5 TIPS TO AVOID THE “COMPLEX OF SUPERIORITY” WHEN DOING BUSINESSES IN ASIA
Till the end of the XIX century European powers dominate the world. America led in the XX. And XXI will be the century of Asia.
Today, at January 2014, still western corporations are more and larger and western is the approach to global business. But this state of things is shifting rapidly towards the East, to Asia.
Why? Some points explain high level the rationale behind:
- GDP in Asia as a region has been growing above 5% yearly over the past decade and will continue within similar parameters over the next years. In some countries like China, the main economy in Asia, the annual growth has been close to a staggering 10%. At this pace, dozens of millions of Asians move up every year from poverty to the middle classes and hence, start consuming much more products and services than the required for subsistence. Also, a few millions join the upper classes or become ultra rich up from the middle class.
- Government debt levels are low and expenses are under reasonable control. Still, new infrastructures are built all over; health and education systems are improving and, in some cases, are becoming better in quality than the western ones according to international reviews.
- Last, but not least, people is excited about their future and are willing to do any personal effort to grab the opportunities they believe lye ahead of them. This is so much so among youngsters.
In contrast, in the western world
- Governments and families are heavily indebt. This is not only bad in itself but it is aggravated because western politicians and citizens behave like nobody will pay ever the immense debt. Their kids and grandchildren will!
- Accommodated people, used to live subsidized by a welfare state that is not sustainable.
- No growth, even negative growth in GDP, per capita income and population.
Very importantly, points 1 to 6 are making the shift happen at an incredible fast speed.
In this context, many western companies are looking to Asia, either for growth or, even, for survival. Many corporations make the move and, unfortunately, most of them fail to enter Asia successfully. There are several reasons for that failure, but one stands above any other. What I call the effect of the “complex of superiority”.
What do I mean by that?
In a non-conscious way, western executives assume:
- That businesses are businesses no matter where and that to make businesses in Asia should be the same as to make businesses in Europe or America. This is wrong; businesses are done in a very different way in Asia and even within different Asian countries.
- That their business model and their operations, marketing and so on can be replicated exactly in Asia. This is not true either, not only because of important differences in the legal or financial frameworks, but because the mindsets of the relevant stakeholders in Asia are different too.
- That the western executives are better educated, higher performers and, in general better equipped for success. False again. Western executives are just different than local Asian and, if any, they are in an inferior position to lead businesses because they are alien to Asia and do not understand well the driving forces that influence a given Asian country and marketplace.
Because of these 3 simple points, corporations fail to enter Asia. It looks simple, but to solve it is complex because those three traits are deeply rooted in the western mentality.
Why so deeply?
I want to believe that it has nothing to do with racism or new post colonialism. What I believe is:
- That Western people have deeply ingrained in themselves that their main social organizations are best. Western style democracy, the welfare state with high taxes and high debt, its market regulations and so and so. And this Holy Truth does not admit even a discussion. It is interesting to observe that people that hold their democracy as superior do not accept even to discus about any other kind of social and economic organization than theirs.
- Western business schools and main Universities, multinational corporations and big legal, tax and audit firm set the global “good practices”.
- A sense of domination of the western culture ranging from the English language, to food, lifestyle, personal values and family organization.
So, what to do to overcome all of this and make Western corporations successful when they enter Asia and at a reasonable cost?
Here you have 5 tips to success:
- Doing business in Asia is not the same as doing business in the West. Engrave this in your forehead! There are many differences and one of them is critical, the importance of contacts and personal relations.
- You are a host in the country you are in Asia. Behave like that. Be humble, be respectful, and be interested in the local culture. Study, analyze, and learn what surround you.
- Do not get frustrated and take shortcuts. Do not assume that Asian countries do not have regulations as you have in your country of origin, and even worse, do not assume that you are not abide but them. Some of these regulations are more business friendly than in your country, some less, but it is what it is, and same way that you follow them in your country of origin, follow them in the country where you reside.
- Count on local talent. Local people can be as good executives as the ones in your country of origin. To build a company based on expatriates will prove very costly without any important benefit.
- Don’t act like a “machete man”. Ask for advice, contact local consultants that will hold your hand, will help you strategize and, very importantly, will introduce you to the local key contacts.
This is the first blog post of a series based on my experience in Asia. I love Asia. It has given me so much that I expect to pay back some. Hope to receive your feedback and to engage in a fluent and useful dialogue.