By Ludmila (Mila) Rusakova Golovine
East Asia is one of the largest markets in the world. Countries like China, Japan, South Korea, and Taiwan all have rapidly growing and expanding economies with over a billion consumers. Since the 1950s, these countries have experienced significant economic growth, dwarfing most other economies. In terms of Gross Domestic Product (GDP), China is second in the world only to the United States while Japan is third. Many economists predict that China will eventually unseat the United States as the leading economic power. Meanwhile, both South Korea and Taiwan have been named part of the “Asian Tigers,” a laudatory appellation for their consistent annual 7% GDP growth between the 1960s and 1990s, ultimately making them economic powerhouses in their own right. Consequently, these countries are some of the most attractive targets for long-term global investment and trade. Although their success has put them on par with the Western world, it is important to note that their mentality and business etiquette are quite different in comparison. This reality must be taken into consideration by anyone wishing to do business in this area of the world.
One important difference between East and West is formality. The trend in American culture is to break down formality. This phenomenon is obviously a result of democratic and egalitarian values instituted after the American Revolution in which social equality was promoted and class divisions were broken down. This has not been the case in East Asia. A cursory examination of business negotiations demonstrates this quite well in an American business negotiation. Subordinates are given more latitude as to what extent they can express their own opinions or even disagree with their chairperson. Quite simply, this does not occur in the Asian context. Whether the business delegation is Japanese, Chinese, Taiwanese, or Korean, the delegation will have a chairperson to whom everyone will defer. Very often, only the chairperson will speak or will delegate only one subordinate to be the spokesperson. The other members of the delegation will remain silent and most certainly will not disagree with the chairperson.
Forms of address are an important part of formality. In American business, there is the tendency to employ the first name very soon after meeting a business counterpart. In Asia, this is rude unless permission is given and usually this will take time. Up to that point, the person’s last name and “Mr.” or “Mrs.” should always be used. Titles are also important. If someone’s position is known then it should be referred to out of respect. For example, if “Mr. Li” is the chairman of his company then he should be addressed as such. In the Japanese context, if a person has a PhD then he/she has the honorific title of “sensei” which means teacher and should always be employed after the person’s last name.
The separation between business and personal relationships is also very different. In American English, there is a saying, “Friends are friends and business is business.” Americans are very adept at putting aside personal differences or unpleasant situations in order to get the job done or close a deal. East Asians do not think this way. For them, the relationship between business partners is more important than any business deal. This situation causes no end to frustration for Americans seeking business ventures in East Asia due to the fact that their Asian counterparts postpone discussing real business until they have a sense of whom they are dealing with. Getting to know one’s potential business partner is a long and time-consuming process in East Asia; a process to which Americans are not accustomed.
Similarly, it is important to note that very often business and social outings go hand in hand in East Asia. This is a continuation of the business relationship. Business dinners occur quite frequently and usually alcohol is involved. While alcohol carries somewhat of a stigma in American culture, it is not viewed negatively in this area of the world. If an American is offered alcohol and refuses, it could be considered rude. Consequently, the American should explain that drinking is forbidden for medical reasons or she/he can accept the drink and merely leave it on the table. This strategy helps maintain the harmony of the relationship.
While the differences in mentality and business etiquette between American and East Asian cultures are quite considerable, they are not insurmountable. The most important concept is to approach a culture without any preconceived notions. If you can keep an open mind and deal with every situation calmly, usually everything will work out smoothly.
As a graduate of the Wolff Center for Entrepreneurship at the University of Houston, Ludmila (Mila) Rusakova Golovine, Founder, CEO, and President of MasterWord Services, Inc., started her company with a vision of seamlessly connecting people across any language, any time, and any culture. Mila can be reached by email at [email protected], by phone at 281-589-0810, or visit her website at www.masterword.com.
