David Olsson of King & Wood Mallesons' Beijing office says “Commitment to a longer-term strategy pays off.” We know that Chinese take a much longer-term view of things than people in Western nations like Australia, New Zealand, America, Canada and the United Kingdom. So to successfully merge with or sell your practice to a Chinese organisation is a major feat and ought to be celebrated.
Below are two stories that illustrate how tenacity pays. Two of Australia's most enduring professional service firms, formerly known as Mallesons Stephen Jaques and PTW Architects, have provided us with recent examples of how strong relationships with Chinese partners, built up over time, have resulted in significant advancements for both firms.
The merger of King & Wood Mallesons
It’s now a year since Mallesons Stephen Jaques, one of Australia’s leading law firms combined with King & Wood, China’s leading law firm, to create the world’s first Sino-foreign law firm now called King & Wood Mallesons. At the time, Wall Street Journal declared “Watch out Wall Street, here comes KWM”.
I asked David Olsson what made this merger such a success and the expected benefits that it will deliver to both markets. Here is what he said:
Interview with David Olsson, Beijing
Pamela Young: What was it that drove Mallesons to consider a merger with a Chinese firm?
David Olsson: The business drivers for the merger were clear. Australian companies were seeking growth and new business opportunities in the Asian markets and Chinese enterprises were expanding abroad to support a nation hungry for resources and expertise. In short, our clients were becoming more global and needed legal support, consistently delivered, across the region and internationally.
Both our firms shared an aspiration to create a new Asian-based powerhouse – an international law firm that would be able to meet the demands of local and global clients wanting to take advantage of the growth in the Asian region.
PY: What were the critical ingredients to making this merger a success?
DO: Any cross-border merger involving nearly 400 partner/owners and 2,000 staff across five countries and 23 offices is challenging. When half of those numbers come from vastly different cultural and linguistic backgrounds, the challenges are compounded. We knew from the start that effective integration of the firm, including cultural integration, was a business imperative and key to the success of our business strategy.
To assist us to achieve this, we made investments (and inroads) into developing our ‘cultural intelligence’ and the ability to collaborate across cultural boundaries – with colleagues, clients and other stakeholders (such as government and regulators).
Prior to the merger we rolled out an Australia-wide diversity and inclusion survey, which identified the cultural composition and diversity of our people and we are now harnessing this to drive our cultural competency – as an organisation, as teams, and as individuals.
We now have co-leaders from Australian and Chinese/Asian backgrounds for each of our practice teams and we utilise video conferencing, team off-site meetings and regular visits to create personal connections, friendships and trust between people of different cultures in the various offices.
Language skills have always been valued within the firm and we are refining recruitment policies for graduates to reflect the need to provide services to our multilingual clients.
To facilitate cross-cultural communications and operational efficiency we are in the process of rolling out a new IT system. This will support financial recording, documentation and know-how capture in both English and Chinese languages.
PY: How important is ‘understanding Chinese culture’ to your growth plans?
DO: We did not set out to make everyone an expert on Chinese culture (and vice versa for our Chinese colleagues). Our plans do, however, provide a cross-cultural framework that improves cross-cultural understandings and interactions.
We are rolling out an international secondment and exchange program, which is allowing team-members to educate each other about their respective cultures. This real-time, on-the-job learning is a powerful complement to the formalised training and resources we also provide. Cross-cultural mentoring is in our sights too, as a vehicle for cultural awareness-raising and inclusion.
PY: It is a year since the merger; how is the future looking?
DO: It has been a good first year: our new brand is being recognised internationally and it has been opening doors that were not previously open, creating opportunities that have exceeded expectations.
The changes we embarked upon are not for the faint-hearted and the complexity of the changes required cannot be underestimated. We made the merger decision with a clear vision of where we were heading, the strong leadership we needed, an open mind to new possibilities and an engaged and culturally diverse team.
While we started from a strong platform and market-leading position already established in China, we are only at the very early stages of building a whole new firm. King & Wood Mallesons will be markedly different from other firms in the future because as we grow in the region under our new global brand, we will offer more timely and innovative services to clients and present more opportunities to our partners and staff than we have been able to do before.
Author: David Olsson, Partner, King & Wood Mallesons, Beijing
The sale of PTW Architects to CCDI in China
When James Peddle started the firm which became known as Peddle Thorp and Walker in 1889 I'm sure he had no expectation that his professional descendants would expand the business across South-East Asia and then sell the practice to China Construction Design International (CCDI) 124 years later.
The deal was said to have provided many benefits including strategic capability and market reach giving PTW's Asian offices access to China's leading contracting and engineering firms.
Read The Australian report on 7 March 2013
Both these long-surviving Australian firms are now enjoying the benefits of having built trusting relationships with colleagues in China over a number of years. Their success shows that forming successful trade relationships with organisations in Asia can lead to mergers and acquisitions down the track.
Taking the first step is as easy as planning a research trip to the markets you believe are ripe for your product or service. Just call the local Chamber of Commerce, Austrade, High Commission or industry group and ask for assistance and introductions to potential business partners. It's as easy as that to get started.
Author: Pamela Young