Markets


“When Cultures Collide”

Thanks to Rod Rothwell – an Aussie doing business in Korea – for bringing this to our attention.

According to  “When Cultures Collide“ by British linguist Richard D. Lewis,who has mapped out leadership styles and cultural identities, cultures have different approaches to communication in business negotiations.

Lewis speaks ten languages, so he realistically warns of the danger of cultural comparisons and generalizations. However, he finds that there are also “national norms:”

By focusing on the cultural roots of national behavior, both in society and business, we can foresee and calculate with a surprising degree of accuracy how others will react to our plans for them, and we can make certain assumptions as to how they will approach us. A working knowledge of the basic traits of other cultures (as well as our own) will minimize unpleasant surprises (culture shock), give us insights in advance, and enable us to interact successfully with nationalities with whom we previously had difficulty.

Lewis’ communication diagrams follow these conventions:

  • Wider shapes show greater conversational range
  • Obstacles are marked in gray
  • Cultural traits are also noted.

Vive la Différence!

How do the different nationalities compare? Here’s how they tend to communicate:

  • Americans tend to launch straight into negotiations, respond to discord confrontationally, and resolve with one or both sides making concessions.
  • Canadians, while similarly direct, can be more low-key, and inclined to seek harmony.
  • English may avoid confrontation in an understated, mannered, and humorous style
  • French often engage vigorously in a logical debate.
  • Germans rely on logic, while amassing more evidence and laboring their points more than the British or French.
  • Spanish and Italians “regard their languages as instruments of eloquence and they will go up and down the scale at will, pulling out every stop if need be to achieve greater expressiveness.”
  • Scandinavians can have entrenched but often reasonable opinions formulated “in the long dark nights.”
  • Swiss tend to be straightforward and unaggressive negotiators, obtaining concessions by expressing confidence in the quality and value of their goods and services.
  • Hungarians value eloquence over logic and are unafraid to talk over each other.
  • Bulgarians may take a circuitous approach to negotiations before seeking a mutually beneficial resolution, which will often be screwed up by bureaucracy.
  • Poles often have a communication style that is “enigmatic, ranging from a matter-of-fact pragmatic style to a wordy, sentimental, romantic approach to any given subject.”
  • Dutch are focused on facts and figures but “are also great talkers and rarely make final decisions without a long ‘Dutch’ debate, sometimes approaching the danger zone of overanalysis.”
  • Chinese tend to be more direct than the Japanese and some other East Asians; however, meetings are principally for information gathering, with the real decisions made elsewhere.
  • Hong Kongers negotiate much more briskly to achieve quick results.
  • Indians speak English in a way that “excels in ambiguity, and such things as truth and appearances are often subject to negotiation.”
  • Australians tend to have a loose and frank conversational style.
  • Singaporeans generally take time to build a relationship, after which they can be shrewd negotiators.
  • Koreans tend to be energetic conversationalists who seek to close deals quickly, occasionally stretching the truth.
  • Indonesians tend to be very deferential conversationalists, sometimes to the point of ambiguity.
  • Israelis tend to proceed logically on most issues but emotionally on some.

 

communication styles

 

 

 

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Mastercard Measures Women’s Financial Literacy

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In view of recent studies showing U.S. women to still lag men in financial literacy, an assessment of financial literacy conducted among women in the Asia-Pacific region has also turned up surprising results.  Intuitively it would seem that women in the most developed economies such as Japan, Korea, Australia or Singapore would have the highest level of financial savvy would be found in. But MasterCard Worldwide’s inaugural Index of Financial Literacy among women in the Asia-Pacific region shows this not to be the case.

The Thais Have It

The most financially savvy women were, in fact, found by MasterCard to be in Thailand, with an overall index score of 73.9 out of 100.

MasterCard’s overall index is made up of three components:

  • Basic money management weighted at 50%. This is to determine the level of basic money management skills in terms of budgeting, savings, and responsibility of credit usage;
  • Financial planning weighted 30%. This is to assess the level of knowledge of financial products, services, and concepts and the ability to plan for long-term financial needs; and
  • Investment weighted 20%. This to determine basic understanding of the various risks associated with investment, different investment products and skills required.

Notably, Thai women also had the highest scores in financial planning (87) and investments (69.3), outshining their peers in the other 12 Asia-Pacific markets surveyed by MasterCard.

Of the three components that make up MasterCard’s survey, women across the 13 Asia-Pacific countries as a whole scored the best in financial planning (average score 74.6), followed by basic money management (63.9) and investment (56.7). The overall average score across the 13 markets was 66.3.

Vietnamese Do Well Too: Also of significance was that women in another early-development stage market, Vietnam, also performed well to take sixth place with an overall index score of 70.1. Women in three other developing markets surveyed were also in the MasterCard’s index’s top-10: The Philippines (overall score 68.2), Indonesia (66.5) and Malaysia (66).

Georgette Tan, vice-president, communications for MasterCard, Asia-Pacific, Middle East and Africa, said of the strong performance of Thai and Vietnamese women in the rankings:

These are markets where rapid socio-economic advancement has given women vital and valuable first-hand entrepreneurial experience and exposure to financial planning and money management concepts.

Women in Singapore were in third overall place with a score of 72.4, thanks to good scores on basic money management (70) and financial planning (80.4). But they fell short in terms of investment skills and knowledge, scoring of 51.5, well below the regional average.

Women in Key Developed Markets Surprisingly Lag

Bringing up the rear in the survey were women in the developed markets of Korea, with the lowest overall index score of 55.9, and in Japan with the third-lowest overall index score of 59.9. Women in Korea and Japan were also the only ones in the region with financial literacy index scores of below 60.

Women In Other Developed Markets Excel

Women in New Zealand had the second highest overall index score (73.8) followed in fourth position (71.6) by Australian women, leading the field in basic money management with scores of 76.7 and 75.8 respectively. However, they both fared poorly on financial planning – coming in under the overall survey average – and on investments with scores of 58.3 and 55.2, respectively.

Indian and Chinese Women Lag

In the most populous developing markets, India and China, women had overall index scores of 62.5 and 60.1, respectively. This ranked Indian women fourth lowest and Chinese women second lowest. MasterCard found that Indian and Chinese women are particularly weak in basic money management, scoring 58.8 and 54.4, respectively.

Counter Intuitive Findings on Korean Women Yield Cultural Insights

Women are the Household Financial Decision Makers: Mastercard found that the majority of Korean women polled were the household financial decision makers. This was certainly true during my 15 years in Korea. I spent some years serving as General Manager of Marketing at Samsung Life, Korea’s leading insurer, where the traditional Financial Consultant channel was  female.

Yet Financial Literacy Remains Low: Ironically, Korean women had the lowest financial literacy scores:

  • Lowest financial literacy score (55.9)
  • Lowest in basic money management (51.1)
  • Lowest in financial planning (65.7).
  • In investing, only 22% of Korean women had a basic understanding of inflation and its impact on the future value of money.
  • Only 40% said they understood the concept of compound interest rates.
    • 36% did not understand the concept; 24% were unsure or did not know.

Japanese women had the lowest investment score (38.4).

Why? Traditional Societies Have Strong Cultural Differences

1. Little Experience With Equities Based Products: It is important to note that there are strong cultural differences that can largely account for these findings. Korea doesn’t have a long history with equities-based products. Traditionally,  investor clubs, called kae are used to raise seed money for businesses. The first recipients cede some of their cumulative periodic investment for the privilege of being the first to have access to a lump sum for investment. Later recipients receive back earnings as a result. But the pool is based entirely on monthly contributions of the members and there is no actual appreciation or interest on that pool.

2. Fixed Investments and Real Estate Are King: A second important Asian trend is a traditional emphasis on fixed income investments vs. equities. As highlighted in my article, The Declining Role of Equities, while investors in Europe, the United States, and wealthier parts of Asia, such as Hong Kong, hold 30% to 40% of their financial assets in equities, new investors in emerging economies keep 75% in deposit accounts.

General Observations and Conclusions

Women Need to Round Out Their Financial Skills: As an overall observation, while it is a broad generalization, women from traditional societies where they are the household decision makers tend to excel in money management, yet fall short in  investment skills and knowledge.

By contrast, research on U.S. women shows them still lacking confidence in money management skills, although their long-term family-oriented focus equips them to do better than U.S. men in long-term planning.  In comparison, the more transactional quantitative decisions such as budgeting or investing are typically more appealing to U.S. men who enjoy the “game” of it, than to U.S. women.

Financial Literacy Education Is Invaluable: The high scores of the women of Thailand, New Zealand, Singapore, Australia and Taiwan show that, regardless of cultural differences,  empowered women anywhere are a force to be reconed with.

One finding of the MasterCard research that can be generalized to all women was a close correlation between financial knowledge and planning – women who exhibited higher levels of financial literacy were more likely to be proactive in planning for their future. This shows that financial literacy training can be a potent tool for women financial consumers.

At Samsung Life, we invested heavily in educating the Financial Consultants in principles of financial planning that they could pass on to their clients, while introducing variable life, annuities and mutual funds to the product mix. The results were highly successful. This shows that an investment in female financial literacy is an invaluable investment for financial firms.

Financial planners have a receptive market with U.S. women, who have an advantage over U.S. men in long-term planning skills, and one way to reach them is to recruit and develop more female financial planners.  Helping women to round out their money management and investment knowledge will make them more confident consumers for investment products. In particular, women’s lower risk tolerance would make them a natural market for today’s Equity Indexed life insurance and annuity products, as well as Variable Annuities with living benefit guarantees that lock in gains and guarantee an income base for future annuitization.

Related Articles

Study: Gender Gap In Financial Literacy Grows

Seven Steps to Overcome Women’s Top Money Fears

The Declining Role of Equities

Equity Indexed Universal Life Insurance: Enticing New Alternative

Indexed Annuity Sales Excel in Low Interest Rate Environment


It's so hard to find a good pet insurance salesman.

Strong Growth Pet-ential

The pet insurance market is a rapidly emerging market, with spending estimated at $450m in 2011, according to a recent articlein Stl Today. In fact, a new study by Packaged Facts indicates that sales of pet insurance policies are actually growing faster than the sales of veterinary services. Following a jump of 27 percent from 2007 to 2008, pet insurance sales rose 16 percent from 2008 to 2009, according to Packaged Facts. Sales of veterinary services rose 10 percent during the same year.

Pet insurance revenue in North America totaled $354 million in 2009, up from $310 million in 2008, according to a Packaged Facts estimate.  The growth is not expected to end, estimates Packaged Facts, which says pet insurance sales in the United States could climb toward $760 million by 2014.

According to APPA (American Pet Product Association), the number of US households that own pets has steadily increased to an all-time high of 72.9 million in 2011/2012.  APPA also projects that pet owners are going to spend up to $12.2 billion dollars for veterinary care in 2012.

Pet health insurance has been available in the United States for nearly 30 years, but expanded veterinary treatments and changing attitudes toward the family pet have bolstered the number of policies over the last decade, even during the economic downturn. Three percent of the nation’s 78 million dogs and 1 percent of its 93 million cats are now covered, according to a recent American Pet Products Association estimate. That’s up from 1 percent of dogs and virtually no cats covered in 1998.

What’s the potential for this market? Pet insurance has gained wide acceptance in some European countries, such as the United Kingdom, where 20 percent of pets have policies, and Sweden, where at least 30 percent of pets are covered, according to New York-based research firm Packaged Facts. St. Louis-based Nestlé Purina PetCare, which started its PurinaCare insurance subsidiary in 2008 and has expanded coverage to all 50 states, believes that eventually 10 percent of U.S. pets will be covered by insurance.

Changes in people’s social support systems — higher divorce rates, fewer children and people living farther away from their families — has helped drive this trend, said James Serpell, a veterinary ethics professor at the University of Pennsylvania’s School of Veterinary Medicine. “We’re using animals to replace what we’re losing in human social relationships,” he said.

Who Let the Dogs Out?

In 1982, VPI Pet Insurance issued the first pet insurance policy in the United States. VPI has long dominated the industry, but it has lost market share in recent years as more providers emerged. VPI had 52 percent market share in 2009, according to Packaged Facts, down from 68 percent in 2005. The number of pet insurance providers in the nation doubled over the last decade from six to a dozen in 2010.

Among the newcomers is Nestlé Purina. After studying the pet insurance market for three years, the company felt it could be competitive by drawing on its experience and research in pet health.  According to company executives, a void existed in the market for people to access information about what pet policies covered. Packaged Facts estimates it still has less than 1 percent of the North American pet insurance market. However, the entry into the market of such a large global consumer products conglomerate, no less one as cautious and conservative as Nestlé Purina is a sign of the market’s strong growth potential.

Rivals include pet retailer PetCo and the financial services division of grocery chain Kroger. There’s speculation that Wal-Mart will introduce a pet insurance product at its Canadian stores this year.

“I think that the tipping point will be when big retailers get into it, and we’re right on the verge with retailers exploring it,” said Kristen Lynch, executive director of the nonprofit North American Pet Health Insurance Association, whose members include pet insurance providers.

Still Laughing? You Haven’t Seen the Bill

Veterinary care isn’t cheap. It’s second only to food in the amount people spend on pets. Of the $50 billion expected to be spent this year on pets, $14.11 billion will be for vet bills, up from $13 billion last year.  Visits to the office can start at $100 but can quickly add up to several thousand dollars when multiple procedures are performed.  Treatment for some chronic diseases such as cancer can cost pet owners more than $300 a month. Many pet owners are willing to pay the cost, with or without insurance.

By comparison, monthly pet insurance premiums can be a bargain. They can start at around $10 but can exceed $100 for some older dogs. Plans may allow pet owners to pay lower premiums in exchange for bearing a higher percentage of the bill, between 30 percent and 40 percent of eligible expenses.

Some of the higher-end preventive plans cover heartworm and flea medications in addition to vaccines and annual exams while some lower-cost plans just provide coverage for unexpected accidents and illnesses.  A $1,180 vet bill for a dog’s broken leg under VPI’s Super Plan, for example, will reimburse the pet owner $1,002. With a lower monthly payment, VPI will reimburse $626 of the vet’s bill.

Consumer Reports’ Money Adviser newsletter’s article analyzing VPI, ASPCA Pet Health Insurance, 24PetWatch QuickCare and Trupanion concluded that for generally healthy animals, pet insurance isn’t worth the cost, and establishing an emergency fund for unexpected pet bills is a better choice. Still, the report stated that for young pets that develop a chronic condition or illness after the policy is in place, having the policies paid off.

Time to Let the Cat Out of the Bag

As the market for pet insurance continues to grow, ReviMedia has launched a new website that gives a general overview of pet insurance options and provides users with all the necessary information for choosing the right plan for their pet. PetInsuranceComparison.net was designed to support pet owners in making an informed, independent decision and to have a positive effect on the pet insurance industry’s growth.

ReviMedia, Inc, which has offices in New York City, Panama and Holland, specialized in developing and executing direct response and performance marketing campaigns. It has a industry leading platform and campaigns focusing on high quality lead generation in insurance verticals, exclusive in-house offers and more.

Who do marketers need to target? The Packaged Facts report suggests that the best candidates might be upper income households who already indulge their pets. According to their data on who is buying pet insurance, nearly 7 percent of dogs who are taken to the veterinarian three or more times per year are covered by insurance. So are 5.3 percent of dogs belonging to a household with an income of $60,000 or more. About 5 percent of large-dog owners purchase pet insurance, as well as 4.5 percent of owners who spend $240 or more per year on dog-related expenses.