Managing a cross-cultural negotiation is tricky and complicated affair at the best of times. When these negotiations occur in a foreign language environment it can be even more so, particularly if you allow yourself to become lost in the discussion. It is easy to feel left out of the loop when those around you are in discussion in a language you don't understand. You can feel distanced and become distracted, and it can impact on your natural communicative flow. Many challenges arise from the use of translators in business and it is how you manage these challenges that may well determine the ultimate success of your business negotiations.
Those experienced in conducting business in North Asia will tell you that relationship building is paramount to a successful business outcome. Relationship building in Asia is often in direct contrast to standard business practices expected in Anglo-Western cultures such as North America, Australia and the UK. These business practices will effect the way negotiations are conducted, and so when you are negotiating in Asia it is important to consider the differences from your standard negotiation protocols.
In the Asian Century, China is clearly one of the most important economies to consider, and most business leaders around the world are seeking to take advantage of this market in one way or another. However, there is a risk that while many experienced exporters have taken a strategic approach to the Asian region, many newly internationalising companies are missing out on one of the best opportunities available; Japan. The questions that business leaders should be asking are; Where are the opportunities in Japan? and how does the Japanese market compare to the Chinese market?
When was the last time you heard a business leader suggest that they were going to target Asia, and Japan would be the key market of entry? It would probably be a while. Australian companies still do business with Japan, but new business is not growing as fast as it probably should be, and perhaps that is down to the besotted nature that Australia and the various federal, state and local governments have had with China. Its hard for Japan not to be swamped and overlooked in favour of its bigger East Asian neighbour. But is this a fair comparison?
The education demands of China are continuing to grow inline with the ongoing development of the economy. As demonstrated in previous articles, Australia has succeeded in attracting a range of Chinese university students over the past decade and this has continued to grow, although at much smaller levels than in previous periods. China still remains the most important education market for Australian Universities. But are Australian education institutions reaching the opportunities inherent in the Chinese market?
Academic studies and many airline business books on China have long acknowledged the importance of Guanxi or ‘Social Capital’. Guanxi is a confusing term to many business people in the West, but it is important to take time to understand how it works and why it works. Guanxi is essentially the level of status or respect that is accorded to a person based upon their level of social capital or personal connection which they hold within a given group of people. It is related to trust and trustworthiness, but it is much more. In the West we tend to not worry so much about this aspect of the business deal because we use legally binding contracts to ensure the other partner is kept to the agreed bargain (and in some cases even this is not sufficient to ensure ethical behaviour).
International students have an overwhelming positive economic impact on Australian cities, and particularly inner city urban development, and vibrancy. Economic analysis in recent years has suggested that international students have an annual economic impact of $17.5 billion on the Australian economy. There has consequently been considerable discussion about expanding international student numbers and attracting more students to Australian institutions.
This is a good story of Australia’s position as an education destination of choice for Chinese students, however they may demonstrate a emerging challenge for the Australian education industry to continue to reap the economic benefits of Chinese students in Australia. This leads to an important question about whether Australia, and its key government and institutional stakeholders in the education sector are effectively approaching market capacity in what can realistically be achieved from Chinese students to Australia. Does Australia and its education institutions need to look at adapting its engagement model with China to train more students?
In recent years we have seen growing demand for Australian food consumer goods such as milk powder, which has lead some Australian supermarkets to impose daily limits on the number of milk powder units that can be purchased in any single transaction. Similarly there have been great stories of the insatiable appetite for Australian wines in China, and particularly since the ratification of the China – Australia Free Trade Agreement in 2015. But does this apparent demand for Australian food and wine translate into huge market opportunities for our farmers, wine makers and premium food producers in China?
The importance of relationship building to the Chinese is paramount. Apparent social functions like banquets are held in very high regard by Chinese businessmen and government official due to the ability for one to get to 'know' their potential business partners. This knowledge is achieved through watching foreign businessman’s behaviour during the formal and informal drinking and eating rituals that are performed during every formal banquet. It is therefore important to be aware of these rituals, drinking strategies and how to ensure you leave the banquet in higher esteem than when you arrived.
Conducting business in China can be a confronting affair, with the rules of engagement vastly different from what we would expect in many western countries. The number one rule when conducting business in China is to take it slow, develop your reputation or Guanxi, and build your relationships with the people you meet, whether they be business or government officials.