Article - Business In Pacific Rim

Stop, Look and Listen!
Expert Advice on Doing Business in the Pac Rim

By Paul Beretz

(Reprinted with permission from IOMA's Report on Managing International Credit and Collections, September 2000 issue).

The author, Paul Beretz, is Managing Director of Pacific Business Solutions, a company based in Alamo, CA, which identifies and implements strategic planning opportunities and cash flow improvement solutions. He shares his business experience in working through the business processes involved in ERP installations and upgrades with Fortune 100 companies. Beretz is an Editorial Advisory Board Member of IOMA'a "Managing International Credit and Collections" publication.

Understanding cultural nuances can be the difference between success and failure when dealing with customers in other countries. Most international credit executives are well aware of this fact and strive to avoid the obvious land mines. Yet, even the most seasoned international credit professional occasionally stumbles, especially when transacting business in the Pacific Rim, where business attitudes and behaviors are quite different than what most U.S. managers are accustomed to. MICC recently spoke with veteran credit professional and experienced traveler, Paul Beretz, about how international credit professionals could avoid cultural blunders when traveling to the Pacific Rim.

Observation

"In the Pacific Rim business environment," says Beretz, a managing director of Pacific Business Solutions, "the observant credit manager will remember the sign they may have seen at railroad crossings: "Stop, Look, and Listen!" He warns that this includes not only dealing with customers offshore, but also with a company's own "internal" customer, the branch office in the overseas country.

The international credit professional must be aware of many subtleties. To be successful in the Pacific Rim countries, the international credit professional will study behavior, learn about verbal and nonverbal differences that exist, and probably use a "go-between" (a shokaijo in Japan) to help develop the desired relationship. "The credit manager should understand how important the go-between is in the Pac Rim country," warns Beretz. That person may be the seller's country manager, a banker, accountant, or individual in a key position in the country who understands how to help achieve the objective.

Will credit managers understand that an immediate decision-in the expected, American way-may not be forthcoming in a Pacific Rim culture? Open conflict and public emotional displays are also counter to the culture that they are dealing with.

Trust

In the United States, trust is rarely an issue when conducting business. In the Pacific Rim, trust is extremely important and those who ignore it do so at the peril of their business. Trust takes time to build, adding to the frustration many feel when doing business in the Pacific Rim. (The same frustrations apply to Latin America.)

"In the Pac Rim," says Beretz, "cultures depend on trust, or the 'oil of life' as defined in Japan, known as amae." He warns that in any relationship in this region, a feeling of complete trust and confidence must exist, not only so that the other party will not take advantage of him but also so that he count on the indulgence of the other. Most American international credit executives are accustomed to some-thing quite different from this.

Those deemed most qualified for leadership positions in this region are perceived as being dependent on those people beneath them. "This is the purest form of an egoless relationship, which contrasts with the need to repress trust that Western societies foster," he says.

Listening is not easy for many Americans. Interrupting is second nature for some. Beretz says it is undoubtedly the origin for the Japanese saying "hollow drums make the most noise." One of the hardest concepts for Americans to understand is that many in the Pacific Rim will consider a matter for a while before answering. Long pauses tend to make Americans feel that they have to jump in and fill the void. Don't. Let your customer take time to think before answering. Having the international credit executive also think before answering is not a bad idea, especially since the silence will not put off your Pacific Rim host.

Examples of How Observation Can Work

Japan. In Japan, the concept of wa, meaning peace and harmony, is the basis for a working relationship. The highest priority is placed on wa. The Japanese person with closed eyes sitting opposite the credit manager is not necessarily being rude-he may be working towards inner harmony. "Speech is silver, silence is golden."

Korea. In Korea, the priorities are family, respect for authority, formality, and class. Koreans are aggressive, hardworking, friendly, and hospitable. A driving force in Korean relationships (and significant in all Pacific Rim countries to a degree) is "saving face." If no one points out any errors to the people responsible, the person might assume that no errors exist, so no "face" is lost.

In addition, the following provides advice to international credit executives on using an interpreter and on some of the more common mistakes westerners make when doing business in the Pacific Rim. The international credit executive who is aware of the cultural nuances is in the best position to succeed when transacting business in the Pacific Rim. Those who follow Beretz's guidance will have taken the first step on the road to that victory. Those who ignore it do so at their own peril.

How to Negotiate When Using an Interpreter

While English has truly become the international language, in the Pacific Rim, top executives have not mastered (or didn't care to master) it. In these cases, using an interpreter can help. However, the following caveats should be considered:

The presenter (the credit manager visiting his customer, for example, needs to find his or her own interpreter, probably through a go-between in the country.
A written text of the presentation (or at least, the gist of the notes for the meeting) needs to be given to the interpreter.
The English speaker should speak slowly around a single topic, avoid slang and puns, and only use metaphors and analogies with care. For example, would the speaker expect an interpreter to translate "what's good for the goose, is good for the gander" into an Asian language?
Charts and visuals should be used whenever possible.
Monitor facial and nonverbal expressions, and talk to the person, not the interpreter.

Common Mistakes Westerners Make When Doing Business in the Pacific Rim

A little humility. Those who travel from the United States to Asian nations in particular need to stop promoting the United States. ("That may be the way you write a contract here in China, but that's not the way we do it in the United States" or "Can't I find American food anywhere around this place?") These Americans are visiting their host, not the other way around.

Idioms. Why are we not more conscious of the use of idioms? Idiomatic phrases are extremely difficult for non-U.S. people to understand. Just think how a customer sitting across the table in countries such as China, Japan, South Korea, Vietnam, or Taiwan may react when phrases such as "better late than never," "in the long run," "put it on the back burner," "get the ball rolling," "get to first base," "quick on the trigger," and "beat around the bush" are used.

Business cards etiquette. Does the westerner stop to appreciate the significance of the "name" (business) card in Pac Rim countries? The high number of visitors to Asian nations who do not have the native language printed on business cards (especially if one does extensive, repeat business in Japan or China, for example) is amazing. The card is presented with both hands, with a slight bow or ojigi ("oh-jee-ghee" in Japanese). The name of the other person's company is looked at closely, and the cards are not written on or put away during the meeting. An insult tendered at the beginning of the meeting-even an unintentional slight-can destroy the chance for any successful outcome.

Group consensus. Japan's cultural roots have a strong middle management that has deep working relationships and seniority in rank. Japanese managers look after subordinates. Management is participative, problems are solved by consensus, and there is no open expression of conflict. A humble attitude by public figures especially is still considered an essential virtue. Westerners should realize that apologies in this culture may be real as well as "pretended" in the same way that Americans brag about their imagined skills. The purpose of the Japanese apology is to avoid ill will, friction, and anything else that may be seen as wrong.