Q/A: China Awakens to the Strategic Upside of Latin America

Nearshore Americas sat down with Luis Robbio, the CEO of Argentina-based Belatrix Software, to get the perspective of a Latin American outsourcing exec with some experience in China. Robbio was a panelist at the recent Sixth Annual China-LAC Business Summit in Hangzhou, China, and offers his perspectives on the opportunities and risks involved in doing business in China, and the significance of the difference in cultures.

NSAM: Can you give us a brief overview of the China-LAC Business Summit – your impressions and key takeaways?

Luis Robbio: One key conclusion was that up until now China has been largely focused on acquiring resources, but the Chinese economy is beginning to mature, and the need for services is growing rapidly. Everyone agrees the relationship between China and Latin America is just beginning. China is now the largest foreign investor in Argentina. The leadership in China understands the unique competitive position of Latin American countries in terms of offering nearshore-enabled agile software development with U.S. companies, and knows that they have to foster a relationship with these countries if they want to get a piece of the pie.

NSAM: Please tell us a little bit more about the “Trade in Services” panel you participated in.

Luis Robbio: I had the honor of serving on the panel with Blanca Treviño, the CEO of Softtek, and a representative from China as well as the CEO of an outsourcing provider from Uruguay. The key conclusion of the panel was that although miniscule at present, trade in services between China and LAC has great potential for growth and expansion. Furthermore, that both government and industry associations had important roles to play in the development of the trade in services over the next few years.

Just as an aside, I should mention that Blanca put forth the claim that Softtek was not just an early leader in developing the nearshore industry, but actually coined the term in the mid-90s.

NSAM: Can you share a few details from your experiences in setting up a joint venture in China?

Luis Robbio: Yes. The project was a software testing joint venture between a Boston-based client who wanted a presence in China and Belatrix. Eastern Ocean Solutions was founded in 2009, and hired about 20 software engineers, and over 90% of the hires were local Chinese engineers. We received strong support from the authorities in Donghai, but we did have some difficulties recruiting talent locally so we moved some operations to Beijing. Eastern Ocean Solutions was operational for a little over two years, then our partner was bought out and the acquirer had a completely different focus and decided to pull out of the joint venture.

I was in Donghai, which means eastern ocean by the way, for almost two months in late 2009, and it was an eye opening experience for me. I began with the idea of learning to speak Mandarin, but it soon dawned on me that there was a large cultural divide as well as the difficulty of learning a completely new language with tones, so I gave up on it. The experience did give me a lot more perspective on the “poor English” of some of my Chinese colleagues, given both the cultural and linguistic differences to be bridged.

NSAM: You mention cultural differences – not necessarily as a negative, but as a set of issues to be carefully considered. Can you give us a few examples?

Luis Robbio: I had one embarrassing experience during my stay when I was invited for a visit with the mayor of Donghai. I had been advised to bring a gift for the mayor as I would surely receive one from him, so I came with a small gift. I accepted the gift he gave me graciously and proceeded to unwrap it right there, as this is the tradition in my country. Unfortunately, my actions prompted an embarrassed silence in the meeting room, as in China it is considered rude to open a gift in front of the giver in business situations. I was not aware of this custom, and ended up appearing a bit rude in front of the mayor. Nobody made a big deal about it, but it was a good lesson for me on the significant cultural differences between China and Latin America.

There is also the issue of the trend in the industry toward expecting outsourcing providers to do more than just complete a specific volume of work, but to add value to an enterprise in terms of innovation and creative insights into process improvements. This is a strength of Latin American outsourcers, and an area still in development in China, so it is obviously a fruitful area for partnerships.

NSAM: What are some of the potential pitfalls and risks of doing business in China?

Luis Robbio: Well, first, you definitely need a Chinese partner as it is very difficult to do business in China without one. And it is not just the language barrier to be overcome, but also a cultural divide in understanding expectations or even in just navigating local bureaucracies. Second and relating to what I was just mentioning above, you need great patience to do business in China. Things take time to get done, especially for foreign businesses who must completely comply with all legal requirements even for the smallest of transactions.