Comment: Kung hei fat choi

Kung hei fat choi – the soft mutter of the Chinese new year greeting is every where in these bustling Hong Kong streets. From Sheung Wan to Wan Chai, the mood is festive, with people meeting and greeting others and exchanging traditional red envelopes.
Chinese New Year is one of the most important holidays in Chinese society. For two weeks, one of the most powerful countries in the world quietens, softens and goes inside itself, to the core of its psyche – family.

Like waves of migrating birds fleeing to warmer climes at the end of the summer, millions of people, get on the road, on a train or on a plane to return to their origins.

From the New York-like streets of Hong Kong Central to the quiet roads of the Chinese countryside, all rush to go places, celebrate and love. It is also the occasion to rekindle bonds and alliances so important in Chinese or, more widely, Asian society – the very bonds that make business flourish and thrive in this culture.

This new Chinese year might be a more important one. Following the dramatic year of the snake, the year of the horse is all about success and energy. Luck and business success will be on the agenda. To enter so promising a year, I sought a deeper understanding of the Chinese culture by meeting Elsa Pau on one of the rare sunny afternoons you can find in a wintry Hong Kong.

Pau is the founder, publisher and chief executive of finance publisher WealthAsia, and a senior partner at Estate Solutions, an estate planning consultancy for high-net-worth individuals. A bundle of energy, she is all about impact and social change. And she has a soft spot for female empowerment – she is currently spearheading the Women Extraordinaire Forum initiative. The regional forum’s objective is to help women to gain financial savvy and independence, and unleash their leadership potential. She is one of the first women to tackle estate planning for the Chinese family, and has been incredibly successful.

To put things in perspective, Chinese people believe in life more than death. In Chinese culture, you will first find a string of spirits, dedicated celebrations – July’s Ghost Festival is major. You have to take care of the spirits –feed them, appease them, as they can be associated with bad luck and can affect personal and business life. Talking about death, let alone planning for a future after you are gone, is a huge challenge in Chinese society.

Pau sought to challenge this cultural omission. She said: “In order to crack this nut, I needed to find a group of people that dealt with death every day. It sounds a bit flippant to put it this way, but I figured if I can reach an audience that has already, somewhere, somewhat overcome the cultural taboo against talking about death, then half the battle is already won. I naturally reached out to the life insurance industry.”

Using life insurance as a conduit for estate planning appears to be an interesting choice. I would have chosen the more traditional routes of asset or wealth management.

Pau said: “There are several reasons that made the life insurance angle much more suitable. First, life insurers engage with their customers with death in mind, so they are used to asking uncomfortable questions. Reciprocally, the customer needs to be mature enough in his thinking to talk about death and its ramifications. Taking the leap to introduce them to estate planning is, then, not a huge stretch. It naturally helps to address the issue of what happens to those you are going to leave behind.

“Last year, China’s insurance regulator started to consider new marketing channels. It opened the door to capital injection for high-profile local life insurers and is now preparing to welcome international players. It is a strong sign of an upward trend for the life insurance industry, and– as a consequence – will encourage estate planning.“

Second, life insurance is easily implemented. It is questionnaire based, and the information gathered is used in premium calculation. It was then, relatively easy to weave in estate planning questions. We started asking things like: What would you like your descendants to do with the money? Where would you like to keep it? Who should be the custodian? What are the conditions you want to put inplace for them to access it? And so on and so forth. Our greatest achievement was to train the agent to guide the customer through the soul-searching process. The whole objective was to make them open up to the unusual nature of the questions. We spent quite a bit of time finding the right order and the right vocabulary.”

The complexity of processing all the information gathered appeared mind-boggling to me and I asked how this could be done. Pau said: “We use specialist software containing the 600 clauses of the estate planning code and linked that to the answers to all the estate planning flavoured questions. Once the life insurance questionnaire is done, almost automatically we get an assessment for estate planning.”

I asked about subsequent discussions with the client to propose options and decide on structure. Pau said: “This is where you get a real sense of the Chinese psyche. You get to see and sense everything. You have the opportunity to uncover the hidden feelings, worries and, at times, secrets. Who is the patriarch happy to see in charge? What level of trust does he afford any descendant? How does he perceive various risks – what if one divorces, or loves gambling? Once the gates are opened, manoeuvring through the emotional side to create something solid and sustainable is a real art. It can make a real difference to the family.”

The westerner in me saw a unique opportunity to influence wealth allocation and infuse some important messages– about responsibility and accountability. For me, this linked to current western trends for seeking social impact – the imperative to reconcile financial success with contribution to society. I asked Pau for her thoughts on this issue. I was interested in the level of interest and the opinions of Chinese high-net-worth individuals.

She said: “This is a indeed another part of what we are trying to achieve, and it resonates with my personal vision. I want to create impact for women of course, but more generally for society. While going through the estate planning exercise we make a point of raising awareness of mega-trends. With Chinese people, we are talking specifically about an ageing population and associated diseases. Our objective is to make descendants think about how they can contribute to a better life not only for their ageing parents but for ageing Chinese people in general.”

I could not help but wonder how this fits in with Chinese family tradition and culture.

“There is a real dichotomy, or tension, there,” said Pau. “Chinese culture is highly traditionalist, and the notion of free will for descendants is still a bit foreign. For the high net-worth second generation, the founder is still very present, almost dictating how he wants his money to be spent and by whom. Descendants feel stuck between expressing, or trying to express, their own business potential, and respecting their ancestors’ wishes. Mainland Chinese do not spoil their offspring in comparison with Hong Kong Chinese. They are investing in them, and they expect hardwork and value creation, and that they will proudly continue the family tradition, but in an almost predetermined way.”

Having now lived in Hong Kong for more than two years, I can vouch for the subtle but certain social evolution of the city. Heirs and heiresses of founding families are at two ends of a spectrum. At one end, they demonstrate high drive, fantastic intellect and an almost unquenchable desire to make a name for themselves – creating businesses, growing the family wealth and changing the world. Adrienne Ma and Annie Chen are names that come to mind. At the other end of the spectrum you will find the glittering jet-setters, giving a recognisable buzz to a city full of parties and gallery openings, and they are almost inevitably found in the real estate space. 

From a business perspective, Pau is a genius. She inherently managed to find an immediate outsourced salesforce by playing on what I would call an ultimate customer-value proposition enhancement – in terms of ecosystems, looking for the non-obvious and creating strategic alliances. It makes me believe even more in collaboration as a way of building sustainable businesses. Goodbye competition and short-term thinking. 

From a cultural perspective, I am even more convinced of the complexity of the Chinese psyche, and the superficial assessment one westerner can make of it. Understanding the rules of feng shui and the symbolism of Cantonese opera and the tea ceremony are next on my list of imperatives while in Hong Kong. I believe that learning from the culture, and getting more inside the Chinese head, are the key to successful business and relationship building in Greater China.

Give and learn, wait and observe, thinking long term and forgetting fast cash are the unwritten rules of the game. Do you apply these principles in your dealings with Chinese or Asian cultures?

From a social perspective, I cannot help but reflecton the path being taken by young Chinese people. How do they reconcile this subtle mix of traditions they must respect with the urge to express their individualism – the sacrosanct individuality we praise so much in the west? How can they cope with the pressure to be successful and the need to maintain family reputation? What does free will cost in such a culture?

In a world that is, in my mind, on the verge of becoming truly global, and not presenting opposing poles of wealth and influence, how will they manage to mesh tradition and modernity, to evolve yet stay true to their culture?

I will pursue these issues in the coming year. In the meantime, I hope they all harness the energetic power of the year of the horse, and gallop further than their dreams can envision.