When expanding into a new business environment, companies must calibrate their business models and modify their core structure to align with local market mandates to appeal to the end consumers. As companies in the West look to the East for business opportunities, it is imperative for business executives to not just master the language of the country where they intend to expand into, but they should have an in-depth understanding of the country’s culture. According to the Goldman Sachs Next 11 Report, six of the eleven countries with the most potential to become the world’s largest economies are Asian countries, suggesting that Asia may be the continent with the most potential to expand business into. Understanding the differences in business conduct between East and West, as well as gaining a deep insight into specific Asian markets is essential for Western companies wanting to expand their business into Asian countries.

No to Straight Talk, Yes to Relationship Building

Cheng Hing Han, experienced executive whose expertise is helping businesses break into new markets, has shared his view on the main differences between Western and Eastern business cultures, in a speech at Singapore Management University (SMU). First of all, “straight talk” is disliked and avoided in Eastern culture, as it brings forth a loss of face. Cheng described a personal experience, in which a senior executive literally walked out the room out of embarrassment as a result of his straight mannerism. “Assertiveness is not a common practice among Asians. At times talking around an issue is viewed as lack of confidence in the West. But there are good reasons why Asians do not want to be assertive…because sometimes we don’t want to embarrass people”- Chang said.

Spending time building relationships is another essential component of the Eastern business etiquette. The emphasis on relationship building can lead to paradoxical situations. Cheng makes the example of a Chinese businessman who “may tell his counterpart that he is giving him a special price and is not making any money from the deal, although it is not true.” The underlying message is that the Chinese business values the relationship with his counterpart more than money, but a Westerner can only understand this if he or she detaches the meaning from the utterance, and becomes more comfortable with dealing with a more indirect communication style. Messages like these should not be taken literally: “But in the Western culture, the counterpart gets very nervous (on hearing this). They will say that this business is not sustainable”.

No Monolithic Asian Market: Cater to Countries’ Specificity

eBay has tried to localize into three distinct Asian markets with the same business model. With this approach, eBay made a costly gaffe in Japan that has become a well-known demonstration of the fact that consumers in different countries have different reactions, customs, and needs. eBay did not delve deep into the very particular Japanese auction culture and did not realize that in Japan sellers have a lot more power than buyers. For example, just like in real estate where landlords do not pay any broker fees and can request tenants up to a year in rent, in online auctions in Japan sellers do not pay any fees. Moreover, they can cancel bids any time before the auction ends without being penalized. eBay tried to impose its already existing business model in Japan, assuming that consumers would understand the guidelines and that sellers would surrender and pay the fees. The attempt turned out to be disastrous, and there were not enough sellers or goods. After three years of futile attempts to develop a foot hold in Japan, eBay Japan had no choice but to withdraw from the country and still has no presence in Japan.

Conclusion

Understanding specific Asian markets as well as the main differences in business etiquette between the Eastern and Western world is essential in order to expand your business and strive in Asia. Lacking this strategic orientation will imperil business ventures and risk losing time and money.

This article is written by a professional writer, Ilaria Ghelardoni, associated with Ulatus.