This second document in Intercultural Management is a brief research report on doing business in the Arab World and in Asian Continent and highlights prerequisites for successfully doing business in each of the two mentioned areas. It attempts to develop and broaden a deep understanding of the concepts of international business and international management by giving a documented exploration of multicultural management and the idea of doing business across cultures, especially in Asia and the Middle East.
The paper presents a good understanding of the characteristics of each region and outlines the challenges met by firms doing business across cultures and, in particular, the obvious particularities observed or/and encountered in doing business in Asian and Middle East markets. The paper borrows mainly from the recommended textbook Elishmawi (2001)1, from Francesco & Gold (2005) and from several other sources such as Czinkota et al 2002, Morrison, Conaway & Borden (1994)2, Lewis (1999)3, and many others.
This paper borrows also from several sources both in print or press form from the web. All sources are indicated at the end of this assignment in the “List of References”. 1. 1. Introduction: This document is a requested brief report prepared for an international businessman who was interested in opening business in Asia and/or the Middle East. The person has no single idea on in which country to settle his business at the best and he was anxious to get advice on each possible country before deciding where to start.
The document would be a valuable tool for any person planning to open or expand business in Asia and/or in Middle East. Since, as note Morrison, Conaway & Borden (1994), each country has its own national culture, to describe the many characteristics of the two regions, the research report covers separately Hong-Kong, Japan, China, Taiwan & Singapore, India, South Korea, Indonesia, Malaysia, Thailand, the Philippines, in Asia; and Egypt, Kuwait, Turkey and Iran, in the Middle East. Though Israel is in the Middle-East region, it represents a particular case.
The two covered regions have so diversified cultures that, as Morrison, Conaway & Borden (1994) suggest it may be through either “kissing, bowing or shaking hands” that you can open business doors and ease negotiations. The authors forgot certainly to add one more thing: “Hugging”! Therefore, this report will be presented in two separate parts: Part 1: Asia and Part 2: The Middle East. Recommendations to business people will be given throughout the paper chapters. The paper is in two parts: part-1: Asia and part II: the Middle-East. 2. Part 1: Managing Cross-Cultural Differences in Asia 2.
1 Conducting Business and Living in Hong-Kong In case the regional headquarters are in Hong-Kong, it is important to understand what kind of cultural environment can be expected by the organization, the business and the expatriates (and family members). It would be wrong to think that Hong-Kong shares all Chinese cultural features. Of course, Hong -Kong is inhabited by Chinese people but it has its own identity. It bears a large western influence resulting from the 99 year lease by UK. Morrison, Conaway and Borden (1994) describe very well Hong-Kong and give exhaustive information on this interesting trade place.
Hong-Kong two official languages are Chinese (mostly Cantonese) and English. However, due to links with the mainland China, the modern Standard Chinese, Mandarin, is taught in Hong Kong’s schools. There is a variety of religions and none is official or obligatory. There are over one-half million Christians in Hong-Kong, divided equally between Protestants and Catholics, which sweets any American or Western expatriate(s) and families. Schools with British programs are available and so are supermarkets and other European-type cultural centers.
In Hong-Kong, Chinese people process information associatively unless they have had extensive Western education, in which case, they will be more abstractive. (Lewis 2004) As in China, the Hong-Kong Chinese considers it imperative to save face. One person’s action reflects on his/her family, plus any other groups of which he or she is a member. Decisions are taken by consensus of the group, where group members defer to persons with the highest ethos. One must maintain intra-group harmony and avoid overt conflict in interpersonal relations.
There is a strong authoritative structure demanding impartiality and obedience. Age is revered and there is respect and deference directed from the young to the old, and authority and responsibility from the old to the young. There is inherent trust in people because of the homogeneity of the populace and social pressure. When doing business or living in Hong-Kong, it is important to remember the next: The word “yes” does not mean necessarily “I agree with you”. A clear meaning would be: “I heard you”. “It would be difficult” is the closest way of saying “no” in Hong-Kong.
Age is very respected by Chinese; a person aged 50 or older will command respect. Chinese negotiator needs several alternatives in order to get enough to reject with dignity. Negotiations can seem too slow, with extensive attention to single details. This is a normal process, at the end of which the Chinese negotiating team may request a discount called “compromise” in Hong-Kong. It is not advised to confront a Chinese person with unpleasant fact in public; it is better to discuss it in private. People in Hong-Kong are exceptional diplomats when it comes to conversation.
They will avoid any potentially insulting or embarrassing word in their (lengthy) statements. Members of the same sex may hold hands to mark their friendship but, members of opposite sex cannot. The traditional greeting is a bow, which must be deeper when addressed to a chief, boss, supervisor or elder. However, either traditional British or Chinese greetings are acceptable in Hong-Kong. Thus, men and women may shake hands (but not hold long). Gifts are welcome and appreciated, except clocks, books, blankets, unwrapped gifts, gifts wrapped in blue and green hats.
They are cursed gifts for either reason. Consulting a fengshui man (a diviner or a geomancer) to determine auspicious dates and arrangements for opening new offices, for example, is normal in Hong-Kong. 2. 2 Doing Business or/and Dealing with Japanese: Elashmawi (2001) asserts that every society accumulates a set of unique cultural values. These values are reflected in the business cultures of each society. Due to its geographic isolation, Japan’s political and cultural doors were closed and locked for centuries.
As a result, the Japanese developed a set of values which enable them to survive and peacefully coexist within sharply defined boundaries. To this day, those values include “group harmony”, “consensus”, and “achievement”. Parents and grandparents teach Japanese children the importance of those three cultural values. Though in recent years Japan has officially opened many of its barriers to politics and trade, its deeply cultural values are slow to change. The primary source of business-related cultural conflicts is the approach taken by companies seeking to do business with Japanese companies.
When, for example, Americans make a proposal to Japanese, they approach the deal with the values they have inherited. Americans apply their values of “freedom”, “equality”, “independence”, “risk taking”, and “competition”. They are often unaware that Japanese values lie on the opposite end of their cultural spectrum. (Elashmawi 2001) Independence and competition are important qualities for American Managers, whereas successful Japanese Managers must learn to work well within their groups and accept the consensus of their teams.
A firm is considered to be one of these groups. Clashing values often result in failed business relationships. ITC Executives should be aware. Japanese will stress building relationships before any business can start. This is followed naturally by group harmony and cooperation in all aspects of decision-making and management. For example, caring for elders is still an important part of Japanese life. According to Elashmawi (2001) most foreigners interact with Japanese salary-men who are employed by most Japanese offices, instead of meeting the leaders.
Most Japanese high school students dream about becoming salary-men. They believe this will give them the security they need to be employed for the duration of their lives. For that, they work hard to do well in numerous interviews with potential companies. Briefly, the phenomenon of Japanese salary-men is indicative of many of the cultural norms of Japan. The values of harmony, group togetherness and cohesion, and adherence to rules of etiquette all show themselves in the study of the salary-man.
The process of becoming a salary-man also explains the resilience of Japanese values, and how these values can remain so strong in a drastically changing world. (Elashmawi 2001, page 56) 2. 2. 1 Recommendations Scholars, including Howell (2004), Elashmawi (2001), Lewis (2004) and Morrison, Conaway & Borden (1994) give the following important recommendations to anyone willing to do business or to work in Japan. They are also valuable tips for marketing to the Japanese: A. Enhancing Relationships with Japanese: Relationships are important in Japan.
Elashmawi (2001) sustains that even if your company’s products and technology are the best in the industry, the door is not automatically open for you to conduct business with Japanese companies. With the Japanese, one must go through the lengthy process of nurturing a relationship, first. Relationships are nurtured through a contact that has mutually obligatory relationships with the company. That is why you should choose that contact very carefully in order to avoid embarrassing your business counterpart, who normally will feel obliged to be loyal to the contact.
Do not choose someone of lower rank than the person with whom he/she will be dealing (Morrison, Conaway & Borden 1994, page: 205). Relationships should be nurtured not only with regular and seasonal communication, but also with interpersonal activities such as lunch, dinner, drinking sessions, and meetings on golf courses. Social etiquette tips can be used in order to build strong relationships with Japanese partners: Lunch, dinner and drinking time, gifts and presents, seasonal greetings, regular phone calls, faxes, letters and visits, karaoke parties, etc…
Elashmawi (2001) concurs with. B. Marketing to the Japanese: ITC should note the following tips (from Elashmawi 2001 and Morrison, Conaway & Borden 1994): a business proposal is highly considered if there have been due introduction to the company by a respected Japanese contact. Formal meetings with foreigners are conducted mainly to receive information or ask questions, not to make necessarily any decision. A strong manager within the Japanese organization must sponsor the proposal and defend it to the other parties involved.
When speaking on phone, it is advised to speak slowly and clearly-not being ambiguous; to send a fax or a letter on a particular subject before calling on phone and to follow up with a written summary of the main point. Top management will question the sponsoring managers until all involved parties have agreed. Consensus is the key. The Japanese will look for potential market shares, adaptability of the products, and the harmonious and cooperative attitude. Decisions are made behind the scenes during a series of informal meetings and only after all parties agree. There must be a full and complete consensus on all levels.
Thus, a Japanese response: “I will consider it” may actually mean “no”. C. Conducting Meetings /Presentations and Avoiding Taboos Elashmawi (2001) insists that Japanese meet with foreigners to collect information, not to make decisions (we have seen that above). Thus, meetings with them may be crucial and need to have minimized language barriers. That is why it is advised to use visual images as much as possible during presentations. Presentations should be as participatory as possible and questions should be directed to specific persons without developing general questions.
Watching nonverbal messages is very important: their smiling, nodding, hand gestures, scratching heads, taking off glasses, taking notes, and sleeping. It is crucial to maintain harmonious environment with Japanese counterparts during meetings. It would be an error refusing signs of hospitality: a cup of coffee, lunch, karaoke, etc. The Japanese welcome foreigners to visit their homes and look forward to visiting the homes of foreigners. Social etiquette is important in Japan and successful foreign businessmen are those who respect and follow that etiquette.
Share time with Japanese but focus mostly on your sponsor relationships. Show him your compromising attitudes and long-range interests. Nothing will be obtained from Japanese top managers without passing through the sponsor or “contact”. 2. 3 Doing Business in the Mainland China There are many questions western businesspeople dealing with the Chinese often ask. Elashmawi (2001) argues that more than new technology and available capital will be needed to attain success in establishing business alliances and operating joint ventures with the Chinese.
The cultural competency of foreign negotiators and managers will play a significant role in the Chinese market acquisition and growth. Fan & Zigang (2004) assert that China has become an appealing and largest market in Asia. They add that problems of cross-cultural management in China and doing business here continue to increase. 2. 3. 1 Chinese Cultural Values According to Elashmawi (2001), the Confucian ethics is in the heart of most Chinese cultural values. Historically, the core cultural teachings of Confucianism have been extremely normative for all Chinese sub-cultural groups, regardless of the country they live in.
The attitudes that have been significantly influential in their world view include total loyalty to a hierarchical structure of authority, duty to the parent, strict, and descriptively defined forms of conduct between children and adults, in the roles of husband and wife, and trust between friends. The Cultural Revolution and, more recently, the move toward the open market have deeply influenced the mainland Chinese culture. Lewis (2004) claims that Chinese people are proud to rank, per importance, their superior values as follows:
Modesty, tolerance, filial piety, courtesy, thrift patience, respect for elderly, sincerity, loyalty, family closeness, tradition, trustworthiness, stoicism, tenacity, self-sacrifice, kindness, moderation, patriotism, asceticism, diligence, harmony towards all, resistance to corruption, learning, respect for hierarchy, generosity, adaptability, conscientiousness, sense of duty, pride (no losing face), being undemanding, friendships, gratitude for favors, impartiality, purity, gentleness, and wisdom. Of course, some of the listed values are not anymore true.
One might wonder, for example, about resistance to corruption, modesty and impartiality. But, in main the Chinese do go about their daily lives, exhibiting many of those characteristics. Anyway, that is how Chinese people see themselves and, indeed, the majority of the values are still present, as whatever they might think of us, they are courteous and compliant. Lewis 2004 adds that Chinese people think that the American and Western cultures are declining. Russia has never been admired and Japan is nothing, but a materialist island. Keep that in mind when you attempt to penetrate the Chinese vast and active market!