Asia business consultant and speaker, revenue growth expert, best-selling author and coach, David Clive Price, shares his inside secrets to creating lucrative partnerships and opportunities in Asia business. Tune in for podcasts with weekly inspirational tips and powerful strategies to attract more of your Asia customers and clients.

Asia business consultant and speaker, revenue growth expert, best-selling author and coach, David Clive Price, shares his inside secrets to creating lucrative partnerships and opportunities in Asia business. Tune in for podcasts with weekly inspirational tips and powerful strategies to attract more of your Asia customers and clients.

Asia business consultant and speaker, revenue growth expert, best-selling author and coach, David Clive Price, shares his inside secrets to creating lucrative partnerships and opportunities in Asia business. Tune in for podcasts with weekly inspirational tips and powerful strategies to attract more of your Asia customers and clients.

Asia business consultant and speaker, revenue growth expert, best-selling author and coach, David Clive Price, shares his inside secrets to creating lucrative partnerships and opportunities in Asia business. Tune in for podcasts with weekly inspirational tips and powerful strategies to attract more of your Asia customers and clients.

Asia business consultant and speaker, revenue growth expert, best-selling author and coach, David Clive Price, shares his inside secrets to creating lucrative partnerships and opportunities in Asia business. Tune in for podcasts with weekly inspirational tips and powerful strategies to attract more of your Asia customers and clients.

A recent survey by business advisers Alix Partners found that 25 per cent of lawyers and executives of multinationals avoided China and the Middle East for fear of corruption.

However, the same report revealed that 54 per cent of executives considered corruption to be unavoidable in several countries in Southeast Asia and 30 per cent said that their industries were exposed globally to significant levels of corruption.

In China, patronage systems and collectivism have inevitably encouraged corruption in one form or another, which has flourished according to the relative strength or weakness of the rule of law.

However, ethical problems in doing business in China are often traceable to misunderstandings and lack of cultural awareness.

THE ISSUE OF FACE

In dealing with Chinese companies, it’s important to remember that the Chinese educational system still uses a certain amount of shaming and this naturally results in people who have a great aversion to being embarrassed.

Often a personal visit and respectful probing one on one — possibly in a relaxed social situation — can be a better way to solving problems of face. Show respect by bringing solutions with you. Learn how to be firm in a way that shows personal and cultural respect.

A white lie is used to either avoid embarrassing or damaging someone, saying something that they think will disrespect you, or saying something they think will undermine your authority.

Do not become aggressive because of this, but rather be grateful for this form of respect. You should practise solving these kinds of problems with discretion and diplomacy.

GUANXI AND OBLIGATIONS

The concept of guanxi and the network of obligations it involves lie at the heart of Chinese business, but sometimes various obligations will collide.

A Chinese person will then spend considerable time working out a solution that gives respect to all parties, often avoiding the literal truth in the process.

When doing high-level business in China a smart player should learn to recognise such shades of grey and develop strategies accordingly. Chinese people are inherently skilled at seeking out the solution to such problems.

THE RULE OF LAW

Although legal protection has generally been weak in China, one of the most effective anti-corruption factors for private sector firms in the country is the sharing of prospective high profits.

This prospect aligns the interests of government officials with those of entrepreneurs and investors, thereby ensuring that all parties fulfill their roles and protect the firm’s reputation to make the enterprise successful.

Generally speaking, Asian executives rate corruption well below inflation and inadequate infrastructure or labour regulations as an obstacle to doing business.

In part this is because Western law has not been central to Asian experience except in cities like Hong Kong and Singapore that were under colonial rule for so long.

China, by contrast, is said not to have rule of law but rule by law. A successful entrepreneur or a government official will command a large project to be done and it will be done. His power may be theoretically limited by the need for permits, but he will order his lawyers to find a law that allows what he wants, or he will even get a new law passed.

Anyone who wants to do business in China should be aware of the variety of legal systems in operation, and of their relative strengths and weaknesses.

CAVEAT EMPTOR

Act carefully and sensibly. Have your designs registered in China and let the source company know you have done this. Design sensible contracts and protect your intellectual property carefully. Specify the parameters of a copy in the contract to avoid later arguments and litigation.

Often you will flush out dishonest players when you ask them to sign a contract, even if the contract is merely a negotiating ploy on the route to a long-term relationship.

Whether hiring staff, investing in a joint venture or appointing a local distributor, carrying [...]

The Hong Kong waterfront at night is one of the great views of Asia and the Asia business landscape. All those rippling neon lights and iconic buildings: IM Pei’s Bank of China, Norman Foster’s Hongkong Bank, the Star Ferries crisscrossing the harbor.

And a sense that here truly is the crossroads of Asia, between East and West, international chic and traditional Chinese, the colonial past and the vibrant present.

In 1997 onwards I was fortunate enough to write the speeches for several of Hong Kong’s business leaders during and after the return of Hong Kong to China and I wondered then, like so many, what would become of the city.

There have been several bumps along the way. However, Hong Kong has survived – and indeed reinforced its position as a major platform for Western and Asia businesses seeking to invest and trade in China. while also becoming a leading Asia business hub within the ten major economies of ASEAN.

HUB OF ASIA AND CHINA BUSINESS

It doesn’t matter what direction you follow the iconic Hong Kong junk, whether it’s up along China’s coastal cities and down the Pearl River and Yangtze, or across to the Mekong Delta, the South China Sea, the Indonesian and Philippine archipelagos.

Hong Kong is the leading centre for a host of investment, legal and financial services, logistics, distribution, and culture between China and the ASEAN family of nations, and China and the world.

With Hong Kong being such a hub of Asia business for the region, and such a melting pot of East and West cultures, it is also the ideal starting point for any company or entrepreneur wanting to do business in Asia’s increasingly connected economies.

There’s no better place for learning the ropes, plugging into the networks, and getting a basic grounding in the rules of Asia business than in Hong Kong, home of the bamboo network and now more and more ‘Asia’s world city’.

ASEAN ECONOMIC INTEGRATION

A recent report by the Hong Kong Trade and Development Council pointed out that many of today’s key emerging markets are located in Southeast Asia. It also showed  that business opportunities are set to flourish as ASEAN countries move towards closer economic integration.

The ASEAN Economic Community (AEC) will create a single regional market, potentially bringing new trade opportunities for Hong Kong companies.

For Western companies and entrepreneurs selling products to the region, the closer integration of ASEAN holds out the prospect of selling to the entire region rather than to individuals or single markets.

So, for example, by selling to Malaysia, companies can then transport goods to Singapore much more easily. The new connectivity will help grow the market and there will also be huge infrastructure development or relocation opportunities for manufacturers from the region.

In order to leverage this platform, Western companies, SMEs and entrepreneurs will need to prepare themselves with competitive intelligence on China and individual ASEAN markets, highly targeted knowledge of local cultures and business environments in Asia, and world-class intercultural leadership skills — and there is not better place to learn these than in Hong Kong.

DOING BUSINESS IN CHINA AND HONG KONG?

Are you thinking of setting up or further developing business in Hong Kong as a hub for ASEAN markets or China?

Are you new to the region and still lack confidence because of the different customs and ways of doing business in each Asian market? If so, I’m here to help you.

I’m opening up some spaces on my calendar to discuss your specific challenges so if you’re ready to take action now, complete your details below and we’ll be in touch.

Strategy Session With David

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THE ONLY WAY to truly understand the Chinese business world is through regular visits, or even better extended stays and/or continuous presence. China is not a market (or more correctly, many markets) that will reward a lazy approach to business.

Videoconferencing a partner or visiting a trade fair won’t cut it. You need to allocate time and money to get a grip of the markets’ specific dynamics and culture. Only then can you understand the way that business in China is done both in the country as a whole, and in your specific market.

1. BUILDING FOR THE LONG TERM

The main business-related cross-cultural difference between the West and the Chinese is the significance of the long-term business relationship. What the Chinese call guanxi (relationships) are at the heart of the Chinese business process.

When Chinese businesspeople meet for the first time, they begin to immediately build guanxi. They will probably spend many hours drinking tea or dining and discussing what seems to be ‘non-business’ to Westerners. Chinese use this process to assess people they might like to work with. This often makes results driven Westerners very impatient.

However, having a good network of connections (guanxi wang) in China is the most important element of business success. Every Chinese cultivates his or her own network of personal relationships in business, by which is meant networks with obligations.

 2. LOCAL PARTNER – BUT BE REALISTIC

For Westerners too, guanxi relationships and networking often serve to smooth out operations. It is therefore essential to work initially through an intermediary/local partner that can make a formal introduction and vouch for the reliability of your company.

Team members and local partners must be recruited that understand how the guanxi system operates. Many foreign businesspeople hold unrealistic expectations that one local Chinese partner can accomplish everything for them.

They don’t realize that you may well need specialists in every area of business you are targeting, and not simply a local fixer. Don’t forget that the Chinese, like most Asians, avoid losing face at all costs and have innumerable ways of saying ‘yes’ when they mean ‘no’.

Just as you wouldn’t expect to work with someone in your home market who is not a specialist in that business, it is important to find the right person to open doors in China and navigate the minefield that is Chinese bureaucracy.

3. TRUST IS NOT BUILT OVERNIGHT

There is a Chinese proverb that says ‘A man needs his face like a tree needs its bark’. The Chinese character xin (trustworthiness) expresses a belief in developing credibility and reputation over time. But how is this achieved?

Business relationships in China are built formally after the Chinese begin to know you through your intermediaries and associates, the materials that describe your company, and face-to-face meetings. Every step along the way is slow, burdened with bureaucracy, and requires extreme patience.

But the rewards of persistence can often be highly worthwhile. At no stage in the process should it be forgotten that the correct approach is official and formal. Social events are not the places for business discussion, and the two should not be confused.

4. MANAGE YOUR EXPECTATIONS

It is important to pave the way for the first negotiation or presentation; to see your Chinese counterparts without a fixed agenda. This can take several months by itself.

Older Chinese can attend whole meetings without a substantive issue being discussed. Trust has to develop before bargaining begins. When negotiations finally occur, the Chinese do not necessarily pursue a win-win line, but rather one of ‘fair play’ for those that have dealings with them.

They are particularly attracted to value-enhancing investors, such as those with expertise in accounting, marketing and technical systems and know-how. Ultimately, they tend to look for good long-term relationships. Once you reach the negotiating or presentation st[...]

WORLD LEADERS at the G8 Summit two years ago praised the Japanese Premier Shinzo Abe’s “Abenomics”, his proposals for relaunching the Japanese economy and opening up Japan to more foreign investment.

It sounded great at the time — for Japan’s ageing population and for its underemployed young people, for the Japanese consumer, and for foreign companies and investors. After all, Japan’s nominal GDP is still larger than that of the UK and Germany combined.

However, a word of caution is necessary. The Japanese market and Japanese business culture are notoriously difficult for Westerners to penetrate, and do not provide an easy platform on which to build long-term success.

JAPANESE BUSINESS CULTURE AND ATTITUDES

Sometimes even people who have lived and worked in the country complain that doing business in Japan is like trying to read emoticons without knowing what they mean.

You’re never quite sure what’s going on in a business meeting, presentation or negotiation, and you aren’t allowed to ask because you won’t get a straight answer. You might not get an answer at all.

Personal dignity or ‘face’ is very important to the Japanese and this has particular relevance to decision-making. Face-saving tactics are often used in business to avoid giving a clear, logical response to proposals. This gives the Japanese side time to consider proposals and to wait until a personal relationship is established.

 

 

Non-verbal techniques to avoid responses include a hissing sound made by indrawn breath, vaguely worded and evasive questions, and a love of paradox. There is even a Japanese word for this: haragei (literally, the ‘art of the stomach’).

This oblique, and largely instinctive behaviour is a way of buying time in negotiations and also of avoiding the disharmony created by giving straight yes/no replies to proposals or questions. 

This respect for order and harmony is also reflected in the way that the Japanese come to decisions. There’s also a special word for this: nemawashi.

WASHING ROUND THE ROOTS

Nemawashi (loosely translated as ‘spade work’) is a gardening term meaning literally ‘washing round’ or ‘uncovering’ the roots before transplanting a tree. In the process, each part of the root system is cared for individually and made ready for the upcoming change.

In the corporate world, nemawashi means that each part of the organization can express itself and have it needs addressed through direct consultations and one-on-one meetings. In other words, consensus is reached at small meetings before the larger meeting when the final decision is made.

Foreign companies operating in the Japanese market, whether for the first time or in long-term partnership with a Japanese counterpart, must understand the nemawashi process that usually takes place before a formal meeting of after a proposal. They must also be prepared for the process to be time-consuming and not always easy to follow.

RESPECT FOR HIERARCHIES

A further refinement is provided by the Japanese respect for hierarchy. Senior Japanese executives expect to be informed of new proposals before an official meeting. If they only learn about a proposal for the first time at the meeting, they may feel that they have been left out. Almost inevitably, they will reject the proposal for that reason alone.

It is therefore vitally important for foreign businesspeople to approach senior executives individually or through their Japanese partners in the company before the meeting takes place. This will provide an opportunity for them to introduce the proposal beforehand, and above all personally. They can then estimate the Japanese boss’s possible reaction. and perhaps obtain some input. This process is all part of the great nemawashi enterprise!

With cultural conundrums like this, it’s no wonder many foreign business people in Japan feel their efforts are lost in translation.[...]

I was checking out some TED talks the other day and I came across this one by Hans Rosling, a Swedish professor of global health and a famous statistician, speaker and author. His speciality is dispelling common myths about the so-called developing world, which he points out is no longer worlds away from the West.

What sets Rosling apart isn’t just his apt observations of broad social and economic trends, but the stunning way he presents them.

You’ll have never seen data about the rise of India and China and Japan, and the closing of the gap with the US and UK and Europe presented like this.

 

Using hilarious graphs, tongue-in-cheek descriptions of the rise and (relative) fall of the ‘colonial’ powers, and a huge recyclable pointing stick, he gives a crash course on economic history since the 1850s. He concludes by naming his 100th birthday in July 2049 as the exact time when China and India achieve full economic parity with the West.

As he remarks to his amused Indian audience, there’s a serious point to this. The national pride of countries like China and India is of enormous importance to their economic and social progress. You can’t understand Asia business, unless you understand the dynamics of national pride.

SO WHAT DOES HE MEAN ABOUT COLONIAL HUMILIATION?

I thought about this recently when I was talking with a business conference manager from Dubai, who said he couldn’t understand the ‘China dream’ message of the President of China  Xi Jinping when speaking about the future direction of the country.

“What’s all this about exorcising a century of colonial humiliation?” he asked. “The China dream isn’t really about innovation but about borrowing ideas and technology from the West.”

The same accusation used to be levelled at Japan’s economic miracle before the stagflation of the 1990s. Business people in the developed Western economies claimed Japan was a big imitator, which is how the country became so successful. It was due, of course, to “borrowing” from the West.

This got me thinking about the question of national pride in Asia. It occurred to me that there’s a strong sense of patriotism and self-fulfillment in a whole range of Asian economies.

NATIONAL PRIDE

Not only those that became independent from c0lonial powers such as India, Malaysia, Singapore, Hong Kong, Vietnam and the Philippines (and indeed South Korea from Japan, Taiwan from Japan). Thailand also has a strong sense of national pride and identity precisely because it was never colonized. And let’s not even get started on the division of Korea.

Even if some of these events happened more than 50 years ago, the sense of young nationhood or national fulfillment still plays an enormous role in Asia and is a huge driver of economic performance in many of the region’s markets.

And yet how many business people from the West consider this when doing business in Asia? How many come to Asia with the feeling (perhaps unconscious) that the way things are done in their own countries are still superior? How often have I heard foreigners in Asia say “This isn’t what I’m used to at all.”

Well, there are many cultural and social differences in Asia from the way “things are done” in, say, London or New York or Sydney or Auckland. But that doesn’t mean they are necessarily inferior, or even less efficient. It’s up to every company and business to learn the secrets and tools necessary to succeed in Asia.

And I would suggest that putting national pride on your checklist for doing business in almost every country in Asia is a good place to start.

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