National culture when doing business in asia pacific

Rapid expansion of international business, the emergence of Asia-Pacific economic initiative suggests an increasing relevance in understanding how national culture influences doing business in this region .

This paper is designed to contribute to the importance of understanding culture in Asia-Pacific for those who want to contemplate trading with and/or investing in a country in the Asia Pacific Region.

It gives some explanations and suggestions through comparing and analyzing different natural culture in Asia-Pacific region.

The study will draw from cultural psychology, anthropology, political economy and contemporary management theory. The intention is to illuminate these normative values underpinning practice by using across-cultural, comparative technique that provides an external point of reference for both Australian and some western participants.

Overview the culture in Asia-Pacific

A wide variety of societies, religions and ethnicities shape the culture of Asia. The Asian culture is an aggregation of diverse customs, traditions and social values that form the core of the Asian society. The continent of Asia is comprised of the geographic and cultural subregions of central, southern, western and eastern Asia. The Asian continent boasts of a rich cultural heritage that has given the region, an identity of its own. The different forms of Asian art and literature are widely popular around the world and the widespread influence of the Asian philosophy and religion, especially of East Asia, is worth making a mention of. The cultures of the continent of Asia are the most diverse of world cultures. Let us take a look at them.

East Asia

East Asia is usually thought to consist of China, Japan, Korea, Hong Kong and Macau. China is the dominant in the Asia Pacific especially the culture of Chinese has influenced many countries and religions whether in old times and modern times. The culture of East Asia has many characteristics such as shared Chinese-derived language characteristics, shared religion (especially Buddhism and Taoism) and shared social and moral philosophy derived from Confucianism.

Apart from the unifying influence of Confucianism, Buddhism, Chinese characters, and other Chinese Cultural Influences, there is nevertheless much diversity between the countries of the region such as different national costumes, languages, religions, cuisines and so on.

Southeast Asia

Southeast Asia is usually thought to consist of Mainland Southeast Asia and Maritime Southeast Asia which is also include Myanmar, Thailand, Laos, Cambodia, Vietnam, Indonesia, Malaysia, Singapore, East Timor, Brunei and the Philippines. This region has been influenced by the cultures of India and China greatly. Also it has been influenced by the the religions Islam and Christianity from Southwest Asia and Western culture due to the lasting legacy of colonialism. For example Singapore has been greatly influenced by England due to the invasion.

West Asia

West Asia is usually thought to consist of Turkey, Syria, Armenia, Georgia, Azerbaijan, Iraq, Iran, Lebanon, Jordan, Israel, Palestinian territories, Saudi Arabia, Kuwait, Bahrain, Qatar, United Arab Emirates, Oman and Yemen which are the term the Middle East. However, the usage of the term Middle East is slowly fading out due to its obvious Eurocentrism as the region is east of Europe but it is south of Russia and west of India. The region is the historical birthplace of Abrahamic religions: Judaism, Christianity and Islam. Today, the region is almost 93% Muslim and is dominated by Islamic politics. Culturally, the region is Turkish, Arab and Persian.

Central Asia

Central Asia is usually thought to consist of Kazakhstan, Kyrgyzstan, Tajikstan, Uzbekistan and Turkmenistan which sometimes include Iran, Afghanistan and Pakistan. The predominant religion in Central Asia is Islam. Central Asia is famous for its Silk Road and it has a long history. The natural culture of Central Asia is influenced by Chinese, Indian, Persian, Arabian, Turkish, Russian, Sarmatian and Mongolian cultures. The Kazakh Khanate people have historically been nomadic people of Central Asia since 16th century.

Influence of multiculturalism

Cultural advantages can arise from different values and ways of seeing the world. To realize

competitive advantage from them, it is first necessary to try to understand them.

For cultural differences to be lower these should be managed. According to Hoecklin (1994)

there are four strategies for managing cultural differences:

1) Building a strong corporate culture internationally

2) Developing a common technical or professional culture worldwide

3) Relying on strong financial or planning systems.

4) Leaving each culture alone

Hofstede’s cultural dimensions

‘Hofstede identified five dimensions and rated 53 countries on indices for each dimension, normalized to values (usually) of 0 to 100. His five dimensions of culture are the following’:

Culture Dimension

Definition

Uncertainty avoidance (UA)

(Hofstede, 1980, 1983, 1994a; Trompenaars, 1993)

Degree to which people in a country prefer structured over unstructured situations: from relatively flexible to extremely rigid.

Power Distance (PD)

(Hofstede, 1980, 1983, 1994a)

Degree of inequality among people, which the population of a country considers as normal: from relatively equal to extremely unequal.

Masculinity/femininity (MF)

(Hofstede, 1980, 1983, 1994a)

Degree to which “masculine” values like assertiveness, performance, success and competition prevail over “feminine” values like the quality of life, maintaining warm personal relationships, service, caring, and solidarity: from tender to tough.

Individualism/collectivism (IC)

(Hofstede, 1980, 1983,, 1994a)

Degree to which people in a country have learned to act as individuals rather than as members of cohesive groups: from collectivist to individualist.

Confucian Dynamism

(Hofstede, 1994b)

Degree to which people in a country promote collective welfare and harmony, resulting in psychological collectivism.

In Hofstede’s theory, it notes that some cultural relativism is necessary. Establish absolute criteria for what is noble and what is disgusting is very difficult. All of people create cultural values which are based on environment and education since childhood. Not everyone who live in the world is suitable for the cultural pattern, but there is enough statistical regularity to identify trends. These trends should used to create negative stereotypes and it should not be recognized as different patterns of values and thought. In a multiple culture world, it is necessary to cooperate to reach the practical goals without requiring everybody to think, and believe identically.

Importance of understanding culture in Asia

The meaning of studying international culture

Business can be influenced by culture in several ways such as language issues and culture collisions, especially in the beginning. The company must be able to solve these difficulties in a way that is satisfying also for the other part. It is difficult to correct and disrespect mistakes of the foreign culture and it can destroy the entire operation.

Different cultures have different methods of doing business, for example some people prefer to do their business meetings with foreigners in a formal way, and would be offended to be addressed by their first name; some might believe that the use of an informal style and first name would signal to the partners that they are trusted. Two partners from these different cultural

backgrounds could easily misunderstand each other if they negotiate without a previous knowledge of one another’s assumptions and values.So if an investor from western countries wants his business in Asia-Pacific success, he must understand the culture of Asia.

Different cultures between Australia and Asia

Cross-cultural and comparative research has endeavored to explore and explain cultural similarities and differences. The seminal research of Hofstede (1980) has inspired much of the cross-cultural research activity since 1980 and has been the dominant research paradigm in cross-cultural studies of national attitudes.

Compare Conflict Resolution Preferences

There are many differences between these two regions.

Asians have a significantly weaker preference for competing than either Australians or Asians have for any other strategy.

Within the Asian people, the respondents also showed a stronger preference for compromising and avoiding than for accommodating and collaborating.

In comparison, within the Australian people, the respondents showed a much stronger preference for compromising than for accommodating and competing.

Asians showed a stronger preference for avoiding and compromising than Australians did for avoiding, accommodating and competing. Additionally, Asians showed a stronger preference for compromising than Australians did for collaborating.

Compare Supplementary

Asian values shift as a result of their experiences in a more individualistic culture.

Asians showed a strong preference for avoidance and compromise over accommodation and collaboration which, in turn, were preferred to competing or Asians, social pressures lead to less aggression and emotion in conflict situations.

Australians reporting a stronger preference for compromise than for accommodation and competition. It appears that Australians are predisposed to “splitting the difference”. This preference for a moderate level of cooperation may well be the result of the Australian emphasis placed on egalitarianism (McGaughey et al., 1997) which leads to concessions only when necessary to reach an agreement (see Carnevale et al., 1996, for similar arguments). However, it suggests that, for Australians, compromise, collaboration and avoidance are of comparable value, as are accommodation, competition, collaboration and avoidance. It further implies that the use of collaboration and avoidance may be especially sensitive to contextual cues. Finally, contrary to predictions, Australians did not show a strong preference for competing. These results reinforce our earlier comments about the possibility that all individualistic countries do not behave in a uniform manner and point to the need for cross-cultural comparisons within the group of individualistic nations.

Conclusion

Cultures vary in the goals that identical strategies are believed to serve. For example, although Asians and Australians were equally willing to compromise, they were not equally willing to avoid conflict. Also, although Australians did not differentiate between compromise and collaboration, the Asian preference for compromise was stronger than both the Asia and Australian preference for collaboration. Recalling our argument that Asians value harmony whereas Australians emphasize personal goals, we propose that compromise may serve either goal: because it minimizes conflict it may preserve relationships or it may prevent a cycle of escalating conflict in which individuals fail to achieve any outcomes. Avoidance, however, does not serve both goals equally; while it may serve to preserve a relationship within a cooperative context, it is more likely to signal powerlessness and to encourage exploitation within an individualistic contex t. Conversely, because collaboration requires an element of contentiousness, it is likely to be viewed as damaging to relationships by Asians but as a safeguard against exploitation by Australians. In summary, we conclude that compromise may serve the goals of both groups equally well; we further conclude that whereas compromise and collaboration are functionally equivalent for Australians, compromise and avoidance are functionally equivalent for Asians.

Relationship between business and culture

How culture impact on business

According to Czinkota, cultural factors have an important impact on the flow of business. Each society has its own elements of culture. These elements of culture are manifested through:

ƒ¼ Language

ƒ¹ verbal

ƒ¹ nonverbal

ƒ¼ Religion

ƒ¼ Values and attitudes

ƒ¼ Manners and customs

ƒ¼ Material elements

ƒ¼ Aesthetics

ƒ¼ Education

ƒ¼ Social institutions

Adaptation of these elements for an international company depends on its level in the market

participation -for example, licensing versus direct investment and the product or service

marketed.

The most important issue for a foreign company is cultural analysis, which includes

information that helps the company´ staff to take planning decisions. This information from the cultural analysis must be more than collecting the facts; these must also be interpreted in

the proper way.

Another significant issue about culture is the levels manifested through artefacts, values and

underlying assumptions.

In the below presented model the cultural influence in each country is presented. Culture in

each country is meditated through three factors: cultural forces, cultural messages and

consumer decision process. Family, education and national identity manifest cultural forces.

Ethics and morality, behaviour and roles and design influence cultural messages. Culture is

also influenced from universal needs and wants in the society and consumer trends.

These cultural differences are different in country A and country B. The foreign company

must analyze and cope with these cultural differences and harness the tension to bring about

reconciliation between these countries. ‘With combining and synthesizing cultural differences the foreign company can integrate different cultural perspectives and seek a dynamic solution

to problems that may arise (Bradley, 2002)’.

Tayeb says that in some cultures, the persons involved in international business deals

would like to build up personal and closer relationships first and establish the fidelity and trust

of their trade counterparts before doing business contracts and activities with them.

Tayeb also mentions that in other cultures, business negotiators would prefer to do

contracts directly, relying deeply on the legal rights and obligations clauses included in that to

safeguard their interests.

Johansson states that it is to have in mind that even if adaptation to the foreign culture

is good when it comes to future negotiations and co-operations, there is a limit for how far a

manager should go to try to accommodate this foreign culture. Mistrust from the other part

can be created if for example a manager is trying to adapt to the foreign culture and is doing

this superficial and with lack of deeper meaning. This can lead to misinterpretation and seen

as false and insincerely.

According to Ball et al. doing business with another culture is not an easy task and to

be successful, every foreign company should be aware and follow some rules that make their

business activity more compatible. They state that there are six rules of thumb for doing

business in another culture. Even if these can be important when doing business in the home

country, they become more crucial when going abroad. These rules consists on:

· Be prepared

· Slow down

· Establish trust

· Understand importance of language

· Respect the culture

· Understand components of culture

Why culture is important for business

The international business that the company has decided to begin can get some consequences

that have strong effects on the success of the firm. A bad choice of a new country reduces

opportunities and increases the risks for high financial losses. This in turn can lead to loss of

control on the foreign market.

When conducting international business it is of great importance to consider the political,

legal and economic environment. However, according to Mayrhofer¼Œthe socio-cultural

environment is an even more important aspect. For instance if the issues regarding political,

legal and the economic environment are successfully fulfilled, the cultural aspects can

seriously affect the company’s future if not properly considered in advertising. Mayrhofer

even said that companies, who want to be “a step ahead” of their competitors, need to

be aware of the importance of the home-country factors. By this he means that companies

should not neglect the cultural and institutional differences.

The most important issue is to be prepared for the different culture and all that comes with it.

If people are open and respectful for the country´ way of living and thinking, without forcing

its own beliefs on people, co-operations have a good chance to be successful.

To give information to personal before sending them abroad can be a good investment that a larger number of companies should consider. We believe that this is a crucial issue and must be

handled in a correct way. Because culture and all the differences that culture includes, being

prepared and to know what to expect makes it possible to minimize the risk for misunderstandings and conflicts.

Whenever a conflict cannot be solved and cannot lead to agreement, the co-operation will be difficult tocontinue. Smaller mistakes, of course, can be managed but if the mistake continue or grow,they can be very difficult to correct.

Mistakes can come from for example sending the wrong kind of personal abroad which in the worse case scenario can lead to failures that cannot be corrected. Some cultures are very strict when it comes to mistakes and cultural reverences.

Trying to cope with mistakes can be a much more difficult assignment then being properly

prepared and do the right things from the very start.

The companies should also have a follow-up system, which helps them to analyze both

mistakes and successes. This is also a good way to learn from its own failures and try to

correct them so that they do not influence international business in the future. We can even

see in the model that if all the underlying factors in culture are handled correctly, successful

collaborations are the outcome. The companies and the countries are learning from each other

and can in the future do business with each other much more easily.