Doing Business In Asia

In business, communication with your partner is of utmost importance for a successful partnership. However, in the globalised world like ours where West often meets East and people of different countries, societies and races regularly cross paths with each other, even simple communication among parties can be a little difficult due to various issues such as language barriers, cultural differences or the sheer distance between countries and time differences.

In recent years, we are gradually seeing an increased emergence of companies from the developing countries in Asia such as India and China. These are enticing even previously domestic-oriented companies. But the East can be vastly different from the West. What should one know when dealing with Asian companies?

On this, Christian Philippsen, managing director at Beneo Asia Pacific, and Masanao Ishida, director at Oishii Japan, shared more with APFI.

Coming Out Into Asia

When asked why European companies have started to come out to Asia, Mr Philippsen said that Asia is a growing market today.

He cited his company as an example: “For Beneo, we have been selling functional ingredients in Europe for the last 30 years. You can imagine that we know the market very well as it is our home market. However, we also experience that larger growth potential lies in the Americas and Asia-Pacific because there the population growth is higher than in Europe.”

In order to expand, he says, his company and other European companies have therefore started venturing across the ocean to Latin America and Asia.

Mr Ishida told a somewhat similar story when asked why Japanese companies have come out into Asia. “The ASEAN (Association of Southeast Asian Nations) populations are growing and they have more spending power; these provide good opportunities for Japanese food companies to venture into the ASEAN markets.”

The ASEAN markets are also proving more attractive for the Japanese food industry because of the increasing ASEAN consumer demands for Japanese products, and also because of free trade agreements influencing the region such as the Trans-Pacific Partnership (TPP). Though the Japanese are traditionally and still largely against the import of foods, they would welcome the opportunity to export overseas, he said.

With the TPP, even traditionally closed sectors of Japan such as rice farming now gives farmers the ability to take their rice overseas to expand their companies, he added.

Further, similar to what Mr Philippsen mentioned, Mr Ishida mentioned that the market in Japan is shrinking due to the deteriorating consumer population; many Japanese companies have no choice but to explore beyond their shores.

APFI asked both parties what their advice for foreigners coming into Asia to do business would be. Both parties mentioned the need to hire locals for a successful business partnership.

At Beneo, Mr Philippsen plays the role of the ‘middle man’ who understands both the local and European cultures, and transmits information to and from the Europe headquarters to the Asia-Pacific office where he is based. “My job then is to not only conduct/generate sales, but also to maintain a connection with the Europe side. The direct sales are done by the local people, and I observe it and bring the information to Europe and vice versa. Because of this, most heads of European companies with Asian offices are foreigners so that the required information does not get lost in translation in terms of culture and language.”

On business in China, Mr Philippsen’s advice is to look for a trustworthy Chinese partner, rather than trying to stand on their own as a European company in the Orient. On business in India, he advised that cautioned should be exercised. According to him, the Indian market can be quite attractive because the projected growth for the country in the next few years is exponential.

However, business in India is also influenced by the government. This is why having a close eye on the regional political situation may help to make the right decisions. Nevertheless, India will be an important market in the future, he said. It is just a matter of when.

On top of looking for local employees, Mr Ishida also advises that venturing businesses should be clear with the different food regulations of the region, since all countries in ASEAN differ with regard to these.

Difficulties In Asian Relations

Different countries and societies can have different business cultures and expectations of a partnership. APFI questioned Mr Philippsen who the most challenging parties to work with were.

Mr Philippsen answered that he is successfully working with Japanese partners but that he still feels challenged from time to time. Their work culture makes business a little challenging. According to him, the Japanese set a high value on intensive negotiations which may take longer than Western people are expecting. In addition, he says that in conversations listeners need to be able to read between the lines to get the full picture.

“In business, culture is more important than language. You can’t learn 15 languages, but you can respect the culture. By respecting the culture, you gain trust, and by gaining trust, you do business. So that is why, language is one thing, culture is another,” said Mr Philippsen.

On the Japanese side, Mr Ishida admits that Japanese can be hard to work with. Traditionally, Japan is a reserved society with a closed economy, so they do not interact much with people. While most western companies are comfortable with working offsite and via emails, the Japanese value face-to-face interaction instead. On top of that, the Japanese language can be very ambiguous, he said. “You don’t have to say everything, but the listener is expected to understand everything.”

Because of this, problems often arise when Japanese company representatives meet people they have not personally met before. However, this trend is changing according to Mr Ishida. “The younger generation are more daring, and they adapt quicker when going overseas.”

With regard to their seemingly slow decision-making, again it boils down to the Japanese business culture. The Japanese live in a very vertical society, Mr Ishida shared. Even high-ranking executives such as chief executive officers (CEOs) are unable to make a decision themselves; they need to have the approval from the whole board. However, if something goes wrong, the CEO is expected to bear the responsibility of that mistake, which is not something that everyone can do.

According to Mr Ishida, even the decision of employing a staff requires a directors’ meeting and the application has to be approved by all members.

Like Mr Philippsen, Mr Ishida also believes that for successful partnerships and businesses in Asia, or just between companies with different cultures, respect for each other’s differences is a value that must be upheld.