The other day, I listened to an interesting Radio 4 programme which introduced the idea of the ‘tyranny of distance’ in relation to international trade.
The theory goes that – despite all our technological advances – distance is still a key factor that limits our ability to trade effectively with other people: the further away you are, the harder it is.
Seems obvious perhaps, but the issue is not so much the difficulty in transporting goods: nowadays, international freight is cheap and software distribution is basically free. It’s more how distance limits the creation and maintenance of contacts, relationships and personal networks.
In other words, to do business successfully in East Asia, you need to be out there, building and nurturing relationships.
But many people worry that there are huge cultural barriers in doing business in the region. And there are – after all, that’s partly what our company was set up to address.
But they’re likely not the ones you think!
A friend read a “cultural guide” before visiting Japan recently and became preoccupied with how to look at business cards correctly and where he should sit in the room in relation to the door. It proved an unnecessary distraction as he focused more on that than the details of the deal he went to pitch.
People tie themselves in knots trying to decipher their Asian contacts’ first and surnames, which to use, whether to add honorific titles (like ‘san’ in Japan and ‘nim’ in Korea) and where to put them.
And Westerners frequently stress over being able to use chopsticks proficiently, who should pour whose drinks, who eats first and who gets the ‘last bite’.
More perceived than real
Certainly, there are etiquette differences - and you may occasionally meet a stickler. But these barriers are far more perceived than real. East Asians simply don’t expect western business people to know all the local customs - why would you?
While it’s true there are “accepted” ways of handling a business card and using chopsticks, westerners really aren’t expected to follow suit. Nor does anyone worry unduly about where you’re sitting in the room or the names and titles you use.
The rule of thumb is that if you behave professionally, have good relationship-building skills and relax enough to open up and be yourself, you’ll generally be fine.
More complex hurdles
But don’t breathe a sigh of relief just yet.
There are big hurdles, and ones which are far more complex and subtle than points of etiquette. And, because these are less easily recognised, they catch many western business people out.
Some of these relate to language. If you don’t speak Mandarin and you’re trying to sell to Chinese people who don’t speak English, you’re going to struggle.
But at least you can take steps to overcome language barriers by taking an interpreter to a meeting and having documents translated.
The tougher obstacles relate to the subtleties of cultural practices – the way things get done. These vary by country, but there are some common themes.
A major barrier – which relates to language but is much harder to spot – is the tendency of Asian companies to field the person who speaks the best English rather than the best person to negotiate your deal.
The problem is that they won’t tell you they’ve done this, and it might not be apparent until you realise you’re not making any progress many weeks later.
Your contact’s English might also be far from fluent, leading to misunderstandings – especially when your message is relayed back to his or her colleagues. You may effectively be doing business with someone who’s just a poor interpreter – but without realising as much.
The consensus culture of Japanese and Korean firms can be difficult. Because business leaders are often reluctant to make decisions without extensively consulting staff and holding internal reviews, deals can become protracted and frustrating for uninitiated westerners.
One problem is you may think the company isn’t interested and so back away, while it may well be they are, in fact, keen. Or you may find you’re wading through a steep hierarchy of gatekeepers instead of talking to the decision maker. Again, the company isn’t necessarily trying to block you – it may just be how it works.
Chinese businesses differ in these respects. They’re far less consensus-driven, and senior managers are not so focused on discussing decisions with their staff. This makes the ability to deal directly with the decision-maker all the more important. If the nominated ‘English’ speaker is relatively junior, they simply won’t be able to champion your deal.
Western business people can also be fazed by the ethos of face-to-face relationship building that’s embedded across much of East Asia.
There’s often a need to go out drinking and dining with your counterparts, which may sound no hardship until you find you need to do it every week for four months before a deal starts to move forward. And, if you’re not based in Asia and need to keep getting on a plane, the time and cost involved will be huge.
This is most entrenched in traditional sectors such as energy and manufacturing – and it’s true that many start-ups and digital ventures now move faster as speed to market is vital.
But even here, relationships are key. Otherwise, if your personal relationship isn’t strong, you might find your Korean customer regards your first deal as nothing more than a ‘proof of concept’ – and has no scruples in replacing you longer term.
Again, China is different. Relationship building is important in fostering trust, but your counterpart will ultimately be most focused on getting the best deal. Negotiating in China can come as a shock to westerners who’ve spent time nurturing personal links, only to find everything becomes highly transactional when it comes to the crunch.
It’s nothing personal: that’s just the way business is done in China.
People on the ground
So how can you address these issues?
The truth is there are no simple short-cuts through the tougher cultural barriers.
By far the best solution is to invest in people on the ground who speak the language, have good contacts and extensive experience of doing business locally. This won’t make all the obstacles magically disappear, but they’ll know the best way to navigate them and be able to read the nuances.
Whether they’re members of your own staff or consultants acting on your behalf, this is by far the most effective way to build the right relationships and get the job done.
And, in the long run, it will prove far more successful and less costly than trying to negotiate from across the other side of the world.
As the Radio 4 programme rightly highlights, distance still matters.
Do you agree? What are your experiences of the toughest hurdles when working in East Asia?