Immigrant effect good for business

By HENRY CHUNG*

Winston Peters' desire to limit Asian immigration could have far-reaching effects for companies operating in or planning to operate in China, Taiwan and Hong Kong. The contribution made by Asian immigrants goes beyond the money they bring in, either as business people or foreign students.

Greater China has been identified as a key global market for New Zealand businesses. It is clear that businesses operating there are more successful when there is an "immigrant effect".

This effect is present when the business employs Asian immigrants to help to market its products in the immigrants' country of origin.

The impact of Asian immigrant employees in a business is most obvious in the knowledge they have of their country's culture, language and business operations. This innate knowledge is significant to a company's success.

I have researched 233 Australian and New Zealand companies conducting business in China, Taiwan and Hong Kong. Among them, 134 were from Australia and 99 from New Zealand. The project considered the impact of the immigrant effect and how it affected the companies' decision-making and marketing strategy.

Fifty-four of the Australian firms (40 per cent) and 44 New Zealand firms (44 per cent) were confirmed to have this effect.

Studies conducted in Australia and North America have established a positive relationship between immigrant input and international trade and investment.

These studies suggested that an immigrant's knowledge of the market, cultures, languages and business contacts provided a foundation for the resident country to build international trade and investment relationships with the immigrant's source country.

So a company considering investment or a trade relationship with Greater China markets is likely to be more successful if it draws on the knowledge of its Asian immigrant employees.

My research confirmed that immigrant input played an important role in product and price adaptation. This was because of immigrants' good knowledge of their country of origin and their better appreciation of the pricing structure of the host markets. Most important, for the first time, this study uncovered evidence that the immigrant effect assisted firms to achieve higher financial performance in Greater China.

The research shed considerable light on the impact of immigrant effects on the selection of a marketing strategy. Key industries that have used immigrant input to market their products successfully in the host markets include primary producers (apples, meat, fish), the manufacturing sector (home appliance and radio systems), beverages (beer) and the service sector (tertiary education providers).

Within the primary produce sector immigrants often help their employers to modify key products (packaging, design and positioning) and pricing strategies (wholesale and retail pricing).

These modifications are crucial to the success of marketing these sorts of products in the Greater China markets because cultural, consumption and buying behaviour is different. As manufacturing goods are often distributed through a fragmented and multilayered distribution system in these markets, these modifications are necessary for a successful business venture.

Finally, immigrants help service providers to identify key educational, cultural and marketing factors.

Because of their familiarity with local languages and the marketing environment, the immigrant employees are often able to establish a closer personal relationship with their customers.

Guan xi (personal relationship) has been cited as one of the most important elements of doing business in Greater China.

Immigrant input is also used by a large number of Australian firms to achieve their business goals when operating in these markets. Examples are evident in the wine and housing sectors.

Customisation of these items has positioned Australia as one of the most popular wine exporters to these markets.

Considering the debate about the issue of immigrants, led by Mr Peters, the impact of the immigrant employee effect deserves greater attention.

There is evidence that Asian immigrants help firms to achieve their marketing objectives in the global marketplace. I hope the findings from this study will lead to a better appreciation of the contribution that new immigrants make to society.

* Dr Henry Chung is a senior lecturer in marketing at Manukau Institute of Technology. A report of his research findings will be published in the Journal of Global Marketing.

* The Herald wants people to have their say on immigration issues. Send contributions to dialogue@nzherald.co.nz.

Herald feature: Immigration