Why Is Culture So Important In International Business?

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EVERY COUNTRY in Asia is a challenge. It’s tempting to think you can automatically apply the knowledge gained about one Asian business culture to another. But it’s not as easy as that.

If you have the skills and focus, if you have done the groundwork, if you have built the necessary confidence through cultural understanding, you can be successful in more than one market. But to ensure success, you must really know the essential differences in business behavior and culture.

So let’s try to define what we mean by business culture. Because if you don’t know what it is, and why it’s so important, you will never be able to achieve success.

GLOBALIZED BUSINESS V. LOCAL UNDERSTANDING
The cultural subtleties that influence international business reach far beyond the ability to greet your Asian counterpart correctly or choose an appropriate gift for a particular situation or present your business card in the right way.

The question of a culture’s attitude to time and punctuality, whether the society is more collectivist in behavior than individualist, the nuances of respect and hierarchy, not to mention body language and gestures and attitudes to ‘harmony’, can radically affect your understanding of the guy waiting in the next office or the woman across the boardroom table, as well as your own chances of being correctly understood.

In a world of globalized business, the ubiquity of the English language, of the internet and of social media are no guarantee of avoiding unnecessary blunders (even insults!), while ignorance of who you are really dealing with may actively destroy your chances of building personal knowledge and creating the kind of credibility and trust that engenders long-term relationships and business success.

Even the way you frame your e-mails can jeopardize professional relationships across cultures. English may be a lingua franca, but in many countries of Asia this lingua franca conceals a strong attachment to local languages, customs, dialects and deep-rooted beliefs. Ignore them at your peril!

WESTERNIZING V. LOCALIZING
Anyone who has witnessed the rapid modernization or South Korea or the impact of the markets on China in the last two decades will know that economics can indeed make a significant difference to cultural behavior. However, this ‘Westernizing’ effect should not be exaggerated.

Despite the intrusion of market forces into much of the Chinese economy, the emphasis on relationships (guanxi) remains a core element of Chinese business culture. Connections are still paramount in much of Asia, taking precedence over money and markets even in cosmopolitan economies like Hong Kong and Singapore.

Cultural attitudes influence other aspects of economic activity in Asia. Western standards of corporate governance, for example, do not sit well with the family-based, filial loyalty structure and ownership of many Asian corporations.

Even in Hong Kong, conglomerates still make decisions with perhaps an octogenarian family patriarch as Chairman and a freshly installed forty-something MBA as CEO (although this situation is gradually changing).

Not all Asian companies view maximizing shareholder value as the core reason for their existence. Not all Asian financial models are based on economics alone. Islamic finance derives its business model from religious principles: the Koran’s prohibition of earning interest from loans.

ASIAN CULTURE AND BUSINESS: THE KEY FACTORS
The fact is that business behavior in Asia is dependent on a series of factors that may not seem business-related, and yet these factors must be taken into account when building business in each individual Asian market.

For example:
• Asians identify more with the group and the family than with more individualistic behavior.
• Confucianism, still deeply rooted in China, Hong Kong, Singapore, Taiwan and South Korea, teaches that respect for one’s elders, the educated and those in authority forms the basis of society.
• Buddhism, which had its roots in India, is based on a belief in reincarnation that is the result of karma in a previous life and on the accumulation of good deeds in order to achieve a better next life.
• Islam places a strong emphasis on spiritual rather than material attainment, expressly forbidding usury and earning interest on loans.
• Finally, Asian culture has long been dominated by feudalism. For many centuries rich and privileged tyrants, warlords and government officers spread a culture of constant fear among ordinary, impoverished people throughout Asia.
• Even now, exaggerated respect and deference towards figures of authority and a reluctance to speak out are hallmarks of many Asian companies.

For Western businesses and entrepreneurs working in Asia, it is vital to recognize the strengths of the East that may not be so evident in their home countries. Once harnessed, these strengths can become positive assets in a company’s business dealings.

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With 25 years’ experience of Asia business, David Clive Price helps companies and entrepreneurs to bridge the cultural divide with Asia’s diverse markets and maximize their revenue growth. His International Business Passport keynotes & seminars and Master Key Series offer proven strategies for turning cultural awareness into competitive advantage.