2018 THE LAUDER GLOBAL BUSINESS INSIGHT REPORT Facing — and Embracing — Change INTRODUCTION THE LAUDER GLOBAL BUSINESS INSIGHT REPORT 2018 Facing — and Embracing — Change Across the world, business leaders, policy makers and ordinary citizens are coming together to effect change and create a better tomorrow. As they look to what worked in the past, they face the future knowing that growing pains are inevitable. In this special report, students from the Joseph H. Lauder Institute for Management & International Studies traveled the globe to offer unique perspectives gleaned from interviews, observation and research into the ways countries are confronting change on a global scale. Dive into the politics of culture as developing economies work to redefine their identity in the face of unprecedented global change. A similar struggle is taking place across Europe, where the resettlement of millions of refugees is raising tough questions about how to integrate them into society. All countries seek to expand their economies, but the best path forward isn’t always clear. The divergent interests of stakeholders, budgetary constraints, history, ideology and other factors combine to create formidable obstacles to growth. In Brazil, for example, the national bank is working to emerge from a recent scandal, redefine itself and establish new ways of doing business that will help spur the economy. Meanwhile, a project in South Africa is helping black entrepreneurs hurdle the legacy barriers left from the days of apartheid. Technology also poses a challenge for nations just trying to keep up with the lightning speed of change. E-commerce and big data have the potential to revolutionize business in Brazil and Colombia, but success requires a heavy investment in infrastructure. Finally, environmental concerns are causing the public and private sectors to re-evaluate the impact of human activity. Knowledge@Wharton • The Lauder Global Business Insight Report 2018 TABLE OF CONTENTS THE POLITICS OF CULTURE 2 Making ‘Womenomics’ Work: Encouraging Employment Equality in Japan 6 Refugees in France and Germany: Governmental and Nongovernmental Support 10 The Economic and Social Dimensions of India’s Cow Politics 13 Avianca and the Airline Industry in Colombia 16 Lobbying in Russia 20 Has South Korea Transformed from an Economic Miracle to ‘Hell Chosun’ for Millennials? 24 A Brewing Battle: Craft Beer in China 28 Forty Years of the Gaokao: Revisiting China’s College Entrance Exam and Education System THE STRUGGLE FOR ECONOMIC GROWTH 32 BNDES: A Development Bank at a Crossroads 35 The Informal Sector in Sub-Saharan Africa 39 Is a Unified European Welfare State Possible? 43 Can Brazil Become an Attractive Investment Destination? 46 The Awethu Project: Creating Opportunity for South African Entrepreneurs 50 China’s Belt and Road Initiative 53 Refining Palates: Colombian Coffee’s Transition in the Third Wave 57 Boosting Direct Investments in Developing Nations THE POWER OF TECHNOLOGY 61 Intellectual Property Rights in China: The Critical Driver for an Innovative Economy 65 An Analysis of Colombia’s Tech-enabled Food Delivery Market 68 Brazil’s Fintech Opportunities THE IMPACT OF ENVIRONMENTAL CHANGE 72 Is Brazil’s Future Green? 76 Three Lessons Learned from Going Green: A Comparative Perspective Facing — and Embracing — Change 1 THE POLITICS OF CULTURE Making ‘Womenomics’ Work: Encouraging Employment Equality in Japan Political and cultural barriers have created a persistent gender gap in the Japanese labor market, but that is slowly changing. While there is still much work to be done, the public and private sectors are pushing forward with “womenomics.” Many of the scholars who are studying the looming demonstrated his commitment to encourage greater demographic crisis in Japan propose the same solution: female participation in the workforce, which became leverage the potential of women in the workforce. Women one of the three “arrows” of the Abenomics policy. His traditionally have been an underutilized resource in administration’s specific goals are to increase female Japan’s labor market. In 2013, Japan ranked 105 out of 135 participation in the workforce by 3 million and target 30% countries in the World Economic Forum’s Global Gender of managerial positions to be filled by women by 2020. Gap Report. Female employment in Japan is characterized Since the introduction of “womenomics,” about 1 million by an M-shaped curve, with 60% of women dropping out women have entered the labor market. However, a wide of the workforce after getting married and returning only gender gap persists. This article outlines the structural and after their children have left home. Evidence supports the policy initiatives implemented so far and examines some of the remaining challenges and social barriers. Women who must leave work earlier Explaining the Status Quo to care for children can be perceived One reason frequently cited for gender disparity in negatively, regardless of their actual Japan involves the expectations surrounding women’s childrearing responsibilities. The country is known for contributions. a corporate culture that praises hard work and long hours. In this strong face-time culture, where employees premise that if the country can unleash the talent of women sometimes feel pressured to stay at the office until their in the workforce, it will achieve higher economic growth, boss goes home, women who must leave work earlier to thus reducing the burdens of an aging population. care for children can be perceived negatively, regardless Prime Minister Shinzo Abe’s 2013 speech at the 68th of their actual contributions. This mindset applies to Session of the United Nations General Assembly after-hours gatherings as well. After-work drinks and get- 2 Knowledge@Wharton • The Lauder Global Business Insight Report 2018 togethers among colleagues are a crucial aspect of forming female colleagues at my firm who are married, I would say relationships within Japanese companies, including with half choose not to have kids just because they know how upper management. New mothers who cannot participate hard it is to juggle both career and family,” Tanaka said. might be at a disadvantage during promotion discussions. In Other structural drivers include the country’s social addition, the lifetime employment system and the tendency security system and tax code, which provide strong to promote based on the number of years an employee incentives for women to stay out of the workforce. The has been at a company make it more difficult for women to head of the household in Japan, typically the husband, can return to an organization after maternity leave. The high receive a special reduction of about US$3,500 from taxable cost of any missed time may explain, in part, why fewer than income if the spouse earns less than US$9,400 annually. 2% of men take paternity leave, according to government statistics. Both the strong emphasis on continuous participation and Due to the difficulties of raising a expectations that women will leave the workforce after child while working, many women having a child influence hiring decisions. Japan has a two- tiered hiring system: one for career-track workers, called must choose between having a family sogoshoku, and another for administrative workers, called or a career. ippanshoku. According to the Japanese Ministry of Labor, Health and Welfare, in 2014 only 22.2% of the sogoshoku were female, compared with 82.1% of the ippanshoku. Public and Private Initiatives The belief that men are largely in career-track positions In order to increase women’s workforce participation, while women are predominantly in support roles can lead particularly in high-paying corporate roles, a number of to discrimination toward the latter group. According to initiatives have been enacted by the government and Natsuko Tanaka, a woman who works in the Tokyo office of a corporations. The government’s approach emphasizes global technology company, “men in their late 40s to 50s still two aspects: support for life events that impact expect women to pour their drinks whenever we are out.” women’s careers disproportionately, such as marriage, Harassment toward pregnant women, called matahara childbirth, child care and senior care; and women’s career (short for maternity harassment), is also well documented. empowerment, including recruiting, career-switching, For example, women who become pregnant are sometimes work-life balance and promotion improvement. bullied, accused of being a burden or forced out of the Life-event support plays a critical role in enabling women company. According to a 2015 survey conducted by the to continue to work while raising children or taking care of Japanese Trade Union Confederation, 20.9% of working elderly parents. For example, a bill passed in 2016 grants females have experienced matahara. subsidies to corporations that allow men to take paternity Structural factors also contribute to Japan’s corporate leave. Some local governments give an allowance benefit gender disparity. From a practical standpoint, it can be of US$200 a month to working mothers for child care. In difficult for women in Japan to work full time while raising addition, the spousal income-tax deduction was amended a family. For example, there is a chronic lack of day care in 2017 to lift the income threshold from US$10,000 to facilities in urban areas, where more than 23,000 children US$14,000 to mitigate the disincentives for women to are currently on waiting lists. In addition, Japan’s strict step into more high-paying positions. Local governments immigration policies allow only foreign diplomats to hire have also been working closely with the private sector to foreign housekeepers, so it is difficult to find child care help increase the capacity of child care facilities. The Japanese if one lacks access to a family support network. Due to the government has pledged to subsidize 400,000 day care difficulties of raising a child while working, many women spots by 2018 to free young mothers from time constraints.