Closing the Deal in China, Japan and Thailand
Businesses in the Pacific Northwest are finding that the key to long-term relationships in Asian markets can be summed up in three words: know your audience.
When interacting with different cultures, the risk of over-simplifying the factors that shape individual behavior may lead to inaccurate assumptions. However, an understanding of cultural differences helps establish a starting point for fostering a relationship of trust.
The challenge of knowing your audience in foreign cultures has been brought into focus by leading cultural theorists Geert Hofstede and Fons Trompenaar, both of The Netherlands. Dr. Hofstede’s 1980 study of IBM workers is the foundation of his four-dimension map of cultural geographies:
Individualism ----- Collectivism: Is work viewed as a solitary, individual activity to which reward or punishment falls on the individual? Or is it a team enterprise to which credit and blame are assigned to the group?
Low Power Distance ----- High Power Distance: A high power distance organization is hierarchical and top down. A low power distance is more participative, with authority looking more like coaching.
Low Uncertainty Avoidance ----- High Uncertainty Avoidance: Is a highly structured work environment favored to one that is unencumbered by rules, regulations and red tape? Is risk OK? Most government agencies are very structured workplaces, whereas the software industry is not.
Task ----- Relationship Orientation: Does a country culture emphasize tasks and achievements or quality of life and forming relationships? Are deals done among complete strangers, or is a relationship necessary before working together?
What does this mean in the workplace here in the Northwest and in Asia?
1. Be prepared for long and detailed discussions when dealing with Asian business people. Both Drs. Hofstede and Trompenaars make the distinction between the American individualistic society and most Asian collectivistic societies. When these different perspectives come together with their separate goals and values, much time and energy is required to foster understanding and agree to a contract that is satisfying to all.
2. Time is relevant. When in Asia, think long term. Americans usually think in terms of concrete solutions to specific problems, while it is more common in Asia to think in terms of a process that has no precise culmination. An important aspect of the process is forming and maintaining the relationship. Take the time to build the relationship first.
3. When the negotiating atmosphere is getting tense, keep your emotions in check. Never raise your voice or show anger. Rather, just take a break to cool off with your team.
Senior product designer Petra Reisch formerly worked for The Gap Inc. and now works for a large Portland firm. When negotiating on designs in Asia, she patiently engages her vendors rather than using direct confrontation.4. Since American and Asian legal heritage and commercial infrastructure are different, do not assume common understandings of business-specific terms. Be certain that each party understands exactly how the agreement will be implemented.
Ms. Reisch regularly communicates with her partners in Asia via email. She recommends the use of simple and clear English.
“Remember that the person reading your message does not share your cultural background and may easily misunderstand your meaning. Sarcasm and jokes are inappropriate until a strong friendship is established,” Ms. Reisch said.
Keep in mind that each individual, business, industry, region and country within Asia operates by a different system that you must get to know intimately. Although relationships are the heart of business in Asia, it is important to be aware of the subtle differences when negotiating in China, Japan, and Thailand.
CHINA is experiencing amazing growth at a rapid pace at differing levels in different regions. When presenting information, remember that most Chinese business people rely on subjective feelings and personal experiences when forming opinions and solving problems. Additionally, empirical evidence and other objective facts will be accepted only if they do not contradict Communist party doctrine and one’s feelings. Most importantly, you must be willing to act quickly, take risks and make tough decisions.
Randall Collis (Willamette MBA ’90) works in the Chinese textile industry and has learned that Chinese business people move at a fast clip. They make rapid decisions to stay competitive and view higher risk as a necessary component of doing business. Mr. Collis says it’s important to recognize the speed of change in the industry and make necessary, tough decisions.
JAPAN is a highly formalized and structured nation. Formal business attire and manners are most appropriate. Use honorific titles and acknowledge positions of status. If you know a highly respected person in Japan, ask to use his or her endorsement and connection. Using connections is standard practice in Japan. It is also a general rule to build group consensus before making a decision. The Japanese spend a great amount of time building relationships and trust before considering the details of a business exchange. Keeping your emotions in check is particularly important in Japan. Paul Herbig, in the article, “At the Table,” addressing the Japanese negotiation style, suggests that the Japanese value emotions but hide them. A formal display of emotions means a loss of “face” or respect. “Winning the deal is unacceptable if it involves a loss of face for either party,” Mr. Herbig writes.
THAILAND business practices are also rooted in relationships, but Thai businesses function within a network of many subsidiary businesses often run by close family members. These connections are used to build business success and political power. If your relationship to a Thai business can be developed through a mutual friend or relative, the Thais feel far more at ease. They consider you a part of the same team. Thailand’s business structure is similar to China’s where laws are loosely observed. Therefore foreign business people frequently find themselves in compromising situations. Remember that even in these countries long-term success comes from honesty and integrity in all dealings. Yet, don’t assume a gift is a bribe. According to Suwat Kongpiyacharn (Willamette MBA ’99), “gifts are given to express good feelings, not to bribe, and that acceptance of a gift does not signify a commitment of any kind.”
Being aware of your audience members and their cultures are the key to building and understanding across vast geographic boundaries. Nevertheless, do not minimize the impact of the personality, experience, and skills of each individual with whom you are dealing. Use your cultural understanding to guide you, not to limit you.