Cultural tips for successful trade negotiations in Asia
Understanding the culture of a country can be a major factor in the success or failure of trade negotiations, writes John Whelan, AIB export specialist.
Regardless of where you’re doing business – finance, technology, computing, food, and consumer goods – the global cultural differences directly impact you and your company’s profitability. I have found that this was particularly the case in Asian trading, where cultural, religious and commercial manners are very different from those in Ireland and Europe. Improving cultural awareness can help companies maximize international opportunities and avoid misunderstandings and costly setbacks.
When negotiating with a business partner or potential customer, culture can be an essential element of success.
In China, the business hierarchy in business relationships is very important. Quick definition of the conductor or line manager ensures a more effective discussion. It is important that no one suffer a “mianzi” loss of face, which can happen when you address your comments to less experienced negotiators.
The presentation of business cards is a ritual and must be presented in both hands. In the introductions, the Chinese first give their surname, then they can give their first name, which is often an adopted Westerner, like “Harry.” If you explain the Chinese greeting “Ni hao” – “I am glad to meet you” – it will be good if you receive cards. Initial meetings usually end with a business gift exchange. Therefore, it makes a good impression if you bring it from your home country.
Working life and social life tend to be separate in the West, while much of the social life of a Chinese person is used to build personal and professional relationships. In China, about three-quarters of cases are completed outside working hours. Tea rooms, karaoke bars and restaurants can be great places to talk and bargain. The Guanxi system is very important for business in China.
United Arab Emirates
The culture of the United Arab Emirates is rooted in Islamic traditions. Courtesy and hospitality are among the most popular virtues. Foreigners can practice their own religion and the dress code is liberal. The usual salvation is “As-salam alaikum” (peace be upon you), whereupon the answer is “Waalaikum as-salam” (and peace be upon you).
Start in presentations with a handshake. You should greet each of your Emirati colleagues individually. In Muslim practice, avoid shaking hands with a woman unless she offers her first. If you want to use business cards in the United Arab Emirates, make sure that the information is printed in English and Arabic. Inhabitants of the United Arab Emirates prefer to do business in person. Relationships and mutual trust are essential to a successful business relationship and can only be developed through face-to-face meetings. Emiratis prefers to do business with those you know, so it is important to have a good start for successful business relationships.
In Japan, the corporate culture is very formal. People are called Mr. or Mrs., followed by last name. For example, if you know your contact well, you can use the name san. Urabi-san. Business cards (meishi) are essential and must be distributed at the beginning of the meeting. It is considered rude not to offer them. During the meeting, all cards must be on the table – their filing can be misinterpreted. Never put the card in your pocket.
In a commercial context, it is normal to go to restaurants or karaoke bars. The Japanese are very conservative in their dress – black suit, white shirt, black tie. The business-to-business negotiation cycle is usually quite lengthy and many meetings are required. So be prepared to spend a lot of time and effort on the conclusion of an export agreement. However, after the deal, the trade relations will take a long time.
India has a much less formal business structure than Japan, China or the Gulf States, but there are a number of important points to keep in mind. Family relationships are very important – 70% of Indian companies are family businesses. Therefore, Indians consider the trade negotiations as a new family member. It is best to build a personal understanding and relationship before negotiating. It is customary to be invited home for dinner, but no business is discussed.
The management is quite informal, open folders are common. Always negotiate the offered starting price. It should not be the final price. But also be very clear in communication – Indians do not like to say no, so “I’ll do my best” means that this is not possible.
Always look for cultural, religious and business labels in all countries where you want to do business. By strengthening your cultural awareness you are better positioned to ensure the success of your business in new markets.