Asia-Pacific Business
Asia-Pacific Marketing Federation
Certified Professional Marketer
Copyright
Marketing Institute of Singapore
Organization
1) Course objectives
2) How to study the subject
3)Desired outcome
4) Contents
Course Objectives
• To provide a foundation of business and
marketing practices unique to the Asia-Pacific
region.
• To familiarize candidates in general
economic and business climate affected by the
PEST environment.
• Foreign investments and their impact on
Asia-Pacific countries.
How to study the subject
• Recommended reading list
• Magazines and periodicals in Asia-Pacific
example Asia INC,Asia-week
• Newspaper reports of happenings in the AsiaPacific region
• Useful to take part in group discussions to
assess how the political and economic issues of
the day,changing business landscape (example
mergers and acquisitions) impact business
decisions.
Desired Outcome
• Understand how changing PEST
environment in the Asia-Pacific region
impact managerial and business practices
•Appreciate relationship between business
and government
•Understand the dynamics of interactions
and influence of the countries within the
Asia-Pacific region and the regionalisation
and globalisation of their state and private
enterprises.
Contents
•Overview of the Asia-Pacific region
•The Macro and Micro-environment
•Marketing practices
•Management practices
•Some key pointers
- The Chinese family business
- Negotiation techniques
• Conclusion
Overview of the Asia-Pacific
Region
• North-East Asia - Japan, Korea, Taiwan, China
• South-East Asia - Myanmar, Laos, Thailand, Cambodia,
Philippines, Vietnam, Malaysia, Brunei, Singapore,
Indonesia, East Timor
• Rest of the Asia-Pacific Region - Australia, New Zealand,
Nepal, Bhutan, Bangladesh, Pakistan, India, Sri Lanka
Brief history of the colonisation
of the Asia-Pacific Region
•India, Burma (now Myanmar), Malaysia, Hongkong,
Singapore previously colonised by the British
•Macau colonised by Portugal
•Indo-China colonised by France
•Indonesia colonised by Holland (Dutch)
•Taiwan and Korea colonised by Japan
•Philippines colonised by Spain and U.S.A.
Impact of colonisation
•Apart from Thailand and Japan, no country in the AsiaPacific region was spared from Western influence
•400 years of Spanish presence and another 50 years by
Americans has resulted in a Westernised culture in the
Philippines
•Many Dutch words have crept into the Indonesian
language
•Legal systems in India, Malaysia, Singapore and
Hongkong are still based on the foundations of British law.
The chaebol system in South Korea is very similar to the
Japanese keiretsu system
Why the strong interest in the
Asia-Pacific Region
•Potential to fulfill needs of some 2.5 billion people about 60% of the world’s population
•Need to understand the wide diversity of cultures culture influence needs and business practices
•Stages of economic development range from
underdeveloped nations, e.g. Myanmar, Laos, to
developing nations, like Malaysia, to Newly
Industrialised Economies, like Singapore and Taiwan,
to fully developed nations like Japan - presents both
threats and opportunities
Why the strong interest in the
Asia-Pacific Region
•Huge potential for infrastructure projects
•Rapid changes in political leadership in several Asian
countries e.g. Philippines, Thailand and Indonesia
•Emergence of consumer credits
•IT demand in U.S. accounted for nearly 40% of economic
growth in Asian countries in Year 2000, outside Japan
Association of South-East Asian
Nations (ASEAN)
•Formed in 1967 - today comprise of Thailand, Malaysia,
Singapore, Indonesia, Philippines, Brunei, Myanmar,
Laos, Vietnam and Cambodia
•Set up as a group for closer economic, social and
cultural cooperation
•Trade between ASEAN partners (except Singapore), still
not very significant
•Economies of ASEAN countries dominated by Chinese,
although they form only about 6% of the regional
population
ASEAN Free Trade Agreement
(AFTA)
•Launched in 1990
•Supposed to convert ASEAN into a free trade zone or
at most 5% duty by 1st Jan. 2003
•Raw or unprocessed agriculture to be included under
AFTA
•No progress made in the area of services
EAEC & APEC
•EAEC _East Asian Economic Caucus - an economic
grouping without Westerners
•Comprise of ASEAN and Northeast Asian economies
•No significant progress in this alliance
•APEC - Asia-Pacific Economic Cooperation Forum
(ASEAN + China, Taiwan, Hongkong, South Koreaa,
Japan, U.S., Canada, Mexico, Australia, New Zealand,
Papua New Guinea and Chile)
•APEC not truly an Asia-Pacific body as U.S. and
Canada contributes to a large portion of the trade
Newly Industrialised Economies
(NIE’s)
•Consist of South Korea, Taiwan, Hongkong and
Singapore
•Most successful economies in the world with sustained
growth rates of 7-8% p.a.(until the 1997 economic crisis
and the 2001 global downturn)
•The only economies in the developing world likely to
catch up with industrialised countries in terms of
technology, infrastructure and per capita income
•One of the key drivers of the economies of Taiwan and
Singapore is the electronics industry
The Macro and MicroEnvironment
• Business is affected by key changes in the macro and
micro-environment
•Changes can present opportunities or threats for
businesses
•Factors affecting the macro-environment are political,
economic, social and technological
•Trading practices, channels of distribution, the
competitive environment, form part of the microenvironment
The Political Environment
•Political systems can vary from democratic to totalitarian
•Democratic system - multiple centres of power, none of
which is powerful enough to completely control decision
making
•Examples of democratic systems in the Asia-Pacific region:
India, Indonesia (a new democracy)
•Totalitarian system - political power is highly concentrated
in a small elite group
•Examples of totalitarian systems: Myanmar, Laos
Political Ideology
•Political philosophy covers issues as government
intervention, role of market forces and attitudes towards
profit and risk towards a foreign firm
•Ranges from capitalism to socialism
•Capitalism - private ownership of business enterprises
is encouraged
•Socialism - public ownership of businesses is common,
with substantial government regulations of the workings
of a free market
•China is a mixture of capitalism and socialism, whilst
Vietnam is a socialist state
Political Ideology
•Nationalism could affect attitudes towards foreign made
products and foreign owned companies
•Japanese, for example, favour Japanese made products,
although the trend is slowly changing
•Some Indian extremists are against their government
encouraging the presence of foreign companies
•Procurement of goods or services for government use usually preference is given to local companies
Political Instability/International
Politics
•Political instability can have a deterrent effect on
foreign investments e.g. few foreign investors dare
venture into Indonesia now
•Instability also means a higher degree of political risk,
like unexpected introduction of import controls and
expropriation of foreign assets e.g. Myanmar
•Differences in political opinions and strained
relationships between countries affects business
•Example, Muslim countries do not buy goods from
Israel, human rights activists in Western countries
boycott goods made in ‘sweat shops’
The Legal Environment
Most countries have laws and regulations covering:
•Foreign imports
•Foreign direct investment (e.g. companies in Malaysia
require bumiputras to have a share in the company)
•Forms of market entry, such as licensing and franchising
•How products are marketed (e.g. advertising restrictions,
product registration
The Legal Environment
There are laws governing foreign imports. Legislation
may change from time to time, depending on the need.
Laws governing imports include:
•Tariff/non-tariff barriers
•Quotas
•Subsidies to domestic producers
•Buy local campaign (the Malaysian government had
such a campaign during the 1997-1998 crisis)
•Exchange controls
The Legal Environment
Reasons for government control of foreign imports:
•Protect strategically important industries
•Reduce unemployment
•Prevent dumping
•Protect local industries
The Legal Environment
While most governments encourage Foreign Direct
Investments (FDI’s), there are often rules and
regulations governing foreign investments, such as:
•Investment if only on a joint venture basis (as in
many construction companies)
•Local content requirement
•Export/import requirement (e.g. in Myanmar for
every $100 worth of goods exported, only $20 worth
of imports is allowed)
•Transfer pricing controls
The Legal Environment
Marketing of products may be subjected to the
following controls:
•Safety standards, registration, labeling requirements
•Price controls (especially for essential products like
cooking oil, rice)
•Advertising content (scantily clad Caucasian models
are not allowed in Malaysia), sales promotion
techniques
•Exclusive dealerships (e.g. it is very difficult to change
a dealer in South Korea, once the appointment is made)
The Economic Environment
•Each Asian country has its own currency. The
convertibility of a currency determines how difficult it is to
convert one currency to another
•Full convertibility means that both residents and nonresidents can purchase any amount of foreign currency
•Hard currencies are usually fully convertible, e.g. US$
•Soft currencies are non convertible, e.g. Kyat (Burmese)
and Dong (Vietnamese) currencies
The Economic Environment
Governments impose various exchange restrictions to
control their limited supplies of foreign exchange.
Examples of exchange restrictions are:
•Licensing - exchange rate fixed by government licenses
which require all recipients and exporters who receive
foreign exchange to sell to the central bank at the official
buying rate
•Multiple exchange rates
•Import deposit requirement
•Quantity controls
The Economic Environment
Types of risk exposure in international business:
•Transaction exposure - foreign exchange rates on
settlement date
•Economic exposure - most broad type of exposure
that has long term effects: costs, prices, sales,
profits, investments
•Translation exposure - consolidation of financial
statements into different currencies into home
currency or reporting currency
The Economic Environment
•Currency exchange rates can be greatly affected by
political changes e.g. the Indonesian rupiah changes
substantially with each major political development
•Regional economic groupings (AFTA,EAEC, etc;) will
impact economies of both member and non-member
countries
•China’s entry into WTO will have a profound effect on
the other SEAsian economies
The Social/Cultural Environment
Understanding the social/cultural environment in each country
is important because:
•Product features, packaging and advertising strategies must
be sensitive to cultural differences
•Business negotiations involve individuals from different
cultural backgrounds - misunderstandings can arise from lack
of knowledge of cultural backgrounds
•Choice of markets to penetrate may be influenced by cultural
factors, e.g. it is generally easier to introduce a product to
another country whose culture is similar to the home country
The Social/Cultural Environment
•Some managers are very international in their outlook.
•Such managers recognise the fact that different people
from different cultural backgrounds behave differently
•Others believe that what works well at home should work
well abroad too
•There are various terms to describe such management
orientations
The Social/Cultural Environment
Management orientations:
•Ethnocentric - home country is superior. Whatever methods
used to market products at home should be applicable to foreign
countries too
•Polycentric - each host country is unique
•Regiocentric - sees similarities and differences in a particular
region in the world. For example, Asians, generally speaking,
have certain similarities when compared with Westerners, but
within each Asian nation there are differences
The Social/Cultural Environment
Management orientations continued:
•Geocentric - has a world view - sees similarities and
differences in home and host countries. Managers with a
geocentric orientation seek to create a global strategy that is
fully responsive to local needs and wants.
•Examples of companies with a geocentric orientation General Electric, Hewlett Packard
The Social/Cultural Environment
Main elements of culture which impact on marketing are:
•Religion
•Values and attitudes
•Language (both verbal and non-verbal)
•Names and customs (a name like ‘Lostalot’ - an antiwrinkle cream from Shishedo, would not sell in HK or
Singapore)
•Manners (Japanese, for example, would find a direct ‘no’
rather offensive)
The Technology Environment
•IT and communications infrastructure advance at
different rates in different countries and at different
rates even in the same country
•Singapore is highly developed in the IT and
communications infrastructure. India is the IT capital
of Asia, yet barely half the population own home
computers
The Technology Environment
•Apart from, product and process technology change is also
changing the competitive environment of many
industries/countries
•Singapore, for example, has embarked on a major,
government sponsored research into life sciences
•New product, process and information technologies allow
companies to seek competitive advantage in global markets
The Micro-Environment
Knowing the macro-environment of countries in the AsiaPacific Region is not enough. One must also be familiar with
the micro-environment.
The micro-environment includes:
•The competitive environment
•Impact of multi-national companies (MNC’s)
•Distribution chain
•Common trade practices
•The company - including market entry strategies and risk
management
The Competitive Environment
In doing a competitive analysis of foreign markets, it is
necessary to first of all look at the competitive structure.
Having done that, the company looks at the competitive
position, then finally formulate a competitive strategy to
minimise risk of failure in market entry.
The Competitive Environment
•Competitive structure - the broad competitive environment
and structure of the industry including the number and size
of competitor, the extent of competitive rivalry, exit and
entry barriers, the relative power of buyers, and the threat
of suppliers
•Competitive position - an analysis of the company’s
strengths and weaknesses in relation to its competitors
•Competitive strategy - the overall generic strategy of the
firm in the foreign market (cost leadership, differentiation,
or focus)
Impact of Multi-national
Companies
Multi-national companies from U.S., Europe and Japan
and to a lesser extent Taiwan and South Korea, have a
strong presence in many Asia-Pacific countries.
They often dwarf the thousands of small businesses in
each country they are in, and thousands of workers are
directly or indirectly employed by them.
It is therefore important to understand the impact MNC’s
have on the home and host countries.
Impact of Multi-national
Companies
•Setting up operations in foreign countries could mean
loss of jobs for people in the home country
•It also means an outright transfer of technologies and
outward flow of capital
•Home country exports are reduced
Impact of Multi-national
Companies
•On the other hand, there is a profit motive - costs
could be too high in the home country
•Overseas trade barriers - high import duties by
host country may encourage setting up of
operations there
•Huge domestic market in host country
•Close to source of raw materials, cheap and
skilled labour
Impact of Multi-national
Companies
•Utilisation of cheap labour may be interpreted as
exploitation by people in the host country
•The capital market will favour MNC’s rather than small
businesses, thus crowding out locals
•On the other hand, MNC’s provide employment for host
countries
•Earns foreign exchange for the host country
•Transfer technologies to the host country
Distribution Chain
A typical distribution arrangement in Asia-Pacific
countries is for a manufacturer to appoint a sole agent to
take care of the marketing and distribution of his
products.
The sole agent will then distribute through a system of
wholesalers, who in turn distribute to retailers.
Very often, agents have branches in key towns to give
better logistics support.
Each branch would have its own warehouse and
administration team.
Distribution Chain
Typical distribution chain:
Manufacturer (overseas) => Agent/s => Wholesalers =>
Retailers => Consumers
Manufacturer (local) => Wholesalers => Retailers =>
Consumers
Manufacturer => Agent => Supermarket
chains/hypermarkets
Distribution Chain
•The emergence of large independent chains and
hypermarkets in many Asian cities, and the advent of ECommerce, is beginning to challenge the traditional
distribution route.
•Hypermarkets like Makro and Carrefour are often
serviced directly by the agent
•Very often they act as wholesalers themselves
•In IT savy countries, bigger supermarkets have
introduced orders via computers
Distribution Chain
•Government tenders are normally dealt with directly by
the agent
•Industrial equipment which require regular servicing are
also usually sold by the agent’s own outlets or through
exclusive distributors
•This arrangement is necessary because each distribution
point has to have properly trained personnel
Distribution Chain
Advantages of using an agent/distributor by a foreign
company:
•The foreign company may not have extensive contacts
or resources required to penetrate the new market
•Contacts are vital particularly when dealing with
government or government owned companies
•May bypass constraints or business ethics or practices
Common Trade Practices
•Chinese businessmen in China and some traditional
Chinese businessmen in other parts of Asia prefer to
conduct business in informal settings like over
dinners or karaoke lounges
•Australian and New Zealanders prefer the
negotiation table
•Socialising, relationship building, is an important
part of the business process
•Face saving is an important issue
Common Trade Practices
•Smuggling and barter trade is common
•Parallel imports from one Asian country to another
could seriously affect business
•Copyright laws and implementation is still in its infancy
•Corruption is still rife in many parts of Asia
Common Trade Practices
•Credit terms in the trade may vary from 30 - 90 days
•Small retailers normally purchase in cash from
wholesalers, for fast moving consumer goods
•Traditional Chinese wholesalers sometimes sell at cost,
and use the cash to roll over to maximise the credit terms
given to them
The Company
A company, whether or not it is within the Asia-Pacific
Region or outside of it has to have the appropriate
capabilities if it desires to do business in the A-P Region.
The company, for example, has to:
•Have a geocentric, rather than ethnocentric, orientation
•Have adequate production facilities to cater for the
export market
•Be prepared to make changes in product and packaging
requirements even for small batches
•Have an export department
The Company
•The export department must have sufficient staff e.g.
one person taking care of ten markets is not sufficient
•Key personnel must be familiar with international risk
management, cross cultural issues and other factors
(such as appropriate market entry strategies), associated
with doing business outside one’s home country
Market Entry Strategy
The basic elements of a foreign market entry strategy
are as follows:
•Assessing products and foreign markets - choosing the
product/market
•Setting objectives and goals
•Choosing the entry mode - direct export, contractual
arrangements like appointing an agent or joint-venture,
or investment
•Designing the market plan
•Monitoring and controlling the operations
Market Entry Strategy
Choice of entry mode can determine a company’s
success or failure in a foreign market.
Direct export:
•At a fairly basic level, companies export products
based on ‘best price’ to an import agent recommended
by friends or associates, or contacts made at trade
exhibitions
•Company personnel rarely visit the import agent and
there is little marketing support
Market Entry Strategy
Direct export - con’t
•At a more involved level, company personnel makes
regular visits to work with the agent
•There may be sales representatives paid by the
company but attached to the agent’s office
•A company may also have a regional office in the
country of import
•Such an office normally have a full sales and
marketing team
Market Entry Strategy
Licensing:
•Licensing is an arrangement whereby one company (the
licensor) makes an asset available to another company (the
licensee) in exchange for royalties, license fees or some
other form of commission
•A company with advanced technology or strong brand
name can use licensing to improve its profits
•For example, Disney can license its brand name to
another company to put the brand name on caps, shoes,
etc; in return for a fee
Market Entry Strategy
Franchising:
•Franchising is a form of licensing in which the
franchisor provides a standard package of products,
systems and management services
•The franchisee provides market knowledge, capital and
personal involvement in the management
•Well known examples are MacDonald’s, Kentucky
Fried Chicken, 7-11 chain stores and petrol stations
Market Entry Strategy
Joint ventures:
•In a joint venture, the foreign partner and local partner
share ownership
•They share profits as well as risks
•It could be in the form of a manufacturing plant, a
distribution network or massive capital/technology
injection, as in huge infrastructure projects involving the
building of airports, highways and communication systems
Risk Management
•Managing risks when doing business in your home
country and managing risks when doing business abroad
can be quite different
•Often, you are familiar with the people, the
environment, the culture, the systems and the companies
you deal with, when doing business in your own
country
•However, once abroad, risk exposure increases
substantially - from possible currency exchange losses
to copyright piracy, to outright dishonesty on the part of
the people you do business with
Risk Management
It is important to understand the process and tools of risk
management.
The risk management process:
Risk identification
•What dangers and possible events can be harmful to the
company?
•Which possible losses of money, material and equipment
must be taken into account/
•Which events outside the company can disturb or interrupt
its operations?
Risk Management
The risk management process
Risk evaluation
•What will be the possible maximum/minimum cost of
a damage event to the company?
•How often are they expected to occur?
•How likely are the different loss events?
•How critical is each loss event for the existence of the
company?
Risk Management
The risk management process
Risk policy decisions
•Which of the identified risks is the company prepared to
accept?
•Against which others are protective measures (e.g. accident
prevention) indicated?
•How much money can the company make available for risk
reduction?
Risk Management
The risk management process
Risk control
•Which measures should be taken to increase the company’s
security against unforeseen events?
•Who will be responsible for these measures and the control
of their effectiveness?
Risk Management
Tools of risk management
Risk avoidance:
A conscious decision by the company not to engage in
certain activities because the dangers are considered too
great to be acceptable.
Risk Management
Tools of risk management
•Risk reduction:
Measures designed to improve the security of the
company’s operations
•Risk transfer:
Measures designed to shift all or part of the known risk to
another company, usually a supplier or a customer - by
agreement or through a change in company rules
Risk Management
Tools of risk management
Risk division:
Reduce danger to the company overall by removing risk
concentrations (e.g. warehouses) to several locations - or
by spreading the risks over several markets, products or
operational units
Insurance coverage:
Determine for which risks the company requires insurance
coverage, and combining it with other risk control
measures wherever possible
Marketing Practices
•Heavy advertising is still perceived as good marketing by
many small and medium size enterprises
•Environmental marketing is gaining ground, though still a
problem with some chemical industries in India and timber
companies in Indonesia
•Animal rights activists are almost non-existent in Asia and
has little impact on marketing activities
Marketing Practices
•Ethical marketing is self-regulated - consumers’ voice
is not as strong as in the West
•In-door promotions with gifts and lucky draws are
popular in many parts of Asia
•Billboard advertising is prominent in Hongkong, and
key cities in China and Indonesia
•TV remains one of the most popular medium
Management Practices
Management styles in Asian companies vary
considerably, depending on the size of the company, the
number of Western trained managers in the company, and
whether the company is a Western MNC or a branch
office of an MNC.
Or, sometimes, within the same company, there is a
mixture of both Western and Asian styles of management.
Management Practices
McKinsey’s 7-S framework can be used as a basis for
comparison between Western and Asian styles of
management:
Strategy
•Western style - planned. Usually top down, rigid. View
may be too narrow. Ideas from the top may not necessarily
work
•Asian style - flexible. Customer and staff feedback
considered. Staff has ownership of ideas
Management Practices
Structure
•Western style - complex. Usually several layers.
Communication both upwards and downwards take a
long time to filter through. Result is loss of valuable
time.
•Asian style - simple. Structure usually flatter,
allowing for quick feedback e.g. Giordano, the
Hongkong clothing chain, has a fairly flat structure
Management Practices
System
•Western style - sophisticated. High degree of control.
Rules and regulations abound to ensure conformity, e.g.
IBM
•Asian style - minimum. Enough to keep track, but not to
choke. Staff feel that they are trusted
Management Practices
Style
•Western style - bureaucratic. High division of
labour. Result is minimum contribution from
staff because each staff sees himself/herself as
just one of the cogs in the wheel
•Asian style - entrepreneurial. Quicker response
to customer needs
Management Practices
Staff
•Western style - well qualified. Very often, young,
inexperienced graduates are appointed to key
positions. This frustrates lower level, less qualified
staff
•Asian style - Street smart. Staff can relate to all levels
Management Practices
Share values
•Western style - guided by mission statements which are
not often put into practice. Class conscious - management
and staff often have separate canteens and separate toilets
•Asian style - values are put into practice. Top
management often spend time on the shop floor not just
walking around but actually doing the work
Management Practices
Skills
•Western style - analytical. Volumes of reports are
required daily, weekly and monthly. Detailed analysis
carried out. Often too much analysis, too little action
•Asian style - a bit more chaotic. ‘Let’s do it first’
mentality
Management Practices
•‘Yes’ men still prevalent
•Seniority takes precedence over meritocracy
(although this is slowly changing)
•Respect for hierarchy
•Consensus building (widely practiced by the
Japanese)
Management Practices
•Trust is very important. Contracts are signed, but the
spirit in executing the contract is often more important
than the contents of the contract
•Muslims in Malaysia are given time off for prayers on
Fridays
•Very often in family owned enterprises, the owner or
his son functions as the patriarch - overseeing and
approving every policy, major or minor
The Chinese Family Business
• Overseas Chinese have a tremendous influence in
business in the Asia-Pacific Region, particularly in
South-East Asia.
• For example, Chinese comprise only 2.5% of the
population of Indonesia, but they control 73% of the
market capital. Likewise, in Thailand, Chinese form
only 14% of the population, yet they control 81% of the
market capital
•It is therefore important to have an understanding of
the Chinese family business
The Chinese Family Business
There are two dimensions of the Chinese family business:
•Business involving core family members
•Business involving clans - non-family members, but
sharing the same surname or originating from the same
province in China
The Chinese Family Business
•In a business involving core family members, the
owner and key family members hold important
management positions
•Power and authority rests with the owners and
leadership is autocratic
•management style is paternalistic
The Chinese Family Business
•The owner regards business as private property of the
core family and is reluctant to share ownership with others
•Some large Chinese companies, although technically
public, are family controlled and influenced
•Key family members occupy top management positions
•Secondary key management appointments goes to
relatives
The Chinese Family Business
•The structure is small and simple, with concentration on
sales, service or production
•Only a few larger businesses develop functional
departments
•Rules and systems are often absent (except for the more
liberated businesses which hire professional managers)
•Functions and roles of positions not clearly defined
The Chinese Family Business
•Specialisation level is low, with a lot of generalists
dealing with a range of activities
•Personal relationships and feelings take precedence
over objectivity (giving rise to the ‘yes’ men mentality)
The Chinese Family Business
•Management control is characterised by emphasis on
loyalty and subjective assessment mechanisms
•There is often a suppression of professional talents
•There is also a lack of an institutionalised succession
mechanism
The Chinese Family Business
•Chinese clans, particularly the Hakkas, are very
closely knit
•A Hakka businessman in East Malaysia, for
example, will be glad to assist a fellow Hakka in
Singapore, even if they are total strangers
•This close association has made it easier for Chinese
to develop guanxi (connection/relationship) and
guanxi-wang (networking) amongst themselves
Negotiation Techniques
With Chinese and Japanese wealth dominating much of
Asia, it is worthwhile looking at the negotiating styles of the
Chinese and Japanese, as negotiations are often the pivotal
point in any business deal
Negotiation Techniques
•Although Chinese and Japanese are culturally different,
they share many similar negotiation techniques
•They often push for further concessions after agreements
are made
•They are usually tough negotiators
Negotiation Techniques
•China and Japan are relationship oriented rather than
contract oriented
•Their negotiating teams are normally larger than their
Western partners
•Both China and Japan do not like detailed and restrictive
contracts
Negotiation Techniques
There are some differences in negotiation techniques
between the Chinese and Japanese:
•Chinese are willing to comprise, whereas Japanese see
compromise as defeat
•Chinese have a more hierarchical approach in decision
making whereas the Japanese are more consensus
seeking
•Japanese tend to set a more polite tone to proceedings.
Chinese are less likely to be so formal
Conclusion
The various slides are just snippets of what candidates
need to know.
It is not comprehensive, and candidates are expected to
read widely, and more importantly, to be able to
critically analyse the impact of the various changing
forces in the environment, as well as the
behavioural/cultural patterns of Asians on business.