Visiting the Asia Pacific? Welcome to the world of haggling! (Part Two)
By participating in exhibitions and establishing your company in the Asia Pacific market, you will find yourself solidifying and deepening relationships. And that will lead you into the world of negotiating—APAC style. Before you start any business conversations that will hopefully be profitable for everyone involved, let’s talk about the negotiating culture.
The negotiating process in APAC countries is a cultural offshoot of marketplace behavior. Just as haggling is not an in-and-out process of buying and selling, negotiating can be a lengthy, protracted undertaking. And unlike Western culture, where so much is accomplished electronically, in the APAC region, face-to-face dealings are mandatory.
There are essential underlying differences in the mindset and behaviors of Asian negotiators. While in Western nations, the individual is primary, in APAC countries, individuals represent their companies—and company representation requires a clear protocol that includes repeated meetings and an ever-expanding cast of players. Negotiating is a team sport. You will not get a quick resolution, and pressuring for one just might shut down talks entirely.
Ta-Wei Chao, Executive Director of the Institute for Research and Education on Negotiation – Asia Pacific, ESSEC Business School, explains:
For example, consensus decision-making in Japan can make for a long negotiation process. Your counterparts in the negotiation will need to build consensus within factions that have deep historical or organizational ties, and sometimes even bridge organizations. Usually, multiple working groups are formed to study the problem in detail so that decisions can be made based on perfect information. In Japan, even senior executives rarely have the power to make decisions single-handedly.
Some preliminary advice:
- APAC negotiating style is polite and free from ego. Bragging and tough talk will get you nowhere; talk less and listen more is a good rule to follow. Remain calm, and whatever you do, don’t get emotional.
- Control your body language—resist the urge to wave your arms in the air or point the finger at someone—and be attuned to the other party’s body language such as facial expressions or any movement that does not communicate “calm.”
- Equally important is showing respect. This translates into relatively conservative dress, a well-modulated voice, and good manners.
A pillar of Asian culture is “saving face” and a reluctance to say “no.” As a result, you may find yourself in endless discussions until there is a total consensus. On the other hand, know when “no” is implied. “No” might come in a vague, “Well, we’ll have to see about it” or in an intended deal-breaker where the price is ridiculously high and out of budget range.
Here are some tips to remember as your negotiation process evolves:
- Your initial meeting will be primarily information gathering. So will the second, and probably the third.
- In the APAC region, teams conduct negotiations—and the teams can change from meeting to meeting. Because of the revolving teams, the meetings will feel repetitious. Don’t despair.
- Be prepared for stalling tactics. In the APAC region, decisions are made for the long term.
- Above all, preserve harmony. Socialize between meetings. Ask about your counterpart’s family. Praise the country. Personal relationships are critical to successful negotiating.
- Show respect for the senior person on the APAC team, and be prepared for them to show respect for your top person.
- Although you are dealing with a modern Asian company, you are not dealing with a Western company. Don’t assume your two businesses are similar.
- Because of this, you need to know the source of the money and who controls the budget. If you are approached by an intermediary, say, from the U.S., that person may not have a clear picture of the negotiating process. Companies in the APAC region are very loyal to their partners, control their own budgets, and don’t want to lose face with existing relationships
- Be prepared to hear lots of apologies: for the weather, for the traffic, for all kinds of imagined slights. Feel free to apologize as well. It’s part of the culture.
- Don’t threaten to walk out. Ever.
- Don’t insist on artificial deadlines.
- Practice acting indifferent rather than enthusiastic.
- Understand the outcome you are seeking and be prepared to compromise. Again, according to Ta-Wei Chao, in China, Korea, and Japan, people prefer general principles rather than detailed rules. Americans are used to explicit and complicated contracts that cover all contingencies. Because of deep-seated Western influences, Singapore and Hong Kong are also more detail-oriented. Keep in mind that it’s not always an “either-or” situation; sometimes, a rough contract will lead to a more buttoned-down contract later.
Finally, don’t make the mistake of thinking that all Asian countries are the same. At Idea International, we have built our business on understanding cultural nuances from one country to another, and from one city to another. Tap into our knowledge to develop your global business.
We’re here to help! Contact us now.