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18 August 2014

Cultural Tips for Successful Business Negotiations in Asia

Posted By: AIB Business
Cultural-Tips-245-245

Understanding the culture of a country can be a major factor in the success or failure of business negotiations, writes John Whelan, Export Sector Specialist at AIB.

Regardless of the sector in which you operate – finance, technology, computers, or food and consumer goods – global cultural differences will directly impact on you and the profitability of your business. I have found this to be particularly the case when trading across Asia where cultural, religious and business etiquette are strikingly different from that in Ireland and across Europe. Improving levels of cultural awareness can help companies maximise on international opportunities, and avoid costly misunderstandings and setbacks.

In negotiating with a business partner or potential customer, culture can be a vital ingredient for a successful outcome.

China


In China corporate hierarchy is very important in business dealings, and quickly establishing  who the senior executive / official is will ensure the most effective discussions. It is important that no one suffers “mianzi loss of face, which may happen if you address your comments to the less senior negotiator.

Business card presentation is a ritual and must be presented with both hands. On introductions the Chinese will state their surname first, then they may state their first name, which is often a western adopted one, like “Harry”. If you state the Chinese greeting “Ni hao” – “I am pleased to meet you” – it will always go down well when receiving cards. Initial meetings normally finish with an exchange of company gifts, so bringing some from your home country creates a good impression.

Work and social life tend to remain separate in the West, whereas much of a Chinese person’s social life will be used to further personal and business relationships. In China some three-quarters of business deals are sealed outside of working hours. Tea houses, Karaoke bars and restaurants can all be locations where discussions and deals are made. The “guanxi” system (relationship system) is very important for getting real business done across China.

 

United Arab Emirates


UAE’s culture is rooted in Islamic traditions. Courtesy and hospitality are amongst the most highly prized of virtues. Foreigners are free to practice their own religion, and the dress code is liberal. The customary greeting is “As-salam alaikum” (Peace be upon you) to which the reply is “Waalaikum as-salam” (And upon you be peace).

When making introductions, begin with a handshake. You should greet each of your Emirati counterparts individually. In line with Muslim customs, avoid shaking hands with a woman unless she offers hers first. If you do intend to use business cards whilst in the UAE, ensure that the information is printed in both English and Arabic. People in the UAE prefer to do business in person. Relationships and mutual trust are paramount to any successful business interaction and can only be developed through face-to-face meetings. Emiratis prefer to do business with those they know, so appropriate introductions are important to successful business relationships.
 

Japan


In Japan, the business culture is very formal. People are addressed as Mr or Mrs followed by the surname. If you know your contact well, you may use “san” after the surname e.g. Urabi –san. Business cards (meishi) are essential and should be handed out at the beginning of the meeting. It is considered impolite not to offer them. During the meeting, all cards must be on the table – putting them away early may be misinterpreted. Never put the card into your back pocket.

In the business context, it is normal to go to restaurants or karaoke bars. Japanese are very conservative in their dress – black suit, white shirt, dark tie. The business negotiating cycle tends to be quite long with many meetings required, so be prepared to invest substantial time and effort to get an export deal but, once concluded, business relationships tend to last a long time.

 

India


India has a much less formal business structure than Japan, China, or the Gulf states but, none the less, there are a number of important points to note. Family relationships are very important – 70% of India’s businesses are family-owned. Hence, Indians treat business negotiations as welcoming a new member to the family. It is best to establish a personal understanding and relationship before doing the business negotiations. It is common to be invited to the home for dinner, but no business is discussed.                                                                                            

Business dress is quite informal, with open shirts being common. Always negotiate on the initial offered price; it is not expected to be the final price. But also be very clear in the communications – Indians don’t like to say no, hence “I will try my best” means it will not be possible to do.

Always research cultural, religious and business etiquette for any country you intend to do business in. By increasing your cultural awareness, you’ll be better placed to set your company up for success in new markets.
 

Written by: John Whelan, Export Sector Specialist at AIB and founder of the Asia Trade Forum

 

If you require finance to expand into new markets, talk to AIB today.

 

See also:

Outlook: Exports
AIB’s Outlook: Exports report – in association with Bord Bia and the Irish Exporters Association (IEA) – provides detailed research, analysis and commentary, on a multi-sectoral basis, of the SMEs that are currently exporting goods or services from Ireland. An important part of this report is the specially commissioned detailed research on exporting SMEs, which has been carried out independently by Ipsos MRBI on behalf of AIB.

 

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