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Five Facts About Doing Business in Asia

Wen-Shien Chai

Much hype has surrounded the Asian economic growth since it all began in the 1960s with a series of strong economic expansions known as the “Asian Miracle”. Many now predict that the 21st century will be remembered as the “Asian Century”. 

Undeniably, Asia presents enormous business and investment opportunities and much has been talked about ’doing business in Asia’ to best realise the opportunities coming out of this region. 

Whilst opportunities are plentiful, many ‘outsiders’ find the Asia market notoriously difficult to break into. Many are quick to point out that the differences in culture and values are the major hurdle encountered when doing business in Asia. 

Over the years many insights have been offered, and opinions given on how to deal with this cultural mismatch, yet the question still remains - how have we not become savvier to it over the years?

Let’s do a reality check and explore some of the cultural differences and things you need to be mindful of when doing business in Asia.

1. Knowing there are cultural differences is not enough

Many might have talked the talk but not actually walked the walk. Knowing is just not enough. There is the need to understand, respect and embrace the cultural differences encountered when doing business. For instance, in China there is a culture of ‘giving face’ and creating a certain impression. 2000 years of Taoist and Confucian teachings has instilled the importance of building relationships before undertaking a business deal. “Mianzi” or keeping face is far more important than profit, which is reflected in the saying: xian zuo pengyou, hou zuo shengyi (friends must be made before the deal).

Just understanding the differences is not enough. You need to be willing to alter your own customs and expectations to suit the country that you are doing business in. Understanding and embracing these differences will go a long way to building rapport with your new acquaintances

2. One size doesn’t fit all

To describe the myriad of ethnicities and cultures within the Asia region as 'diverse' would be a gross understatement. Just in China alone, there are a staggering 56 distinct ethnic groups, with the primary group being the Han which makes up over 90% of the population. The modern lifestyles and cultural traditions of the peoples in this vast area of the world span a wide spectrum as a result of each nation's location, origin, and unique historical development.  Each ethnic group has their own view of the world and unique business customs.  Knowing the ‘right’ history, philosophy or custom of an ethic group or region is important and can make a huge impact in a business deal.

3. Business is never just business

In Asia, businesses are built on relationships. This rule applies universally. However, some may still think business and personal relationships can be kept separate. The truth is any relationship is interpersonal to some extent and perhaps more so for Asia. One should approach working with Asia as though you are entering into a sort of family relationship.  So, business is personal. In Asia, building relationships is about being able to forge deep connections and demonstrate you are worthy of being a part of the network. Trust takes an especially long time to build. In China in particular, it is important to remember that the Confucian values of trust, mutual reciprocity, and harmony essentially form the basis of each “guanxiwang” (network of relationships). These connections are often forged over the course of many social events, functions and ceremonies. This also includes the custom of giving (the right) gifts. 

Many locals offer a partnership to overseas parties in order to grow stronger relationships, but this can be fraught with risk. Beware of so called local relationship ‘experts’ who say that they know everything about everyone but are often out to scam unsuspecting people.

4. Is language the real barrier?

Obviously, if you don’t know a foreign language, this adds a layer of complexity to doing business in a foreign country. The question is how hard is it to pick up a few words or phrases which will help in breaking the ice and bringing people closer? In principle, it doesn’t seem that difficult. However in Asia, understanding the Asian style of communication and becoming accustomed to it is more important than the words in isolation. Most Asians are from high-context cultures and indirect communicators. For example, most Asian don’t like conflict and confrontation, and the word ‘no’ is taboo. Many will say yes, but clearly mean no. They feel it is not polite to point out the problem, but rather imply a problem and allow others to make the inferences. So in order to successfully understand a conversation and know what it actually means, you need to watch out for contextual clues like eye contact, inflection of voice, pauses, facial expressions, posture and even age and status. Another important thing to note is, while using an interpreter overseas, you do need to make sure he or she is also capable of reading these unspoken signals to ensure you are getting a true interpretation of the conversation.

5. Different but the same

While we celebrate our differences, it is important to appreciate how we are all the same in some ways. Often the biggest road block is when we find ourselves acting from habit.  When dealing with Asia, we unconsciously follow our own cultural way of thinking and doing things, and the outcome often surprises us. At this point in time, we often say it is just too hard to adapt rather than taking a step back, researching the cultural differences and learning from it instead. It might take some time to become accustomed to a new culture or environment, but the reward will be worth it in the end.

Doing business in a foreign market is always going to be challenging in terms of dealing with structural and cultural differences, but by preparing thoroughly and doing some research you put yourself in the best position to overcome some of these hurdles.

For those looking to operate businesses or looking to invest in Asia-Pacific, Moore Stephens Australia Asia Desk can be your gateway to a successful venture. With a team of culturally diverse professionals and relationships with counterparts in the region who have a real understanding of the environments in which you wish to operate, our Asia Desk is ideally placed to help you to embark upon a new chapter in your business.