Asian expansion: take your time

by 15 Apr 2008

SUCCESSFULLY EXPANDING a business into Asia requires time, slowly building relationships, proper investment and adopting an indirect communication style, according to Rosemary Urbon, CEO of Singapore-based People and Culture Development Pte Ltd.

Business transactions in Asia happen at a slower pace than Australians expect, and where it would take six months to close a deal in Australia, it could take 18 months to two years in Asia. To this end, Australian companies need to be prepared for the long haul before embarking on Asian expansion.

“I constantly tell people ‘you need to expect to taste the bitter before you can appreciate the sweet’, when they’re considering expanding into Asia. The time horizons, communication styles and social mores are vastly different from Australia’s, and it takes a concerted effort to understand and adapt to them,” said Urbon at a recent Recruitment & Consulting Services Association lunch.

Slowly building relationships is a key factor when conducting successful business in Asia, according to Urbon, as an Asian business contact has to genuinely like and trust you before you can become a true partner.

“In Asia, ‘time is time’ and not money, as in our context. The payoff, however, is that once you’re in as a true partner, you’ll receive strong loyalty over the long-term, so long as you are consistent in delivery and sensitive to the ways of developing and maintaining the business relationship,” said Urbon.

Dina Zavrski-Makaric, principal of consulting firm Challenging Directions, said that although doing business in Asia cannot be assigned to a single framework of time, it is a significant cultural factor that must be considered to build and sustain success in foreign markets.

“In our culture time is something that needs to be managed. In Eastern cultures time is a valuable resource, utilised wisely in building important relationships, including business. Preference is also on long-term benefits, as opposed to our Western desire for short-term benefits. This is something that is strange to our Western mind. Our managers need results, and they need results now,” she said.

HR issues such as recruitment, retention and talent development are also magnified when companies go offshore into Asia, according to Zavrski-Makaric. In order to find solutions, she said companies must invest time and money in understanding these markets, learning about them as well as from them. This requires proper investment in things such as cross-cultural coaching and global leadership.

“Companies that are already experiencing challenges, and assigning them to cultural differences, are looking for quick fixes, hoping that half- or one-day trainings would equip managers with skills necessary to do business, recruit, motivate and retain employees and build profitable business in Asia,” she said.

“It is impossible for a manager or business leader to learn in those short trainings how to successfully negotiate business, build relationships, put in place practices that would work in China or India.”

Another issue companies experience is the indirectness of the Asian communication style. This can cause confusion for Australians who are more open and direct sharing all information.

“In Asia saying ‘yes’ doesn’t necessarily mean ‘I agree’, but ‘yes, I hear you’,” said Urbon.

However, despite all the cultural hurdles which Australian companies must overcome to successfully expand into Asia, with much of the world’s economic growth now coming out of our Asian neighbours there are plenty of rewards to be gained.

“The good news is that companies can make money and build profitable businesses in Asia, but they cannot do it overnight. There are no quick fixes,” said Zavrski-Makaric.


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