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August 4, 2004 

Tech Elect

 Q&A: CPCP Founder David Baeckelandt on Multilingual Importance, Mentoring 8/3/2004
The mission of Going Global is to educate and inform Midwest technology companies on what local technology companies are doing internationally so other firms can learn from the successes of like-minded peers.

CHICAGO – ePrairie international columnist Michael Muth concludes his Q&A with David Baeckelandt, the founder of Chicago Pacific Capital Partners (CPCP) and the president of Chicago Pacific Capital Advisors (CPCA), by delving into Japanese mentoring and the business importance of being fluent in multiple languages.

Michael Muth: Is the role of mentor the same or different when working with Asian companies?
David Baeckelandt: In the one case where I had extensive involvement (Tully's Coffee in Japan), the interaction between senior management and the lead VC (H. Suga of MVC, who is a good friend of mine) was daily, extensive and far less acrimonious than what I have seen in the U.S. or Canada.

MM commentary: Mentoring is heavily dependent on the culture of the mentor or mentee.

Acrimony is not necessarily bad (depending on what works for the relationship). Speaking generally, because many Japanese are less confrontational, it’s not surprising there would be less acrimony. The test is whether or not objectives are achieved, which might or might not take acrimony to achieve.

MM: Are Americans receptive to mentoring the establishment of Asian concepts (such as kai-zen)?
DB: In order to truly implement those concepts, one needs to have learned the concepts from the inside. There are only a handful of Americans in the greater Chicagoland area who have enough real experience in implementing those concepts.

More fundamentally, sound business practices are nearly universal. I don't really know if the average American entrepreneur would be receptive to a sage-like investor chanting the merits of kai-zen.

MM: Would you suggest locating in Tokyo versus Kansai, Chubu or Kyushu-Yamaguchi?
DB: If you’re in a prestige business (such as financial services) and don’t have a long history with your client base, you should choose a good address and Class A building to operate from in Tokyo.

If your customer base is in Kansai, you should be there. However, if you really believe you have the best little mousetrap or you have a business that requires a physical presence in Japan but not the necessity to be in Tokyo, there are great incentives in Kita-Kyushu and Chubu.

MM: What pan-Pacific concepts are attracting capital these days?
DB: There is a large amount of Japanese institutional investor interest in nanotech, biotech and other areas where the core science is advanced in the U.S.

There also continue to be the occasional deals where growing firms (especially from greater China) purchase a firm in the U.S. USTI’s 2003 purchase of Commworks is a good example.

MM: Please describe the differences in the capital markets in Honolulu, Shanghai and Tokyo.
DB: As cliché as this may sound, Honolulu is an interesting outpost that’s somewhat suspended between the U.S. and Asia. Shanghai is the wild west with a lot of restrictions. Tokyo is a clean and ethical but very structured place.

Once you know the rules and are plugged in, Tokyo is the best place to be involved in the capital markets.

MM commentary: The operative term here is “plugged in,” which can take a lot of time and money to become.

MM: What’s hot in Beijing?
DB: The Chinese and Japanese have a more extensive adoption of and more sophisticated technology in the wireless field than we do in the U.S. Some of the features you see touted in the U.S. as exciting innovations were prevalent in 1998 or 1999 in Tokyo and Shanghai.

MM: How are Malaysian debt ventures markets different?
DB: The Malaysian government is an active backer of venture opportunities in Malaysia. They have an incredible pool of talented, multilingual and multinational people involved.

While Western businessmen may look askance at some of the previous public pronouncements by prime ministers, Mahathir set the tone for Malaysia as one of the most successful and enduring tigers in southeast Asia.

The debt ventures opportunity allows Malaysian start-ups to tap into capital and resources in systematic ways. They’re doing many of the things that the Illinois Coalition and others have promoted in Chicago.

MML How well do you speak Japanese, Mandarin and other languages?
DB: My Japanese is solidly proficient for reading, writing and speaking. I don't speak any other Asian languages with any proficiency.

MM: How much has that helped your success?
DB: Very little. It helped in establishing by bona fides in Japan but more important than the language is knowing the country, people, customs and history. My sense is that this is true for any market. If you know it well and show enthusiasm for the people, the rest falls into place.

MM commentary: I think he is underestimating the power of his Japanese language-speaking ability. Everyone in the world is most comfortable working in their native tongue. He can do that with the Japanese. You gain unbelievable amounts of trust when you can communicate with them in their mother tongue.

While I wholeheartedly agree that the other points are important, learning the language gives deep and important insights into these other cultural aspects as well.

I speak German. There is a definite relationship with the German language, which is very structured. How the Germans live and work is very structured as well. While it’s no guarantee of success if you speak a foreign language, you help yourself whenever you can develop these skills.

Even the French treated me well when I tried to use my simplistic “bonjour,” and “merci” comments. When you call Baeckelandt and can’t reach him, by the way, his outgoing voicemail message is in English and Japanese. There are good reasons for that.

MM: Is there anything important about the financial history of Japan, China and Asia that’s helpful to know?
DB: Absolutely. Understanding the past helps one navigate the present. There is both a history of exchange and a history of tension between Japan, China and Korea. Unless you’re familiar with the hows and whys of that, you limit your chances for success.

I have seen men of stature in Chicago poison the waters with high-ranking Japanese by reminiscing about things Korean or Chinese. It’s the same kind of sensitivity you would want to employ in making sure you’re sensitive to things in Chicago relative to the coasts.

To take a cogent example, we proudly recognize our role in the commodities and futures markets in Chicago. Japanese traders, though, had the world’s most advanced futures markets all the way back in the 1700s!

In the venture capital arena, Japanese venture capitalists were operating at a highly sophisticated level back in the mid-1800s. My former graduate school professor, Ron Toby in Urbana, Ill., is probably the leading professor on that subject.

MM commentary: In the U.S., we look to the future when we’re not asking what you’ve done for me lately. The rest of the world is much more concerned with history and we’d do well to pay more attention to that.

MM: How well did the University of Illinois and Konan University prepare you for these ventures?
DB: The University of Illinois was a great place to stay grounded in Illinois while having fairly broad international contacts. If it were not for them, I would not have had the opportunities before me today.

MM commentary:While I didn’t attend the University of Illinois, I’m pleased to learn there apparently is a Japanese pipeline there.

Michael Muth is managing director of GATA, an international business development consultancy that helps technology companies build international partnerships. He can be reached at mike@intlalliances.com.
Click here for Muth’s full biography.

Previous Columns:
Q&A: CPCP Founder David Baeckelandt on Japanese Disclosure, Due Diligence (7/27/2004)
Q&A: Chicago Pacific Capital Founder David Baeckelandt on Overseas Funding (7/20/2004)
Q&A: ADVIZOR Solutions CEO Doug Cogswell on the Art of Partnering (7/13/2004)
Q&A: ADVIZOR Solutions CEO Doug Cogswell on BP, AstraZeneca Wins (7/6/2004)
Q&A: ADVIZOR Solutions CEO Doug Cogswell on Global Software (6/29/2004)
Q&A: CEO Terry Howerton on Why Chicago, Ukraine Made FastRoot (6/22/2004)
Q&A: FastRoot CEO Terry Howerton on Blended Chicago Approach (6/15/2004)

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