Liam Dann: Seizing the diversity dividend

February's Lantern Festival is a sign of Auckland's increasingly diverse mix of peoples. Photo / Steven McNicholl

The rise of Asian culture in Auckland, as February's Lantern Festival and this month's Diwali celebrations illustrate, has brought a lot of good food, good fun and good energy to the city.

But the sheer scale and speed of the demographic change brings challenges along with opportunities - not least for the business world.

The Superdiversity Stocktake - an extensive new report by Auckland lawyer Mai Chen - has a clear message for local business: There is no time for "business as usual".

The Stocktake seeks to confront the issues posed by the likely shift in the demographic makeup of this country over the next 25 years and it challenges business to take a proactive approach to change.

Certainly the idea that "change is the new normal" is one that business is increasingly geared to accept.

But when it comes to disruption it has been the increasingly powerful influence of the internet that has many industries reinventing themselves and questioning the notion of "business as usual".

But what Superdiversity makes clear is that businesses are at risk of being left behind if they do not address the changing cultural mix of their customer base.

This isn't simply a matter of window dressing to make different ethnic groups feel included or welcome - admirable as that may be.

It is a pressing economic reality.

Eurocentric businesses that struggle to understand and communicate with a wide range of ethnic groups will fail to sell to them.

By 2038 over half of New Zealand's population will be either Maori, Asian or Pacific Island. In fact that is close to the current breakdown in Auckland now.

So there are big risks in doing nothing but conversely these changes represent a huge opportunity for New Zealand businesses - something the Stocktake report calls the diversity dividend.

A key starting point is that employing a diverse mix of staff will provide access to a broader customer base. Ethnically diverse employees will offer language and culture insights into the communities they come from. They will also be able to identify new areas for business growth, and skilled migrants in particular will bring links back to birth-country markets, creating opportunities for export growth.

A more diverse workforce may also help avoid cultural blunders that can taint brands with new migrant groups.

Businesses need to do a better job of understanding the differences between migrant groups. Identifying a customer as Asian or even Chinese in ethnicity really offers very little insight.

Businesses need to get to grips with the cultural difference between first-generation migrants and later generations. "Western" Asians, those born or long settled in New Zealand, will be very different consumers to new migrants, the Stocktake notes.

Likewise, there are vast differences in consumer habits and needs when you break it down by region - from the far west of mainland China to the westernised urban lifestyles in Hong Kong or Singapore.

It is no secret that New Zealand business will need more Mandarin speakers to compete in China but good communication is not always as simple as speaking the language or having interpreters.

Businesses will increasingly need to build "CQ" or cultural intelligence into their planning, the report says.

Workers with these skills will be increasingly valuable as the demographics shift in the coming years.

Lack of cultural intelligence, as well as language barriers, create a greater risk of misunderstanding and business conflicts - contract disputes and other legal issues - will become more acute.

Ignoring the issues that an increasingly diverse ethnic population presents runs the risk of allowing silos of ethnically segregated business to emerge.

That's not good for an inclusive society and it's not good for inclusive economic growth.

Business needs to confront these challenges openly and pragmatically. The first step is to start talking about them.

The Superdiversity Stocktake can be accessed free at superdiversity.org from November 3, together with Superdiversity, Democracy and New Zealand's Electoral Laws.