Thursday, February 4, 2010

ZOMBINOMICS: Small Business Management in Developing Economies

...OR, How to Support Your Family of Four in the 3rd World and Love It!


After moving to Paraguay, I took up employment as an ESL instructor (that´s English as a Second Language to you acronym fans out there) at a local language center.  As the ONLY NATIVE SPEAKER ON STAFF, I was frequently asked about doing business with the US, and soon found myself specialized in Business English.  When the institute imploded due to the mismanagement of its owners, I was faced with two choices:  work for another language school, or work for myself.

And thus, Business English Services was born.

To summarize briefly, it´s full service English language services for businesses here in Paraguay.  I still teach English, but now I also do "culture-coaching" and corporate/internal translations, and, if the gods are generous, by midyear, I´ll be doing official/government translation as well.

I did this mostly because I discovered what I thought was a small hole in the local market for language instruction, namely, a need for professional English, that went beyond ordering in a restaurant, talking about sports and vacations, and understanding a movie without subtitles.  To talk in the lingua franca of global business.

The hole turned out a little bigger, and more complicated than I thought.  I am learning, because I, like most other US Americans, grew up with the luxury of choice, and freedom to choose.  These are NEW and FOREIGN concepts in the developing world, and as such, are seen as dangerous waters for these people to navigate.

Paraguay, to give some frame of reference, was for many years dominated by the dictator Alfredo Stroessner, and after, by his political party.  Critical industries were protected with an iron grip, banks were destroyed, and when the country found itself too far in debt, it simply printed the money it needed to pay it off, and devalued its currency in the process.

In 2008, the elections here were held, and a former Catholic bishop was elected president.  Fernando Lugo is a socialist liberal that was perceived as the shining new hope (in contrast to the corrupt 60-year stranglehold of the controlling party.  After six decades of the Reds, we had a Blue president.

Who, for the last year and a half, has proved to be as bad, if not worse than what was had before.

One of the reasons for this, lies in the fact that this is a culture who was brainwashed NOT to choose or think freely.  To illustrate this, imagine this situation in your mind...

For years since you were a child, you went to the supermarket with your list of groceries:  milk, bread, coffee, sugar, ham, cheese, mayonaise, Coke.  No problem; you only had ONE milk (from the national dairy cooperative), ONE choice for bread (although delicious because it was baked fresh right there), ONE brand of coffee, and so on, ... and Coke, because, well everyone has Coke, thank you Douglas Ivester you genius you...



And so it goes until one day, you go to the store, and you have SIX brands of milk, in whole and skim, because the cooperatives split into regions, TWELVE different breads in white, wheat, seeded, unseeded, because all the bakers want to have their bread sold at the central supermarket, SEVEN brands of coffee because of a new free trade agreement that loosened up the coffee imports, and...Coke.  Coke Light.  Coke Zero.  Sprite.  Fanta, in orange and grape.  Plus one local guy created a soda/juice hybrid.

I imagine you would be shellshocked by all this instant free choice.

This is how an oppressed, uneducated populace views choice, whether shopping for groceries, or electing a president.

If you want to oppress your country, you must control how ideas are communicated.  The most obvious way to do this is to control the media.  Even after the recent changing of the presidential guard, this still happens here, forcing you to read between the lines in your local news.

The more insidious fashion is to diminish education.  Diminish its content, its quality, and its importance in the local mind of the culture.

First, diminish the content.  Here in Paraguay, for years, a child only was impelled to finish up to the 6th grade.  Beyond that was voluntary, and was focused on trades, industrial and agricultural.  The arts were local only.  For example, under Stroessner, lots of Guaranias (a Paraguayan polka sung in guarani, the 2nd official language here), but rock and roll was almost nonexistent.  Put another way:  Part of my advance course is a focused conversation on art.  I use mostly Picasso´s Guernica, because I get the best responses.  I still had one student ask me who Picasso was.  And she was a doctor.

Pablo Picasso - Guernica - 1937

Next, diminish the quality.  Last year, all the public school teachers had to retake the Qualification Exam required by the State.  A kind of minimum skills test.  87% failed.  A few in the outlying parts of the rural areas were functionally illiterate.  Many "country schoolhouses" consist of desks under a shady tree.  And most schools make it the parent´s responsibility to provide school materials and textbooks.  We send my oldest to a private Catholic school, and even we had to buy his texts.  But at least we know he´s using them, and learning.  Here, education really is "you get what you pay for".

Finally, diminish its importance.  The attitude here is that school is not as important as work.  So it should come as no surprise the number of kids selling fruit, cleaning windshields, clearing trash, helping mama y papa in the family store, instead of going to school.

An uneducated populace is a docile one, and won´t make no trouble.

So part of my job is actually to fill in the gaps that their education and experience did not provide.  Many of my students are Argentine, and are generally of similar educational backgrounds as the average public school US kid.  And a few are children of very successful Paraguayans who bucked the trend and carved very successful niches for themselves, based on their parent´s example.  But my university kids are a mixed bag, depending on background, and convincing them on why learning English is not just necessary, but CRITICAL can be an uphill battle.

Those private students, the New Paraguayan Businesspeople, are the ones I´m after, because they´re the ones who are going to get Paraguay out of the mess it is in.  Not the government.  Politicians, I am learning, are about as useful as a Jonas Brother on the space shuttle.

So you´re probably thinking I´m living large, drinking Moet & Chandon and driving a Volvo.

Well....

On average, I make 2 million guaranies (the local currency) per month.  WOW, you say.  But, the exchange rate last year, on average was 5000 guaranies to the U$D.  In reality, I feed my family of four on $400 per month.

I just did my taxes.  Last year, after the current exchange rate of 4600 guaranies to the dollar, I cleared a whopping $3856.85.  And am ineligible for US gov´t programs like the EIC or child tax credit, even though  my oldest is a US citizen, too.  Thanks, America.

So how are we not starving?

The important lesson in working in a developing economy is this:
YOU ARE NOT WORKING FOR MONEY, BUT ARE, IN FACT, TRADING TIME FOR STUFF.

Example:
Let´s say I earn $10/hr in the US.  $80/day.  That means, if a quart of milk is $2, I have to work 12 minutes to buy it.  If I need to pay my monthly cell phone bill of $79.95, I need to work a full eight-hour day.  If I want a thousand-dollar laptop, it takes 2 and 1/2 weeks to earn the scratch to buy it.

Last year, my rate was 30,000 guaranies per hour.  A quart of milk is 3000 = 6 minutes of work.  My cell phone bill is 60,000 = 2 hours of class.  So far so good, except...

If you want to buy a laptop, for three million guaranies, that´s 100 class hours, which is my monthly average.
Pediatric medicine can run 125,000 guaranies, sometimes double.  Even though the doctor´s appointment is cheap (30,000 = one class hour)  the medicine can potentially cost a day´s worth of work.  If I want an iPhone from the local shops here, it´s at US pricing (weeks of work).  On the other hand, my son´s monthly tuition only takes four-and-a-half hours to earn.  A used car starts at 30 million guaranies; that´s 10 MONTHS of work, if we choose not to eat.

So this is lesson number one:  try not to get hung up on the money you make, but rather focus on how much time it takes to make the money you need to get what you want.

This was a great help when deciding on pricing my services.  I could figure out what I needed as a minimum every month, and how much I could charge and get away with it.  I was even able to adjust my pricing this year for inflation, and did not lose a single client because of it.  Priced correctly, I have the certainty that even in the slow part of the business year (Christmas to Easter here), my wife and children are taken care of.  A little extra push, maybe "She-Who-Must-Be-Obeyed" will let me buy comics online.

Next Zombinomics Post:  The nuts of 3rd world business management.  And later, the cast and crew of my daily dramas.  Until then:

Keep shambling.

RAW - the American Zombie

1 comment:

  1. absolutely fascinating, i really can't wait for the next installment! interesting to see this perspective on education, and how it's discouragement is a way of life for politicians and people. i naively always thought politics would be simple, and all anyone had to do was give a simple litmus test of "is this going to make the world a better place?" i guess it's harder than maintaining power, status, and control (all intangible, fleeting illusions).

    great writing Ray, keep up the good work!

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