WRITER: Andrew Bull
PHOTOGRAPHER: Randy Larcombe
Superficial knowledge of Asian culture can be detrimental to doing business in Asia. So why are so many multinationals still trying to get by with just the basics?
A leading expert in Asian business says a superficial knowledge of Asian culture is harming the chances of business success for Australian companies that are seeking to prosper in China and the broader Asian region.
Professor Ying Zhu, Director of UniSA’s Australian Centre for Asian Business, says that businesses may venture into Asian markets based on what they know of the region through the media, but that these impressions lack the in-depth analysis needed to properly educate business leaders in dealing with Asia.
“The mentality is that companies can move into China and make money quickly. This is a mistake, because when you do business in Asia, you’re doing business for the long-term, not a quick return.”
He asserts that an acute knowledge of the local culture and language are essential for doing business in Asia, and while many companies know the basics (e.g. the importance of introductions, saving face and gifting), cultural understanding must extend beyond this.
“It’s the cultural subtleties that will really help you do business in Asia. In Australia, we rely upon the understanding that everybody speaks English, so we don’t need to learn another language or culture. But in a world where bilingualism is the norm, monolingual Australians are now at a disadvantage.”
While the cultural complexities of doing business in Asia have long been discussed, many multinational companies continue to send expatriates to Asia without sound cultural understanding or knowledge of the local language. The common progression is for them to then rely on interpreters to do business. Zhu quickly points out that most interpreters are local people, with local biases and loyalties, and as such, miscommunications and omissions can easily occur.
When misunderstandings do arise, Zhu says that careful reflection about the communication process is required. He notes that businesses should consider whether they clearly explained themselves, and whether they really understood all the details from the beginning. He laments, however, that there is often no such analysis.
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The rapid growth of the Asian economies and the significance of these economies to our international trading relations and economic prosperity, means that the study of Asian business and management has become an issue of international importance, particularly in the case of Australia. With China’s economic growth averaging between 8% and 9% per annum, it is now the world’s second largest economy. If this growth rate continues, China will overtake the US as the largest economy by around 2030. Clearly, it’s time to smarten up.
“Our governments must realise that our economy relies on engagement with Asia, and to continue to do business in this region we need to learn a lot of lessons.”
Zhu has just returned from China, taking in the city of Tianjin, about 30 minutes from Beijing by fast train, and home to sophisticated aviation and biochemical manufacturing industries. It is places like Tianjin that he recommends Australian companies need to monitor, with an eye to moving away from the export of raw materials as a long-term business plan, and taking the opportunity to move into China and participate in that supply chain of more sophisticated manufacturing.
“This should be a survival strategy for Australia. Trade is such an important part of the Australian economy – we must create and nurture our business relationships with Asia. If we don’t build solid foundations now, Australia might be left behind in the future.”
Zhu sees the Australian Centre for Asian Business as a valuable resource to help businesses establish effective business operations, to engage successfully with Asia and to ensure they stay at the forefront of activity in Asia.
“Our Centre was established to build bridges between academic and business communities, and between academic and government bodies, through consultation, policy planning and advice.”
The Centre strives to support the regional economy by assisting businesses, and in particular Australian companies, in their Asian ventures. It does so by providing high-quality, in-depth research, and by facilitating a range of networking and informational events designed to encourage greater business collaboration within Asia.
“There is a need to expand our knowledge of Asia, to improve the quality of our research, and to ensure the findings are accessible to Australian companies which aspire to engage in business, trade or partnerships with Asian counterparts. This is the focus of our Centre.”
The challenge for Zhu now, is to ensure that businesses and government representatives listen and learn, so that Australia isn’t left out in the 21st century.
> For more information, visit the Australian Centre for Asian Business