTHER BUSINESS FUNCTIONS itself mainly with quality, timeliness,
and cost. And customer service
Some companies don’t understand why they should worry about customer experience. personnel tend to concentrate on
Others collect and quantify data on it but don’t circulate the findings. Still others the unfolding transaction but not its
do the measuring and distributing but fail to make anyone responsible for putting connection to those preceding or
the information to use. The extent of the problem has been documented in a survey following it. Even then, much service
done by Bain of 362 companies. Only 8 percent of them described their experience is rote: otherwise, why would service
as “superior,” yet 80 percent of the companies surveyed believe that the experience reps ask, as they so often do, “Is
they have been providing is indeed superior. With such a disparity, prospects for there anything else I can help you
improvement are small. with?” when they haven’t even dealt
with the original reason for the call
But the need is urgent: Consumers have a greater number of choices today than or visit?
ever before, more complex choices, and more channels through which to pursue
them. In such an environment, simple, integrated solutions to problems – not Such attention to customers
fragmented, burdensome ones – will win the allegiance of the time-pressed consumer. requires a closed-loop process
Moreover, in markets that are increasingly global, it is dangerous to assume that a in which every function worries
given offering, communication, or other contact will affect faraway consumers the about delivering a good experience,
same way it does those at home. and senior management ensures
that the offering keeps all those
Hence, customer experience is not just the responsibility of a single department. parochial conceptions in balance
It encompasses every aspect of a company’s offering – from customer care to and thus linked to the bottom line.

Customer experience does
not improve until it becomes a
top priority and a company’s
work processes, systems, and
structure change to reflect that.
When employees observe senior
managers persistently demanding
experience information and using
it to make tough decisions, their
own decisions are conditioned by
that awareness.

Customer dissatisfaction
is widespread and, because
of customers’ empowerment,
increasingly dangerous. Although
companies know a lot about
customers’ buying habits, incomes,
and other characteristics used
to classify them, they know little
about the thoughts, emotions, and
states of mind that customers’
interactions with products,
services, and brands induce. Yet
unless companies know about
these subjective experiences
and the role every function
plays in shaping them, customer
satisfaction is more a slogan than
an attainable goal.

22 INDUSTRY

BY
ONG XIANG

HONG

23

T he inven- In many developed cities, V12 powerplants.
tion of the young professionals are eschewing This will lead to a retooling
automo- car ownership in favour of public
bile not transport. City governments in the way such engines are made
only her- are also actively discouraging and serviced. New materials
alded an car ownership by introducing plus new engine geometry will
increase in congestion charging, tolled roads, necessitate an evolution in the way
mobility. It and high parking rates. parts are produced, replaced, and
also radi- serviced. But this is an evolution
cally changed the urban landscape The recent COVID-19 crisis – not a massive change in how the
– think wider roads, highway also highlighted the idea of a automotive industry is progressing
overpasses, crosswalks, and other renewable energy mix – one which as a whole. Engines are still
asphalt creations. doesn’t rely so much on fossil fuel. based on internal combustion – a
And of course, the increase in Tesla’s electric cars – with their technology that’s been around for
air pollution, noise pollution, as technologically advanced brains a century and a half. Automakers
well as the stresses of commuting and revolutionary electric motor – have merely perfected the craft.
in traffic have made our is selling not just cars, but a vision
relationship with the automotive of future motoring. On the other hand, electric
industry more of a love-hate cars are truly a revolution.
relationship. We buy a car for the With the vast majority of cars Stricter emission regulations,
status, sure – but many buy a car on the road running on polluting lower battery costs, more
because they have to. Either they oil, what does the future hold for widely available charging
live in an area with bad public the automotive industry? And infrastructure, and increasing
transportation, or they need a car where does this leave SMEs? consumer acceptance will create
for their work. new and strong momentum
A DIFFERENT SORT for penetration of electrified
OF DISRUPTION vehicles (hybrid, plug-in, battery
electric, and fuel cell) in the
Tesla’s ‘disruption’ of the coming years. The speed of
automotive industry is only adoption will be determined by
one dimension of it. Instead, the interaction of consumer pull
automakers are disrupting (partially driven by total cost of
themselves from within. ownership) and regulatory push,
which will vary strongly at the
The ‘disruption within’ isn't regional and local level.
about cheap, small, fast. It's
not about catching the industry SHARED MOBILITY
off-balance and ill-prepared
to respond. It is about big The automotive revenue pool will
companies that have a lot of money significantly increase and diversify
recognizing that they can spend toward on-demand mobility
literally billions to attack a new services and data-driven services.
business opportunity. This could create up to US$1.5
trillion – or 30 percent more –
Automakers were already in additional revenue potential
making their cars smaller and in 2030, compared with about
more fuel-efficient since the US$5.2 trillion from traditional car
dawn of the millennium, but sales and aftermarket products/
current leanings and consumer services, up by 50 percent from
appetites are accelerating the about US$3.5 trillion in 2015.
trend. Compact, turbocharged
engines (so fuel burns cleanly) The source of this revenue
are the order of the day, as pool is directly related to the
are continuously-variable decline in car ownership.
transmissions (CVT) that are Commuters will increasingly
far more fuel-efficient than use the car as a shared service,
conventional manual or automatic instead of dealing with the costs of
gearboxes. Even German luxury ownership. The rise of app-driven
stalwarts Mercedes Benz and ride-hailing services like Grab
BMW are introducing thrifty V6 and Uber are facilitating the early
engines in their lineup, instead of stages of this.
thirstier, more traditional V8 or

24 INDUSTRY

ELECTRIC CARS
ARE TRULY A
REVOLUTION.
STRICTER
EMISSION
REGULATIONS,
LOWER BATTERY
COSTS, MORE
WIDELY
AVAILABLE
CHARGING
INFRASTRUCTURE,
AND INCREASING
CONSUMER
ACCEPTANCE
WILL CREATE
NEW AND STRONG
MOMENTUM FOR
PENETRATION
OF ELECTRIFIED
VEHICLES
(HYBRID, PLUG-
IN, BATTERY
ELECTRIC, AND
FUEL CELL) IN THE
COMING YEARS.

Later on, this will be and passengers to use their time margins based on customers'
integrated with the holy grail in transit to do work, indulge in willingness to pay. Frequent well-
of automotive technology – media, or dedicate the freed-up publicized rebates have taught
driverless cars. The increasing time to other personal activities. buyers to mistrust sticker prices
speed of innovation, especially and negotiate from cost up, rather
in software-based systems, will THE CHANGING EXPERIENCE than sticker down. As a result,
require cars to be upgradable. As OF BUYING A CAR dealers often find themselves
shared mobility solutions with competing not against another
shorter life cycles will become The mendacious car salesman is brand, but against a same-make
more common, consumers will be frequently the butt of many jokes dealer across town.
constantly aware of technological – but one that many customers
advances, which will further unfortunately think is true. In Shrinking dealer margins do
increase demand for upgradability the context of the traditional not translate into happy customers:
in privately used cars as well. franchised dealership model, Most customers (approximately
This increased connectivity will high customer acquisition costs four out of five) dislike the
increasingly allow the car to motivate dealers to convert store purchase process, and many still
become a platform for drivers traffic to sales using aggressive come away feeling cheated and
tactics that extract differential mistreated. This strong antipathy

25

The transformation of the In response, vehicle
business of selling cars and trucks manufacturers finally are getting
is happening before our eyes at serious about marketing, and
an incredible pace – promising to about confronting the weaknesses
change forever an industry that embedded in their traditional
has long been noted for its high franchised-dealer distribution
costs, poor service and extremely channels. Manufacturers want to
unpleasant selling process. Auto expand their participation in the
manufacturers have competed customer life-cycle value chain to
fiercely among themselves to drive improve profitability and grow
out cost and meet consumer needs in markets that have been largely
for cheaper and better cars and stagnant. This changes the basis
trucks. Now the survivors face new of competition from designing
threats from outside the industry and making good products to
that might thwart their renewed providing services and managing
interest in building strong, lasting consumer purchase and
relationships with their customers. ownership experiences for which
the products themselves are only
Entrepreneurs have dissected partly responsible.
the cost-value equation and come
up with new retail concepts. Their No one is suggesting,
stories have been persuasive though, that auto dealers will
enough to attract hundreds of disappear. Ironically, changes in
millions of dollars in public equity cars and trucks themselves are
investment and persuade dozens making dealers more important.
of fiercely independent car dealers Consumers have more choices
to sell out. Internet technology has of brands and models than ever
lowered entry barriers for other before. Improved durability and
entrepreneurs with new ideas reliability and faster design cycles
about helping customers find, have narrowed the differences
evaluate and buy new vehicles. among competing products in
These patterns are consistent with the same category. Brand loyalty
revolutions in other consumer increasingly derives not from
durables markets that effectively the product itself but from the
transferred market power from total purchase and ownership
manufacturers to retailers. experience.

is largely responsible for the rapid
growth of Internet-based services
that offer alternative means of
gathering information on cars,
soliciting price quotes and, in some
cases, conducting transactions.

Thus, several questions
must be asked. Will the vehicle
manufacturers and their
franchised-dealer networks be
able to overcome years of inertia
and complacency to pioneer and
execute new concepts that will
strengthen and extend the value
of their brands? Or will nimbler,
more imaginative retailers or
software companies get there first?

26 PERSONALITY

YTAANDAASI HI

27

COMPILED
BY

JORDAN
LOW

DEMOCRATISING
FASHION

020 has been a rough year for businesses

2 around the world. While some have managed to
eke by through adaptation and innovation,
others have suffered great losses. E-commerce
and delivery services are without a doubt the
biggest winners amid the COVID-19 pandemic.
With health and safety being a major priority for
consumers now, the success of these industries
come as no real surprise.
Physical retail on the other hand has been hit particularly hard. Only
the travel and tourism industry can be said to have suffered greater
losses. With the virality of COVID-19, governments around the
world were quick to implement lockdowns and restrictions on public
movement. As such, physical retail stores saw foot-traffic dwindle.
Even as the world slowly recovers from the pandemic, physical
retail has been forced to take up new health and safety measures in
order to ensure that the customers remain safe and secure. As such, the
recovery of physical retail remains stunted, even with all the effort they
put into ensuring the consumers’ best interests.
Despite this, there are certain retail businesses who have managed
to efficiently handle the pandemic situation and adapt accordingly.
Through the strength of their brand, their willingness to adapt to new
channels, and the trust build between their customers over the years,
these retailers serve as inspirations.
Once such retailer comes in the form of Uniqlo, the world renown
Japanese manufacturer and retailer of casual wear; as well as its
parent company, Fast Retailing Co. With the leadership of its founder,
Tadashi Yanai, heading the company, Uniqlo has not only survived the
COVID-19 pandemic, it has thrived.
In this edition of SME, we will take a look at Yanai’s long and
storied career and how he brought his company to the world stage.

WHAT MAKES AN ENTREPRENEUR

If one were to ask ‘what are the most important qualities of a
successful business entrepreneur?’, the answer would be hard work
and perseverance. Tadashi Yanai is an exemplary embodiment of these
values; which is befitting of one of the wealthiest businessmen in Japan.

28 PERSONALITY

He is the present CEO of Fast as he would be able to pursue his passion for business during a time of great
Retailing Co, owner of the Uniqlo economic success for Japan.
clothing brand loved by the Japanese and
the world alike. His clout and business MAKING A NAME FOR HIMSELF
sense has even allowed him to become
an external director and consultant in Following his graduation from Waseda, Yanai kicked-off his career by
major companies like Softbank Corp and selling men's clothing and kitchenware at the Jusco supermarket. After
Nippon Venture Capital Co LTD. spending a year at Jusco, he quit the job, joined his father’s tailoring business
known at the time as Ogori Shoji.
Born on 7th February 1949, Yanai
was passionate about pursuing business Yanai decided to set-up his first Uniqlo shop in 1984, then known as
from the initial years. He graduated from Unique Clothing. His sense of intuition and the free reins made it easier to
the Waseda University in Tokyo in the take good advice. As a humble startup, Uniqlo was able to find great success
year 1971 in political science. One could as an SME, supplying fashionable casual wear to the middle-class of Japan
say that Yanai was born at the right time for reasonable prices.

In 1991, Yanai decided to rebrand his father’s company from Ogori Shoji

29

to Fast Retailing in order to leave his own mark on history. Within a span of ten new. As a result, the markets set new
years, the little suburban shop opened dozens of other stores and leaded to an rules that you either create or follow.
eventual IPO in 1994. Yanai regularly states that if you do
neither, you’re setting your business up
Currently Fast Retailing has more than 2000 stores under its name and has for failure.
become the fourth largest apparel company in the country. The company owns a
number of brands under its umbrella starting from and including Uniqlo, Helmut An interesting story that occurred
Lang, and theory, Comptoir des Cotonniers, Princesse Tam.Tam, J Brand and g.u. early in Yanai’s career as an entrepreneur
was that when he first registered his
From its humble beginnings, Uniqlo was able to build a relationship with company, he misspelled the name. Yanai
the local consumers of Japan. The hometown feel of that first suburban store wanter to name his company “Unico”,
combined with Yanai’s work ethic allowed it to grow into a retail juggernaut which stood for Unique Clothing.
that is beloved by all. Today, even many legendary names in the fashion design Unfortunately, he realised too late
world call Uniqlo home. To say that the company has come a long way would be that the name was accidentally written
“Uniqlo”. Instead of making a big fuss
an understatement. and trying to change it, Yanai decided
to roll with the mistake, thinking that
THE ETHIC BEHIND SUCCESS Uniqlo looked rather unique. This turned
out to be a boon, as it set his company
Famous for his work routine, Yanai has out from the crowd. Since then, Yanai
methods and systems in place that ensure has always encouraged his workers to
extraordinary performance. Business embrace mistakes and look for the best
leaders from all industries can learn more possible outcomes and opportunities that
than a few things from him. can be salvaged from a bad situation.

While it is not uncommon for It can be very discouraging to see
highly successful businessmen to have your long efforts go to waste. Not willing
a handful of driving philosophies, to admit failure, you might keep going
Yanai stands out for being someone in the wrong direction. But not if you
who holds onto many different business take a page out of Yanai’s journey. In
philosophies, all of which have the beginning, his company bought up
contributed to his massive success. rejects from retailers and wholesalers
for sale at a lower price. But the quality
One such philosophy is to think was so below standard that Yanai knew
big; as in, really big. At Panasonic’s it wouldn’t go far. This is why he decided
100th anniversary, Yanai was to completely change the business model
famously remembered for saying: and start his own line. The rest is history.
“The most important thing is to have
high aims and unthinkably high goals LIFE AFTER SUCCESS
– so high that people think you are
crazy. Set high aspirations – that is Yanai is a man of simple taste. While he
the source of innovation." does spend lavishly on occasion, he is
more than happy to be able to spend time
Yanai is also not so proud that he with his family and hit the gold course
would shun the philosophies of others. over the weekend.
He was also known to have given
high praise to Konosuke Matsushita’s Yanai is also well known for his
(Founder of Panasonic) “tap water” philanthropy, often donating huge
philosophy, saying that Fast Retailing’s sums of money to those in need. His
own success owes much to the influence contribution to the 2011 Tohoku
of such a philosophy. The idea of earthquake and tsunami relief fund was
‘tap water’ philosophy, meaning it particularly generous.
is the mission of a manufacturer to
overcome poverty and create happiness In recent times, Yanai was quick to
by producing an abundant supply of give words of encouragement to both
goods as plentiful as tap water, was a customers and staff around the world
foundation of the Panasonic business amidst the COVID-19 pandemic. As
model. It is a theory that Yanai bought per the usual, he credits much of Fast
into early in his career, and in his Retailing’s success during this time
humbleness, often refers to it as a core to his staff and their autonomy. He
reason for his own business’ success. continues to stress the importance of
ensuring the health and safety of his
Another one of Yanai’s famous workers and customers and believes
philosophies is his “change or die” stance. that everyone will come out of this crisis
Always a proponent for innovation, stronger than ever.
Yanai often stresses the importance of
adaptability in an increasingly speedy
world. Consumers always want something

30 FEATURE

BY
ONG XIANG

HONG

HOME PORTOFOLIO C O N TA C T ABOUT US

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31

W ith globali- countries as possible is a surefire owners reflect a greater
sation and recipe for disaster. For starters, propensity to export, possibly
interna- the best thing to do is to focus on after the domestic foothold has
tional one or two overseas markets and been solidly built by the first
commerce address them properly, instead of generation.
very much managing twenty markets at the INNOVATION AND TECHNOLOGY:
cemented same time. Many companies start There is no doubt that
into the their international expansion with innovation plays an
reality of concrete opportunities and, before overwhelming role in
current times, one could be forgiven they know it, they are in 10 countries internationalisation. Innovation
for underestimating the challenges and selling millions. is a characteristic of SMEs
that companies face in taking their in the technological sector,
business abroad. There are many To be successful in this regard, and their propensity to adopt
subtle obstacles that require care- there are several commonly identified rapid R&D models also
ful negotiation from a focussed and factors that play a role in effective translate to their approach to
well-informed management team to internationalisation. internationalisation. The greater
avoid disappointment when venturing TALENTED MANAGERS AND EMPLOYEES: flexibility of technology sector
beyond national borders. companies contributes towards
Early internationalisation efforts accelerated internationalisation
BENEFITS OF INTERNATIONALISATION receive a significant boost processes that occur almost
from levels of international always immediately after their
It may not seem like it, but SMEs experience held by management launch. Of course, this mentality
dominate the global economy. teams and their specialist isn’t exclusive to the tech sector,
They make up 95 percent of all knowledge. Coupled with but the way the industry has
companies in the world, accounting innovative, positive attitude, evolved towards the highly
for 50 percent of global GDP and and a certain amount of risk- specialised resources needed for
60 to 70 percent of employment, taking, SMEs can leverage these their activities has encouraged
according to the WTO and the skills to expand internationally. internationalisation.
International Trade Centre (ITC). Furthermore, in family-owned
When SMEs go international, they SMEs, second-generation
can leverage their sheer mass to
bring economic benefits. WHY INTERNATIONALISE?

A good example that The Diversifying
substantiates this fact is the possibility its operations
significant economic contribution or necessity and associated
of SMEs in major APEC economies. of increasing
They make up more than 50 percent risks
of GDP in member countries like sales Compensating
China, Indonesia, Japan, Korea
and the United States. This is also Reducing for home
supported by the findings of the costs of market decline
European Commission, which suggest labour or saturation
that internationally active SMEs – production
those that invest abroad, involved or supply
in import-export services, have
FDIs, or have established foreign
collaborations – tend to report higher
employment rates; higher inclinations
to build technological cooperation;
and high turnover growth with
enhanced capacities for innovation.

STRATEGIES FOR Getting
INTERNATIONALISATION closer to
its clients
In many cases, the
internationalisation of a business
is produced as a result of an
exceptional trade opportunity. But
this is not enough to start for an
internationalisation strategy.

Though internationalisation is
one of the key tools to increase sales,
going abroad without an objective,
or trying to be present in as many

32 FEATURE

INTERNATIONALISATION AS A COMPETITIVE STRATEGY

Take Moving Exploiting To
advantage of activities in the economies gain
other markets’ value chain to of scale and knowledge
growth and more competitive about other
development reach clients and
regions (e.g. markets
business process

outsourcing)

COST CONTROL: SMEs who go to many, there are many pitfalls to be business partners and joint ventures).
international have the tendency to go aware of. Businesses should know what lies HUMAN RESOURCE BARRIERS:
‘all-in’ where they seek to replicate ahead, and plan accordingly. inefficiencies of human resource
the success they have in their home INFORMATIONAL BARRIERS: management with regard to
country. Unless the stars align, this is problems in identifying, selecting, and internationalisation.
an approach that can go very wrong contacting international markets due to Insufficient quantity of and/or untrained
and lead to huge losses. Hence, information inefficiencies.
SMEs should take an incremental Limited information to locate/analyse personnel for internationalisation:
approach to internationalisation. problems associated with insufficient
Test the market from a sales and markets: difficulty in knowing what numbers of personnel to handle
operations perspective first to see national and international sources of the excess work demanded by
if the market can justify further information is available or required international operations, in addition
investment in infrastructure and to reduce the level of uncertainty of to a lack of specialised knowledge and
fixed assets. Many SMEs can find foreign markets. expertise within the company to deal
more success if they hold off on any Identifying foreign business opportunities: with international business tasks such
infrastructure investments or hard difficulty in strategically and/or as documentation handling, logistical
costs in foreign markets until their proactively identifying and selecting arrangements, and communicating
operation has matured in the market. opportunities in foreign markets with foreign customers.
(including customers, contacts, Difficulty in managing foreign employees:
BARRIERS TO INTERNATIONALISATION

Though going international is appealing

33

inexistence of proper managers to (e.g. different conditions of use, within which the company operates or
employ and manage foreign employees variations in purchasing power, is planning to operate.
to deal with international business dissimilar consumer tastes, diverse Foreign currency exchange risks:
task such as operating activity in socio-cultural settings).
foreign markets. PROCEDURAL BARRIERS: risks to international business
FINANCIAL BARRIERS: barriers associated with the operating transactions arising from unstable
lack or insufficiency of finance with regard aspects of transactions with foreign exchange rates leading to
to internationalisation. customers. fluctuating export prices overseas;
Shortage of funds to finance investment for Unfamiliar exporting procedures/ revaluation of exporter’s currency
internationalisation: difficulty in paperwork: difficulty in understanding resulting in less favourable prices
allocating and/or justifying adequate and/or managing customs to end-users; and unconvertible
expenditure towards investment to documentation, shipping foreign currencies that impede
start or expand international activity. arrangements, and other export the repatriation of sales/profits
PRODUCT AND PRICE BARRIERS: pressures procedures. from overseas.
imposed by external forces on adapting Slow collection of payments from abroad: Unfamiliar foreign business practices:
the elements of the company’s product and difficulty in achieving timely variations in business practices
pricing strategy. collection of payments from overseas from country to country which may
Difficulty in developing new products due to the lack of immediate contact confuse or send distorted signals to
for foreign markets: inability, difficulty with overseas markets, foreign companies that are unfamiliar with
or unwillingness to develop entirely buyers requesting more credit the formal and informal procedures
new products for specific foreign facilities, the use of intermediaries to performed in foreign markets.
market needs and wants. enter a foreign market, and/or strict Different socio-cultural traits:
Difficulty in adapting product design/ currency restrictions imposed by the challenges associated with
style: inability, difficulty or central bank of the foreign market. understanding and accommodating
unwillingness to adapt the company’s BUSINESS ENVIRONMENT BARRIERS: the affects that variations in
product design or style to the Barriers associated with the economic, religion, values, attitudes, manners,
idiosyncrasies of each foreign market political-legal and socio-cultural customs, education, and social
environment of the foreign market(s) organisation have on consumer
behaviour, targeting approaches,
and marketing programmes.

CREATING VALUE THROUGH INTERNATIONALISATION

ADAPTATION AGGREGATION ARBITRAGE

Increasing Taking Exploiting
income and advantage of differences
market share by economies of scale between national
through the and regional
tailoring creation of regional markets in order to
products and and/or global convert them into
services to the operations opportunities
local context

34 FEATURE

BY
ONG XIANG

HONG

ALTHOUGH THERE ARE MANY DOCUMENTS THAT WILL NEED TO BE TRANSLATED running of business:
IN THE EXECUTION OF YOUR INTERNATIONAL ACTIVITY, THERE ARE THREE 1. Advertising materials
DOCUMENT TYPES OF CRUCIAL IMPORTANCE THAT WILL ARE MOST NECESSARY 2. Product materials
TO INTERNATIONALISE YOUR BUSINESS. 3. Legal documents and contracts
We will consider each of the following
I f you are thinking of the trustworthiness and engagement of your in turn.
internationalising your customers. By adapting your commercial
business, you definitely materials, you will be able to achieve your ADVERTISING MATERIALS
need to take into account objective of capturing the interest of the
the language of your target foreign market you are targeting. If a company wants to expand and
audience. To sell your goods internationalise, it is of vital importance
or services you will need consumers or Likewise, you will have to prioritize to communicate what it does and become
distributors in the international market to the efforts allocated to establishing a known. This can be done in various ways,
understand what you are doing and your communication with the foreign market among which is:
value proposition. This requires the so that it does not just turn into a Website translation
localisation of content, materials, and residual effort without any effect on your Attending international events or
documents to other languages. commercial strategy. conventions in the country of interest
Though English is widely understood by Social media postings in the local
much of the commercial world, conducting But before you embark on your language
business in the local language will increase internationalisation strategy, you need Advertising in the local media
to prepare the following three document In order to find a niche and show your
types, which are necessary for the smooth products or services to potential customers
and partners, it is necessary that your
advertising material speaks their language.

It is also key to bear in mind that a poor,

35

incorrect or inappropriate translation can after-sales service. business, there is a need to process a
generate mistrust in the potential buyer. Of course, good post-sales support series of legal documents declaring the
nature, suitability, and integrity of our
A good measure to avoid poor or service means you are able to provide business, such as:
translation in a foreign language is to use the customer with all the information they Service agreements
translators that specialise in the sector you need to use your product. This information Rental contracts
operate in. This is not only to be consistent should be easy for them to understand in Invoices, delivery notes and other
in your communications and marketing their native language. related documents
discourse in international markets, but Contracts with distributors or other
also to be sure of the specific industry Imagine that you buy a new gadget local partners
terms used in that market. online, and when you receive it, the Documentation of foreign taxes
instructions are only in Chinese! You will Industry certifications
It is also important to make a special probably end up returning or breaking the Insurance policies
mention of cases in which products are purchased product. In the specific case of agreements for the
sold through distributors. The quality provision of services, a good translation
of the marketing in a foreign language Therefore, it is essential to translate can avoid expensive legal proceedings in
will affect the performance of your material or documents such as labels, user foreign courts.
international distributors. manuals, safety instructions, information on
packaging, etc. Sometimes, these documents are
Translating to internationalise your available in the form of a paper declaration
business means offering not only quality Of course, in many cases, this will not provided by the local authority. However,
material to your customers, but also to all simply be a matter of customer service or to ensure that the form is the correct one,
the stakeholders involved in the commercial commercial approach. Remember that, on and to further ensure that you are filling in
distribution chain. many occasions, having information in the the form correctly, having a local partner
local language is a requirement imposed by that can help you navigate this minefield is
PRODUCT MATERIALS the consumer laws of the country in which essential.
your products are sold.
Something that can tip the scales on a new
sale or gain a foreign customer’s trust, LEGAL DOCUMENTS AND CONTRACTS
is our ability to provide good support or
Finally, whenever we want to launch a

36 FEATURE

BY
ALEXANDER
KJERULF

O ne woman who Her last letter, reciting a give customers good service.
frequently flew litany of complaints, momentarily However, I think businesses should
on Southwest stumped Southwest’s customer rela-
was constantly tions people. They bumped it up to abandon this phrase once and for all
disappointed Herb’s [Kelleher, CEO of Southwest — ironically, because it leads to worse
with every at the time] desk, with a note: ‘This customer service.
aspect of the company’s operation. In one’s yours.’
fact, she became known as the “Pen Here are the top five reasons why “The
Pal” because after every flight she In sixty seconds Kelleher wrote Customer Is Always Right” is wrong.
wrote in with a complaint. back and said, ‘Dear Mrs. Crabapple,
She didn’t like the fact that the We will miss you. Love, Herb.’” IT MAKES EMPLOYEES UNHAPPY
company didn’t assign seats; she didn’t The phrase “The customer is always right”
like the absence of a first-class section; was originally coined in 1909 by Harry Gordon Bethune is a brash Texan (as is Herb
she didn’t like not having a meal in Gordon Selfridge, the founder of Selfridge’s Kelleher, coincidentally) who is best known
flight; she didn’t like Southwest’s department store in London, and is for turning Continental Airlines around From
boarding procedure; she didn’t like the typically used by businesses to convince Worst to First, a story told in his book of the
flight attendants’ sporty uniforms and customers that they will get good service at same title from 1998. He wanted to make
the casual atmosphere. this company and convince employees to sure that both customers and employees liked
the way Continental treated them, so he made
it very clear that the maxim “the customer is
always right” didn’t hold sway at Continental.

37

In conflicts between employees and unruly the customer. aren’t customers always right? “No,
customers he would consistently side with his When he’d finished the task they are not,” Kelleher snaps. “And
people. Here’s how he put it: I think that’s one of the biggest
and returned to the office, he told betrayals of employees a boss can
When we run into customers that we management about his experience. possibly commit. The customer is
can’t reel back in, our loyalty is with They promptly cancelled the sometimes wrong. We don’t carry
our employees. They have to put up customer’s contract. those sorts of customers. We write
with this stuff every day. Just because Just like Kelleher dismissed the irate lady who to them and say, ‘Fly somebody
you buy a ticket does not give you the kept complaining (but somehow also kept else. Don’t abuse our people.’”
right to abuse our employees ... flying on Southwest), ServiceGruppen fired
a bad customer. Note that it was not even a If you still think that the customer is always
We run more than 3 million matter of a financial calculation — not a ques- right, read this story from Bethune’s book
people through our books every tion of whether either company would make From Worst to First:
month. One or two of those people or lose money on that customer in the long
are going to be unreasonable, run. It was a simple matter of respect and A Continental flight attendant once
demanding jerks. When it’s a choice dignity and of treating their employees right. was offended by a passenger’s
between supporting your employees, child wearing a hat with Nazi and
who work with you every day and IT RESULTS IN WORSE CUSTOMER SERVICE KKK emblems on it. It was pretty
make your product what it is, or offensive stuff, so the attendant went
some irate jerk who demands a free Rosenbluth International, a corporate travel to the kid’s father and asked him to
ticket to Paris because you ran out agency since bought by American Express, put away the hat. “No,” the guy said.
of peanuts, whose side are you going took it even further. CEO Hal Rosenbluth “My kid can wear what he wants,
to be on? wrote an excellent book about their approach and I don’t care who likes it.”
called Put The Customer Second – Put your
You can’t treat your employees people first and watch’em kick butt. The flight attendant went into
like serfs. You have to value them Rosenbluth argues that when you put the the cockpit and got the first officer,
... If they think that you won’t sup- employees first, they put the customers first. who explained to the passenger
port them when a customer is out Put employees first and they will be happy at the FAA regulation that makes it a
of line, even the smallest problem work. Employees who are happy at work give crime to interfere with the duties
can cause resentment. better customer service because: of a crew member. The hat was
So Bethune trusted his people over They care more about other people, causing other passengers and the
unreasonable customers. What I like about including customers crew discomfort, and that interfered
this attitude is that it balances employees They have more energy with the flight attendant’s duties.
and customers. The “always right” maxim They are happy, meaning they are more The guy better put away the hat.
squarely favours the customer which is a fun to talk to and interact with
bad idea, because, as Bethune says, it causes They are more motivated He did, but he didn’t like it. He
resentment among employees. On the other hand, when the company and wrote many nasty letters. We made
Of course, there are plenty of examples of management consistently side with customers every effort to explain our policy
bad employees giving lousy customer service instead of with employees, it sends a clear and the federal air regulations,
but trying to solve this by declaring the cus- message that: but he wasn’t hearing it. He even
tomer “always right” is counter-productive. Employees are not valued showed up in our executive suite
Treating employees fairly is not important to discuss the matter with me. I let
IT GIVES ABRASIVE CUSTOMERS Employees have no right to respect him sit out there. I didn’t want to
AN UNFAIR ADVANTAGE from customers see him and I didn’t want to listen
Employees have to put up with to him. He bought a ticket on our
Using the slogan “The customer is always everything from customers airplane, and that means we’ll take
right,” abusive customers can demand just When this attitude prevails, employees stop him where he wants to go. But if
about anything — they’re right by definition, caring about service. At that point, genuinely he’s going to be rude and offensive,
aren’t they? This makes the employees’ jobs good service is almost impossible — the best he’s welcome to fly another airline.
that much harder when trying to rein them in. customers can hope for is fake good service.
You know the kind I mean: courteous on the The fact is that some customers
Also, it means that abusive people get bet- surface only. are just plain wrong, that businesses
ter treatment and conditions than nice people. are better of without them, and that
That always seemed wrong to me, and it SOME CUSTOMERS ARE managers siding with unreasonable
makes much more sense to be nice to the nice JUST PLAIN WRONG customers over employees is a
customers to keep them coming back. very bad idea, that results in worse
Herb Kelleher agrees, as this passage from customer service.
SOME CUSTOMERS ARE BAD FOR BUSINESS Nuts! the excellent book about Southwest
Airlines shows: So any business needs to put its people
Most businesses think that “the more first — and watch them put the customers
customers the better”. But some customers Herb Kelleher [...] makes it clear that first.
are quite simply bad for business. his employees come first — even if
it means dismissing customers. But ALEXANDER KJERULF, THE “CHIEF HAPPINESS OFFICER,”
Danish IT service provider ServiceGruppen IS ONE OF THE WORLD’S LEADING EXPERTS ON
proudly tell this story: WORKPLACE HAPPINESS. HE IS A SPEAKER,
CONSULTANT, AND AUTHOR.
One of our service technicians
arrived at a customer’s site for a
maintenance task, and to his great
shock was treated very rudely by

38 FRANCHISE

BY
JORDAN

LOW

F or the most part, the immediate threat of
COVID-19 is dying down. While nations across
the world still have lockdowns and restrictions
in place, the vast majority of countries are in
the midst of de-escalating and loosening
restrictions. While we are far from going back
to the pre-pandemic norm, we can at least see
people leaving their homes and returning to work.
The “new normal” we are returning to is very different
than the previous norm. Hygiene and contactless interaction is
on the rise and cashless payments are seeing increased usage.
Brick & mortar retail was already seeing a dip in traffic due to
e-commerce, and the pandemic has only served to worsen this
draught of consumers.
As we mentioned in the previous issue of SME, now may
not necessarily be the best time to purchase a franchise, with the
economy being in the poor state it is. However, the reality is that
the only way to get businesses back on their feet is to stimulate the
economy and get people spending once more. Fortunately, there
are a number of sectors and industries that are still able to thrive
in today’s hostile business climate.
In this edition of SME, we will be reviewing a number of
factors that prospective franchisees should consider before they go
out to buy into a franchise in a post-COVID world.

39

CONSIDER WHAT YOU ARE LEAVING Are you quitting another job to buy terms without having to “win”, so try to create a deal that
makes everyone happy.
this franchise? How did that job provide for you during the quarantine?
What benefits are you leaving behind? As we have already mentioned, the ASK FOR AN INSTALMENT SALE Getting a bank loan right
global economy is not in a great place right now. Buying into a franchise
right now can lead to great success, but it will take a lot of hard work and now can be tough. However, many franchise owners who are
perseverance. Be absolutely sure that you will be up for the task. Above wishing to exit would probably be willing to let you pay them
all else, stay objective. Do not buy a franchise to make yourself feel directly over time. Seller financing is very common. You can
better. Buy it because it’s a smart decision made with logic and clarity. probably offer the seller more money than they’d get from a
traditional, but with payment terms that are better for you.
EVALUATE THE FRANCHISOR Do not hold franchisors to the standards Before going through with this, make sure to consult with an
attorney on the terms.
before the pandemic. Now is the time to observe how these businesses
handle adversity. Look for information regarding how they coped with CONSIDER HIRING THE PREVIOUS OWNER While you
quarantines and lockdowns. Are the currently financially stable? Find out
what they did to help their franchisees throughout the crisis. Don’t sign a wouldn’t want to employ someone who did not run the
franchise agreement unless these are people you’d want to partner with business well, it is still very much possible that they are good
in sickness as well as in health. leaders who had to sell due to financial reasons. The chances
of them accepting the offer is also fairly high, as they would
CAREFULLY EVALUATE RESALE OPPORTUNITIES Just because it’s be receiving a regular paycheck for doing work they already
know. And if it’s an instalment sale, they may be happy to
available doesn’t mean you should move on it. It’s being sold for a ensure the business remains stable. You might even consider
reason. What were its numbers before the pandemic? Was it profitable? making their employment a part of the purchase agreement.
Was it growing? Can you bring something new to the business? Don’t Just be sure to consider the social dynamics, so that you can
just jump on a low-cost to entry, lest you find yourself going down with a collaborate without tension or power struggles.
sinking ship.
SAVE AS MUCH CASH AS POSSIBLE Cash is king in in today’s
READ NEW-FRANCHISE AGREEMENTS CLOSELY If you are buying an
environment. No one knows if we will be forced to return
existing location, you may be assuming the agreement your buyer signed home for another quarantine. We also don’t know how people
or be asked to sign a fresh agreement with different terms. Read these will be spending their money during the economic recovery.
new agreements carefully. Make absolutely sure you understand what the It is now more important than ever to financially plan for the
terms are and whether or not you are agreeable to running the business worst. You need to spend money to buy a business and you
are required. need to save money to buy time.

NEGOTIATE WITH EMPATHY Now is a time for unity and cooperation. Make sure you are absolutely ready to run a franchise
Running a franchise is not for everyone, especially during
Many business and franchise owners are in distress over the state of the these economically tough times. There is a lot of uncertainty
global economy, and now is not a time to exploit them. Karma is a very in the air and running a franchise is a huge responsibility.
real thing in franchising. It is still perfectly possible to get favourable There will always be work, but not always profit. Make sure
that you know what exactly it is you are getting into before
you commit.

Good opportunities can be found in any economy.
Buying a franchise when the pandemic ends may end up being
one. Just make sure to do the homework and be prepared for
any eventuality.

40 TRADE

TAIWAN:BY LNOEOWKISNOGUTTOH THE

ONG XIANG
HONG

Population: 23,603,049 (July 2020 est.) Capital: Taipei Major Languages: Mandarin Chinese (official), Taiwanese (Min Nan), Hakka dialects, English
widely understood Currency: New Taiwan dollars (TWD) Major Industries: electronics, communications and information technology products,
petroleum refining, chemicals, textiles, iron and steel, machinery, cement, food processing, vehicles, consumer products, pharmaceuticals Major
Export Commodities: semiconductors, petrochemicals, automobile/auto parts, ships, wireless communication equipment, flat display displays, steel, electronics,
plastics, computers Major Export Partners: China, United States, Japan, Singapore, South Korea Major Import Commodities: oil/petroleum, semiconductors,
natural gas, coal, steel, computers, wireless communication equipment, automobiles, fine chemicals, textiles Major Import Partners: China, Japan, ASEAN, United
States, European Union, South Korea GDP: US$572.6 billion (2017 est.) GDP Per Capita: US$50,500 (2017 est.) Country code top-level domain: .tw

L ocated across the Taiwan Strait from mainland TRADE WITH ASEAN
China, Taiwan is one of Asia’s economic “tigers”.
Between the early 1960s and 1990s, Taiwan Despite its close links with China, Taiwanese firms maintain tight
underwent rapid industrialization and maintained economic relations with ASEAN markets. Taiwan has long been
an exceptionally high GDP growth rate of more an attractive destination for ASEAN exports, as are Taiwanese
than 7 percent a year. products in markets like Malaysia and Singapore.
Taiwan has a dynamic capitalist economy that is driven largely by
industrial manufacturing, and especially exports of electronics, In 2016, the Taiwanese government unveiled its New
machinery, and petrochemicals. In particular, Taiwan is well-known Southbound Policy (NSP) to increase ties between ASEAN
for its premier position in the global electronics supply chain, led by economies. To promote economic collaboration, the promotion
giant semiconductor foundries like TSMC. plan specifies that Taipei will create partnerships by integrating
This heavy dependence on exports exposes the economy to into NSP countries’ supply chains, export advanced medical
fluctuations in global demand. Taiwan's diplomatic situation, low products and services to promote Taiwan’s brand image, and
birth rate, rapidly aging population, and increasing competition collaborate on critical infrastructure in NSP countries.
from China and other Asia Pacific markets are other major long-
term challenges. The second task, talent exchange, pertains to educational
ties, the “two-way flow of professionals,” and helping immigrants
to find work and overcome linguistic boundaries in Taiwan. By

41

sharing resources, Taipei intends to total exports in 2017. Between
capitalize on Taiwan’s soft power and 2016 and April 2018, of the top
promote bilateral and multilateral ten NSP countries as a destination
cooperation in various sectors: from for Taiwanese exports, seven were
culture and tourism to agriculture, ASEAN countries. India was 6th
technology, and SMEs. with a 5 percent share of Taiwan’s
export market, and Australia and
ASEAN accounts for an Bangladesh followed 8th and 9th
overwhelming majority of Taiwanese on the list.
exports and foreign direct investment
(FDI) with NSP countries. Between Taiwan’s investment flows to
January 2016 and April 2018, ASEAN rose to US$4.2 billion in
ASEAN received over 86 percent of 2016, up 73.3 percent from the
Taiwan’s exports to NSP countries. previous year, making Taiwan the
In 2017, Taiwanese exports to region’s seventh largest source
ASEAN totalled US$58.57 billion, of FDI. In 2017, according to
a 14.2 percent increase from the Taiwan’s Ministry of Economic
previous year. Malaysia alone saw Affairs, Taiwan’s investment in the
a 32.7 percent jump in Taiwanese six largest ASEAN economies of
exports from 2016, while exports to Singapore, Indonesia, Malaysia,
Laos grew by an astonishing 74.5 the Philippines, Thailand, and
percent on the year. Within ASEAN, Vietnam, grew by more than 25
Singapore, Vietnam, and Malaysia percent from the previous year to
accounted for US$38.5 billion of US$2.82 billion.

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46 TECHNOLOGY

BY
SHOHINI
GHOSE

Q uantum physics
has already
changed our lives.
Thanks to the
invention of the
laser and the
transistor — both
products of
quantum theory
— almost every
electronic device we use today is an example
of quantum physics in action. We may now be
on the brink of a second quantum revolution
as we attempt to harness even more of the
power of the quantum world. Quantum
computing and quantum communication could
impact many sectors, including healthcare,
energy, finance, security, and entertainment.
Recent studies predict a multibillion-dollar
quantum industry by 2030. However,
significant practical challenges need to be In our everyday classical computers, 0’s cracking quantum encryption would require
overcome before this level of large-scale impact and 1’s are associated with switches and violating the laws of physics.
is achievable. electronic circuits turning on and off. Not
knowing if they are exactly on or off wouldn’t Just as quantum encryption is
QUANTUM VERSUS CLASSICAL make much sense from a computing point fundamentally different from current
of view. In fact, that would lead to errors encryption methods based on mathematical
Although quantum theory is over a century in calculations. But the revolutionary idea complexity, quantum computers are
old, the current quantum revolution is based behind quantum information processing is fundamentally different from current classical
on the more recent realization that uncertainty that quantum uncertainty — a fuzzy in-between computers. The two are as different as a
— a fundamental property of quantum “superposition” of 0 and 1 — is actually not car and a horse and cart. A car is based on
particles — can be a powerful resource. At the a bug, but a feature. It provides new levers harnessing different laws of physics compared
level of individual quantum particles, such as for more powerful ways to communicate and to a horse and cart. It gets you to your
electrons or photons (particles of light), it’s process data. destination faster and to new destinations
impossible to precisely know every property previously out of reach. The same can be
of the particle at any given moment in time. QUANTUM COMMUNICATION AND said for a quantum computer compared to
For example, the GPS in your car can tell you QUANTUM COMPUTING IN ACTION a classical computer. A quantum computer
your location and your speed and direction harnesses the probabilistic laws of quantum
all at once, and precisely enough to get you to One outcome of the probabilistic nature of physics to process data and perform
your destination. But a quantum GPS could quantum theory is that quantum information computations in a novel way. It can complete
not simultaneously and precisely display all cannot be precisely copied. From a security certain computing tasks faster, and can
those properties of an electron, not because of lens, this is game-changing. Hackers trying to perform new, previously impossible tasks such
faulty design, but because the laws of quantum copy quantum keys used for encrypting and as, for example, quantum teleportation, where
physics forbid it. In the quantum world, transmitting messages would be foiled, even information encoded in quantum particles
we must use the language of probability, if they had access to a quantum computer, or disappears in one location and is exactly (but
rather than certainty. And in the context of other powerful resources. This fundamentally not instantaneously) recreated in another
computing based on binary digits (bits) of 0s unhackable encryption is based on the laws of location far away. While that sounds like sci-fi,
and 1s, this means that quantum bits (qubits) physics, and not on the complex mathematical this new form of data transmission could be a
have some likelihood of being a 1 and some algorithms used today. While mathematical vital component of a future quantum internet.
likelihood of being 0 at the same time. encryption techniques are vulnerable to being
cracked by powerful enough computers, A particularly important application of
Such imprecision is at first disconcerting. quantum computers might be to simulate

47

and analyze molecules for drug development quantum computers are operational today, a resources, and quantum expertise. Even if
and materials design. A quantum computer major hurdle to scaling up the technology is quantum computers may be a decade away,
is uniquely suited for such tasks because it the issue of dealing with errors. Compared waiting until then to adapt would be too
would operate on the same laws of quantum to bits, qubits are incredibly fragile. Even the late. The time to start the process is now.
physics as the molecules it is simulating. Using slightest disturbance from the outside world
a quantum device to simulate quantum chem- is enough to destroy quantum information. 02. IDENTIFYING USE CASES: Nobody could have
istry could be far more efficient than using the That’s why most current machines need to predicted the myriad ways that classical
fastest classical supercomputers today. be carefully shielded in isolated environments computers impact every aspect of our
operating at temperatures far colder than lives. Predicting quantum applications is
Quantum computers are also ideally outer space. While a theoretical framework for equally challenging. That’s why, in order
suited for solving complex optimization tasks quantum error correction has been developed, to fully tap into the potential of quantum
and performing fast searches of unsorted data. implementing it in an energy- and resource- computing, business leaders and experts
This could be relevant for many applications, efficient manner poses significant engineering in different sectors such as health, finance,
from sorting climate data or health or financial challenges. or energy must connect with quantum
data, to optimizing supply chain logistics, or researchers and hardware/software
workforce management, or traffic flow. Given the current state of the field, it’s engineers. This will facilitate the develop-
not clear when or if the full power of quantum ment of industry-specific quantum solutions
PREPARING FOR THE QUANTUM FUTURE computing will be accessible. Even so, business tailored for currently available quantum
leaders should consider developing strategies technologies or for future scalable quantum
The quantum race is already underway. to address three main areas: computing. Interdisciplinary expertise and
Governments and private investors all around 01. PLANNING FOR QUANTUM SECURITY: Current data training will be critical to building and
the world are pouring billions of dollars into growing the quantum app store.
quantum research and development. Satellite- encryption protocols are vulnerable not
based quantum key distribution for encryption only to future quantum computers, but also 03. THINKING THROUGH RESPONSIBLE DESIGN: Who
has been demonstrated, laying the groundwork to ever-more powerful classical computers. will develop and have access to quantum
for a potential quantum security-based global New standards for encryption (whether technology, and how will users engage
communication network. IBM, Google, classical or quantum) are inevitable. with it? The impact of AI and blockchain
Microsoft, Amazon, and other companies Changing over to a quantum-secure has demonstrated the need to consider
are investing heavily in developing large-scale architecture and supporting infrastructure the social, ethical, and environmental
quantum computing hardware and software. for data security will require planning, implications of new technologies. It’s
Nobody is quite there yet. While small-scale early days for the quantum industry. That
provides a rare opportunity to embed
inclusive practices from the start and build
a responsible and sustainable roadmap for
quantum computing.

The rapid growth in the quantum tech sector
over the past five years has been exciting. But
the future remains unpredictable. Luckily,
quantum theory tells us that unpredictability is
not necessarily a bad thing. In fact, two qubits
can be locked together in such a way that
individually they remain undetermined, but
jointly they are perfectly in sync — either both
qubits are 0 or both are 1. This combination of
joint certainty and individual unpredictability
— a phenomenon called entanglement — is
a powerful fuel that drives many quantum
computing algorithms. Perhaps it also holds
a lesson for how to build a quantum industry.
By planning responsibly, while also embracing
future uncertainty, businesses can improve
their odds of being ready for the quantum
future.

SHOHINI GHOSE IS A QUANTUM PHYSICIST AND
PROFESSOR OF PHYSICS AND COMPUTER SCIENCE AT WILFRID
LAURIER UNIVERSITY. SHE IS THE PRESIDENT OF THE
CANADIAN ASSOCIATION OF PHYSICISTS, A TED SENIOR
FELLOW, AND THE FOUNDING DIRECTOR OF THE
LAURIER CENTRE FOR WOMEN IN SCIENCE.

48 TECHNOLOGY

BY
IAN GROSS,
KRISTOFER “KRIFFY”
PEREZ AND
BEE-LIAN QUAH

E ven before
COVID-19,
mobile payment
platforms were
experiencing a
boom in the US
and China. Apple
Pay (US) and
Alipay (China)
have radically
changed the way people transact, offering
secure, contactless payment options through
mobile phones. Though both platforms are
growing, Alipay is outperforming its US peer:
As of late 2019, Bain & Company found that
only 9 percent of American consumers had
adopted Apple Pay while 81 percent of
Chinese consumers used Alipay. Given the
size difference between the two countries, the
difference between the number of Alipay users
in China and Apple Pay users in the US is
staggeringly large. What are some of the and fast: NFC technology is extremely quick, ing for necessary software and training for
factors driving this stark contrast? and consumers can use their fingerprint to employees. Around the time of Apple Pay’s
Based on our extensive financial services authenticate the transaction, significantly launch, only around 10 percent of all point
industry experience and work with platform reducing fraud. But for the average US con- of sale terminals were NFC enabled, and
companies, we found two key strategic drivers sumer, paying with Apple Pay only saved a the cost challenge to merchants and limited
for successful platform adoption: 1) Create few seconds during in-store transactions and benefit to consumers hampered adoption.
value for all parties and 2) Monetize the thus was only marginally more convenient
ecosystem, not just the product. So far, Apple than paying with a debit or credit card. In 2019, five years after its launch,
Pay has only marginally accomplished the first Apple Pay’s domestic growth remained slow:
while Alipay has mastered both. Other plat- Apple was less focused on mutually Only around 6 percent of people who could
form leaders can learn from their examples. beneficial partnerships with banks and mer- use Apple Pay at a physical point of sale
chants. Assuming customers would adopt were doing so, despite the fact that almost
APPLE PAY FOCUSED ON THE CONSUMER their platform quickly, Apple attempted to all point-of-sale terminals that are shipped
monetize it from the very beginning and in North America today are NFC enabled.
The Steve Jobs-driven culture of focusing charged banks and issuers around 0.15 There’s good reason to believe the number
relentlessly on customer experience was core percent per transaction for Apple Pay — on of users has grown significantly during the
to Apple’s development of Apple Pay, which top of regular credit card processing fees, pandemic, but it would require years of ex-
launched in 2014. The premise was simple: which range from 1.15 percent + $0.05 to ponential growth in adoption to even begin
Apple Pay relied on encrypted near-field com- 3.15 percent + $0.10 per transaction. This to match Alipay’s dominance in China.
munication (NFC) signals from point of sale meant that there was little incentive to
devices that would allow users to pay with adopt the new technology — especially given ALIPAY FOCUSED ON CREATING VALUE FOR
their iPhones instead of a credit card. Apple implementation costs for new NFC-equipped ALL PARTIES, NOT JUST FOR CONSUMERS
Pay seemed to offer a genuinely futuristic con- point of sale terminals, which could cost
sumer experience that was secure, seamless, between $1,000 and $2,000 when account- Alipay, which was spun off from Alibaba in
2011 and became Ant Financial (now Ant