Skip to Content

Stanford GSB News

 

World Economies Are Rebalancing, Says International Banker John Bond

April 2005

STANFORD GRADUATE SCHOOL OF BUSINESS—HSBC Group Chairman Sir John Bond accepted Stanford's invitation to deliver a View from the Top address to the Graduate School of Business earlier this spring, but when the veteran banker came to campus, he told students he felt qualified only to discuss the "view from base camp."

Bond, who has spent some 44 years with HSBC and watched it grow from a small Hong Kong institution to one of the world's largest banks, said today he is more consumed by the vast challenges of a future that will be defined by "a fundamental rebalancing of the world's economies" than he was impressed by his company's success to date.

By any measure, that success has been stunning. Since 1961, when Bond joined HSBC, the bank has expanded from 136 branch offices mostly in Asia to some 10,000 locations spread throughout 78 industrialized and developing countries. Because of its vast international reach and the pride it takes in operating in accordance with local cultures and economies, HSBC often refers to itself as "The World's Local Bank."

But at a time when technology is fast bridging geographical and economic barriers, empowering people in some or the world's poorest countries, and transforming the ways corporations make money, Bond said, operating as a local bank the world over is very different than it was just a few years ago.

An oft-mentioned but still compelling statistic he cited is the disparity between the concentration of people and the concentration of wealth. The world's two most populous countries, India and China, today account for one-third of the global population but contribute only about 5 percent to the world's gross national product. The United States, by contrast, accounts for only 5.5 percent of the world's population but contributes roughly 30 percent of the total value of goods and services produced in the world.

Bond said such figures illustrated not only why a fundamental redistribution of wealth is essential but also why it is a good thing.

"We should welcome a redistribution of GNP," he said. "It is already under way." The way that multinational corporations manage this shift will define not only their own success but the very future of capitalism, he said.

"Banks cannot outperform the communities they serve," Bond explained. "Banks do well when their people do well."Bond's own personal career path, as well as the unusual history of HSBC, gives him a unique perspective on the challenges and opportunities of globalization. A native of England who studied as a high school exchange student in Santa Barbara, Calif., but never attended college, Bond held jobs as a deck hand, disc jockey, and bartender before joining HSBC. He said his rise to the top post at that company was not a carefully plotted course, but one marked by many serendipitous twists and turns.

In a similar manner, he said, HSBC's expansion from Hong Kong into many developing nations at a time before many companies were pursuing a global path was a tumultuous journey that led the company to operate in many unstable regions in the midst of civil wars and economic crises.

"You name it, we've been though it," said Bond. "It's been a very different experience from a bank that has grown up with its headquarters in San Francisco, New York, or London."

Lessons about the importance of self-reliance, client orientation, and international teamwork may have been learned the hard way but are proving valuable to the company now that aggressive expansion into developing countries is essential for many western businesses wanting to remain competitive.

Bond recounted that one practice that has always worked well is a commitment to respect local cultures and operate in a matter consistent with local practices.

"In China we're a Chinese bank; in the U.S. we're an American bank," he said. "Local markets shape our culture."

And, lest young business people starting out in the early days of the 21st century regard global expansion as the next logical step in a long growth course plotted by western companies, Bond noted that HSBC's own history suggested it was more a circular trend than a steady climb.

Almost since it was founded in 1865, HSBC pursued international markets from Britain and France to Chile, Vietnam, Singapore, and the Philippines, but it was mostly its success in the world's most developed countries that gave it the means to branch into poorer locations.

Today, he said, the reverse is true.

"Now it's our success in developing countries that's providing the means for us to expand in the west. It's a neat reversal of history."