Diversity Asia

Strategy for Forming Business Relationships in Asia

The common advice given to businesses interested in operating in Asia is to first develop trusting relationships. Western business people must learn that patience comes before doing business.
— By Anna Gonsalves

The advice is given over and over again: To do business in Asia, first develop trusting relationships. The question is: How can Western businesspeople develop the relationships that lead to successfully doing business in Asia?

Companies must adapt Western diversity and inclusion policies and procedures to reflect differences in Asian cultures, and the same holds true for building business relationships. There is a wide gap between Western and Asian businesses, and a lack of understanding of that gap has led to lost opportunities for many Western businesses.

It is important to make a plan for relationship building that recognizes Asian culture and etiquette – from making introductions to gaining the trust necessary to close the deal. Even the smallest details can make a difference.

Building Trust Through Etiquette
Developing trusting relationships in Asia is challenging for people who are accustomed to Western cultures. The differences in Asian and Western cultures are vast, but the divide must be crossed before business deals will successfully close.

Unlike the very direct approach found in Western business cultures, Asian cultures are filled with subtle nuances. For example, a Westerner meets a potential business partner for the first time and says, "Hi Mike. Nice to meet you." Such informality is not acceptable in the Asian culture. It is only after an Asian invites the Westerner to address him or her informally that it should take place.

These kind of etiquette rules should be mastered before embarking on a plan to do business in Asia. The etiquette rules for the specific targeted country and region must be learned. Westerners tend to think of Asian cultures as being the same from country to country, but each country has a unique culture, set of etiquette rules, and accepted relationship-building process.

Working Through a Cultural Lens
Western cultures are monochronic. From a business perspective, this means people focus on work rather than relationships and on the task at hand. Business people strive to get work done and deals signed and sealed as quickly as possible. Impatience is a key trait in the monochronic culture, especially when something takes longer to complete than anticipated.

Most Asian cultures are polychronic. A manager's focus is split among different activities. The door is open for people to drop by, even when there is a meeting in progress. Businesspeople are willing to change plans with little notice, and developing relationships often takes precedent over completing a task on time.

People, rather than work, are more important in the polychronic culture, meaning frequent interruptions are accepted. For Western businesspeople, this can be extremely frustrating and lead to impatience. Even worse, Western culture believes that acknowledging frequent interruptions is rude when a meeting is taking place. On the other hand, people in polychronic cultures do not understand why the Westerners are insulted by people interruptions nor why work tasks take precedent over relationship building. Schedules are not as important as people.

The basis for the differences between the two cultures is the viewpoint on time.

In a monochronic culture, time is linear and tasks must be completed one at a time by a certain time. Efficiency is the measure of success, thus the expression that "time is money."

In the polychronic culture, time is cyclical. This view of time blends with the desire to put people first and that events happen in good time. In this case, it reminds one of the expression, "Go with the flow."

Understanding Cultural Differences
Understanding this basic cultural difference is key to developing successful relationships. Business is personal in Asia and impersonal in the U.S. and Europe. Unless a Westerner fully assimilates this fact into business efforts, there will be conflict.

Asians are communal. Westerners are individualistic. Asians strive for harmony. Westerners view conflict as a source of creative ideas.

Due to technology, some cultural areas are moving closer together. For example, Western culture is learning the importance of networking which is something Asians have embedded in their culture centuries ago.

With these differences, how does a company or entrepreneur find the right Asian business partner?

The first step is selecting a country of interest based on tangible factors like expected GDP growth and location. World-Check One is a screening solution that can help businesses narrow their selection by providing critical risk information and can complete due diligence on potential partners. Many countries require international investors to go through a registered agent before attempting to do business.

After the country and agent or partner is selected, it is time to set up meetings and pursue business opportunities. Spend significant time learning the culture because small details truly matter. That means learning the culture of the area of interest because Asian countries are diverse. A lot of factors come into play, like religion and ethnicity.

Adjusting the Expected Timeline
One of the most difficult adjustments that Westerners must make is doing business at a slower pace, taking the time to learn an area's culture and to develop trusting relationships.

For example, a Canadian entrepreneur found it can take a month just to get pricing lists in Indonesia because Indonesians will only release information when they feel comfortable about the person receiving the information. This is opposite of the Western style of business in which prices are readily released to push business.

In China, decision-making is mostly by consensus, which is much slower than decision-making by a single person. It also means that relationship building must involve multiple people who have to agree to do business with an international businessperson.

There is so much opportunity in Asia for international investments, partnerships and strategic business alliances. The risk of failure is much higher when Western businesspeople do not recognize the importance of mastering cultural differences. In most Asian countries, building strong and trusting relationships must come before any business is conducted.