Negotiation Mastering Business in Asia

Peter Nixon

• Publisher: Wiley
• Year: 2012
• ISBN:
  9781118499153
• Edition: 1
• Topic: Business
• Subtopic: Sales
• Index: Business

The book consolidates the practical tips and concepts that shaped the authors work with organizations and individuals around the world. It is written to allow people to benefit from what hitherto was only available to some of the wealthiest organizations. The ideas presented in this book will help the reader better conduct dialogue with themselves and others leading to optimal outcomes for all. Written for the mass market, this book is a must-read for CEO's and senior staff. It reinvigorates the trainer's approach to interactions with people on all spectrums within the negotiation.

Chapter 1

Negotiating in Asia: Introduction

I find negotiating in Asia to be more challenging than negotiating in other parts of the world, especially Europe and the United States. Sometimes the challenge is fun; other times it leads to tremendous stress and loss. The reasons I find negotiating in Asia to be more challenging derive, I believe, from the socio-economic history of the region and the cultural and linguistic diversity of its people. Indeed, in a world that is embracing globalization, Asia provides the blueprint for the future because of its diversity and intensity, and its need and desire to improve.

What do we mean by “Asia”?

Asia itself requires some defining. It is a vast region spreading from India, Sri Lanka, Pakistan, and Bangladesh up through the countries of Central Asia to Japan, down through Korea, Taiwan, and China to South Asia, where we find Indonesia, the Philippines, Myanmar, Cambodia, Laos, and Malaysia. The region also includes the international cities of Singapore and Hong Kong, and increasingly incorporates Australia and New Zealand as Asia-Pacific countries.

In terms of religious threads, the reader can tie together societies throughout the region that share Buddhist, Muslim, Christian, and Hindu origins, as well as Tamil, Zoroastrian, Jain, and other religions. While religion might provide some commonality, within the religious common areas are found linguistic, economic, and cultural differences and customs that make places like Japan significantly different from, say, Sri Lanka. The cultural complexity of Asia makes defining negotiation in Asia very challenging. I make reference below to some of the cultural nuances typical of East Asian Buddhist and Confucian cultures, but I recognize that these don’t necessarily apply to South and Central Asia where Islam has had a greater influence than Buddhism, or to the subcontinent where Hinduism and other religions are more common.

In negotiation we recommend focusing on the common ground, instead of looking at the differences. In Asia there is one aspect common to all countries (excluding Australia and New Zealand), which I believe differentiates this part of the world from any other. This difference relates to how thoroughly the population throughout Asia has had first-hand experience of trading goods and services throughout history. From the camel trains of the Silk Road, to the junks and sampans that have plied the waters from the Bay of Tokyo through the Straits of Formosa and Malacca, down to Sri Lanka and into the Bay of Bengal, Asians are truly experienced traders and, as such, skilled negotiators.

My experience of the trading culture common across Asia, as well as my exposure to the largely Buddhist and Confucian cultures typical of East Asia, have enabled me to identify some of the main differences between Asia and the rest of the world in terms of their negotiating styles. As I continue to study the habits of negotiators in Asia, I will be looking to add insights arising from the practice of negotiation in those parts of Asia where I have thus far had relatively less experience.

Some of the differences that I identify below will be obvious to most observers, while others will be apparent only to the seasoned negotiator. The impact of this knowledge, however, can be significant for anyone engaged in negotiating with an Asian trading partner. If you are aware of the differences and react appropriately, you can get rich, boost your career, reduce your stress levels, and increase your happiness. If you get it wrong, the opposite can occur. Every day, in ever-increasing numbers, people are disembarking at airports across Asia, especially in China and India, intent on making their fortunes in Asia. A large number of them quickly realize that they have no idea of how to negotiate in Asia, especially with seasoned traders, and they have to scramble to learn from experience before they have to pay too high a cost.

In this and the following chapters, I attempt to identify the differences that confront negotiators in Asia, together with the best practices that make seasoned Asian negotiators (traders) among the best in the world. In addition, I introduce practical tips that readers can apply both at work and outside work to improve their own negotiations and get more from life. The goal for us individually and organizationally is to reach our full potential. We are all advised to follow our calling, to explore different things until we find what we really want to do and then do it. Provided you have a clear idea of what you want, these pages will hopefully provide you with a roadmap outlining how to go about getting it.

Why Negotiating in Asia is Harder than in other Markets

The differences that characterize negotiations in Asia will ensure that your experience of negotiating in the region is challenging. While every market produces good negotiators, I would argue that Asia produces more good negotiators than do other parts of the world, if only because of the prevailing culture and trading environment. What is it that makes people in Asia so much better at negotiating, and why is negotiating in Asia so much more complicated than in other parts of the world? I outline below the main differences that characterize negotiation in Asia when compared with Western nations. The tactics and process steps that will help you to become an equally effective negotiator and to manage these differences are provided in the rest of the book.

The best way to consider the differences is to examine the main elements of negotiation: the people, the process, and the content.

People: Differences related to the people doing the negotiating

• Relationships are more important than contracts.
• The group is more important than the individual.
• Gender and hierarchy both matter.
• Diversity of race, culture, and language is an asset.
• There is a preference to keep things in the family.
• The age of the negotiators makes a difference.

Process: Differences related to how the negotiations are conducted

• Asians enjoy bargaining more than other cultures.
• Negotiations take place amid significant financial, security, health, and competitive risks.
• Owner-managed companies spend personal money.
• Face issues affect feedback.
• Things aren’t always considered as being black or white.
• Negotiations take place amid a variety of legal, financial, and governance frameworks.

Content: Differences related mainly to what is being negotiated

• Conflict avoidance influences the agenda.
• Prices are subject to negotiation.
• Volume is significant, so small changes have big implications.
• Cyclical wealth causes a short-term focus.
• You are only guilty if you are caught.
• Multiple currencies add cross rates to the agenda.

The people

Relationships mean more than contracts

“Asians are very relationship based. They far prefer to trust the person with whom they negotiate rather than the contract they signed.”

ROGER DAWSON
— Secrets of Power Negotiating

One of the first challenges faced by people who are new to negotiating in Asia is the importance of relationships over and above contracts. This has many implications. First, it is difficult to get what you want without knowing the right people. This leads to the challenge of getting through to the decision-makers, finding out who knows them, and how to influence them to get what you want.

The second major implication arises when situations change and reality diverges from the contract. While Western negotiators might argue that something is in the contract and must therefore be adhered to, people with plenty of experience in Asia know that contractual terms are always negotiable. The ?ion reverts to the people involved and knowing who to influence in order to get something done.¹ This difference is reinforced by the fluid legal systems in Asia, which, depending upon the country, may or may not be considered helpful in getting things done. An example of the importance of relationships over contracts is found in the key role that families play in business in Asia. These relationships mean that important decisions affecting the governance of listed companies can be made without the consent of minority shareholders, much to the dismay of corporate governance advocates.

Collectivist versus individualist society

Another difference between Western and Eastern cultures that is often referred to relates to how people see themselves. In Asia, people tend to define themselves in terms of the group with which they are associated (for example, their company).² This perception extends to their decision-making style, so that Asian negotiators will tend to check with everyone in the group before taking a decision. This approach can frustrate Western negotiators, who come to the table with a slightly different mindset. Westerners generally are more individualistic, which means they tend to define themselves as being unique. They are more prepared to change employers if their personal situation should dictate that a change is needed, whereas Asian employees might accept their current situation as their fate (Asians are considered more fatalistic than Westerners), defer to their boss (hierarchy plays a greater role in Asia than in the West), and stick with the group.

These cultural implications put a definite imprint upon negotiations in Asia. Negotiations tend to be more drawn-out than in the West, with less obvious outcomes, and if a consensus isn’t achieved, they may even stall. When negotiating in Asia, Westerners are well advised to look beyond the person with whom they are dealing and ask who else is involved in the decision so that they can also meet with them and understand their needs. (See the discussion on stakeholders in Chapter 11.)

Gender and hierarchy

Asian negotiations are affected by gender bias and deference to hierarchy.³ Gender bias may either be in favor of males (as in Japan,⁴ Korea, India, and Muslim countries) or in favor of women (such as in Thailand, Indochina, and possibly the Philippines). There are few countries where equality matches what some might expect in Western economies. Gender plays a role in how negotiations are played out, either in a more masculine (demonstrated through power tactics) or feminine way (demonstrated through more empathizing). Gender also affects where and when negotiations take place. In more masculine-oriented markets, it is common to find negotiations extending into the evenings with the inclusion of social settings (golf clubs, karaoke bars, hostess clubs, and so on). In more feminine markets, negotiations tend to take place during working hours and with more emphasis on getting things done on site.

A multilateral aid agency operating in Asia found it very frustrating when negotiations were interrupted for meal times and the females and males were separated, according to religious custom. The head of the negotiating team was female; everyone else, apart from the secretarial staff, was male. The agency head was forced to choose between being cut off from her negotiation counterparts and eating with the secretarial pool, or breaking custom and insisting that she eat with the males – something that would have left a lasting negative impression.

A merger and acquisitions deal wasn’t progressing, and the Swiss party that I was advising couldn’t work out what was going wrong. Upon further analysis we learned that the father of the current chairman of the target company was still alive, and although he had retired from the business 20 years earlier and was now on his death-bed he insisted that as long as he was alive the company shouldn’t be sold. True to hierarchy and filial piety, the son respected his father’s wishes and refused to negotiate what up to that point had been perceived as a sure bet for the acquiring company.

Asia is multiracial, multicultural, and multilingual

While it can be said that the world is becoming a global village, Asia has forever contained more people, more races, more cultures, and more language groups than any other part of the world. In terms of negotiation, this means that Asians are generally more aware of the importance of differences when negotiating. These differences might arise through language – for example, how one says something can mean different things in different languages (“yes” may not mean “yes”) – or culture (for example, conflict avoidance styles). People exposed to more diversi...

Table of contents

• Cover
• Title
• Copyright
• Dedication
• About the Series
• Preface
• Acknowledgements
• Chapter 1: Negotiating in Asia: Introduction
• Chapter 2: Successful Negotiators and the Stages of Negotiation
• Chapter 3: The Preparation Stage
• Chapter 4: The Introduction Stage
• Chapter 5: The Objection Stage
• Chapter 6: The Creation Stage
• Chapter 7: The Contracting and Follow-up Stage
• Chapter 8: Communication
• Chapter 9: Tactics
• Chapter 10: Information
• Chapter 11: People
• Chapter 12: Situation
• Chapter 13: Conclusion
• APPENDIX 1: Your Negotiation Toolkit
• APPENDIX 2: Sample Negotiation Situations
• Index