East-West trade has been the cornerstone of global economic growth for some time, but in the post-2008 world intraregional trade in Asia has become significantly more important. In fact, it accounted for 57.1 percent of all trade in the region in 2015.
Regional cooperation and integration across Asia and the Pacific are an important source of growth, and strengthening business relationships and trade links is an essential part of this process. But doing business in Asia isn’t easy, and negotiation can be particularly challenging.
So if you’re doing business in Asia, here’s the first thing you need to know: you will be negotiating with all sorts of culturally and linguistically diverse people. This will make negotiations complex and difficult to navigate. But, with these four pieces of advice from our team of advisors in Hong Kong, you’ll be more likely to succeed.
Forget what you know about ‘Asia’. Diversity is everything, and you need to adapt.
Kwai-Cheung Lo once declared in Modern Chinese Literature and Culture that ‘there is no such thing as Asia.’ Far from being facetious, Lo was making a important point: the notion of a ‘pan-Asian culture’ is merely an abstract concept facilitated by the ‘growing homogenising and integrative forces of global capitalism.’ In reality, pan-Asian culture doesn’t exist.
So whether you’re doing business in Jakarta or negotiating in Hong Kong, here’s the first thing you must remember: Asians are not all the same. Asian cultures are incredibly diverse, and with this cultural diversity comes a broad spectrum of attitudes towards negotiation, decision-making and business.
This means that being a successful negotiator in Asia requires a high degree of awareness and flexibility. In a culture that values ritual and tradition, you must exhibit respect and civility; and in a culture that celebrates hierarchy and order, you must be deferential. Do your research and be prepared to adapt your behaviour to better suit your counterpart’s cultural mores.
You need to pay attention to subtleties in behaviour and read between the lines.
In addition to watching and adapting your own behaviour, you must keep an eye on how your counterparts are behaving and what they are saying – and not saying.
As Michael Benoliel of Singapore Management University explains in Eurasian Journal of Social Sciences, much of the ‘Asian culture’ is ‘unstated, implicit and internalised in subtle behavioural patterns.’ This can make negotiations difficult to navigate if you’re not paying attention. Here are some things to look out for:
- Body language. In many Asian cultures, individuals are taught to minimise emotional outbursts and project calm at all times (in accordance with the Confucian teaching of xinping qihe, ‘being perfectly calm’). You should therefore minimise your own emotional displays, and also watch for subtle changes in body language like facial expressions, crossed hands, or any movement that does not project calm.
- Change in conversation. Harmony and conflict avoidance are highly valued in Asian cultures, meaning that Asian businesspeople are not likely to say ‘no’ outright if they disagree with you. They’re more likely to change the subject, ask irrelevant questions or steer the conversation in another direction. Look out for this, as it may suggest that your counterpart is not willing to accept your offer, and you need to renegotiate.
- Vaguely positive expressions. Again, rather than reject an offer or disagree openly, your counterpart may respond in negotiations with vague expressions that may (or may not) have negative implications. If you are not a native speaker of their language, you may need an intermediary to pick up on – and explain – these expressions. More on that below.
Knowing how decisions are made will give you an upper hand.
In Western cultures, subjective notions of authority, independence and individuality inform attitudes towards decision making. But in Asian cultures it’s a different story.
In Chinese and Japanese cultures, for example, consensus decision making reigns supreme. Top-down, dictatorial decision making is avoided in order to foster interdependence and ‘harmony’; rarely will you see an executive or a manager ‘hand down’ a decision that has been made without consultation.
Furthermore, many Asian cultures approach decision making not as an isolated activity, but as a protracted process with steps. The Japanese practice of Nemawashi is a good example of this. Literally translated as ‘going around the roots’ or ‘laying the groundwork,’ Nemawashi is the first step in the decision making process, during which information is shared, discussed and evaluated by all employees. As Toyota explains: ‘successful application of Nemawashi allows changes to be carried out with the consent of all parties.’
There are parts of Asia, however, where consensus isn’t the dominant paradigm. In India and Bangladesh, for example, decisions are made by higher authorities and handed down to subordinates of whom compliance and loyalty are expected. In a cross-cultural study of managerial styles, Dr Shaidul Kazi explains:
‘…There is a top heavy approach in India and Bangladesh. As head of the organization, the managing director has immense influence in all organizational decision-making. Subordinates hardly ever oppose any decision made by the managing director…Managerial decision-making style…is mainly autocratic.’
The bottom line: don’t assume a decision will be made on the spot by the people around the table. If you’re negotiating in Asia you need to understand how decisions will be made and who (if anyone) will make the final call. That way, you can tailor your negotiation strategy accordingly.
You may need an intermediary.
Francis Fukuyama once described Asian cultures as being fundamentally ‘low trust.’ While Westerners tend to trust others until they’re given a reason not to, people in some Asian cultures are deeply mistrustful of strangers – particularly foreigners or ‘outsiders.’
As a result, negotiations in Asia tend to be characterised by secrecy, suspicion and withheld information. That’s why an intermediary (or zhongjian ren in China) is often essential to a successful negotiation. Intermediaries give your counterpart a ‘familiar face’ with which to interact, and in China they give you a way to transmit trust via guanxi, something which you cannot do business without.
The role of the intermediary includes establishing first contact, organising meetings, initiating business conversations and resolving differences. An intermediary will also be indispensable when it comes to deciphering subtle body language and expressions you may not understand.
So,if you’re negotiating in Asia, don’t assume there is mutual trust. And if you’re dealing with individuals who don’t ‘trust by default’ consider appointing a local intermediary – someone who can forge personal links and build trust on your behalf. They’re incredibly useful and in many cases, expected.
And that’s just the beginning…
Doing business in Asia is a challenging, enriching and rewarding activity. And though successfully negotiating in Asia can be a complex task, it’s not impossible. A bit of cultural awareness, sensitivity and preparation will take you a long way. (And the help of a well-connected local intermediary will help too).