Doing Business with Asians & Australians

Pacific Rim Overview

  • Nearly 2/5 of humanity lives in Asia; China, India, and Indonesia alone contain 40\% of Earth’s inhabitants.
  • Key Pacific-Rim economies covered: Australia, China, India, Indonesia, Japan, Malaysia, Singapore, New Zealand, Pakistan, Philippines, South Korea, Taiwan, Thailand, Vietnam.
  • Trade gravity is shifting from the Atlantic to the Pacific (“Century of the Pacific”).
  • Six Central-Asian “-stan” nations (not detailed in transcript) are increasingly relevant for resources & logistics.
  • Forecasts
    • By 2020 China’s GNP projected to exceed the United States by 40\%.
    • Rapid growth co-exists with social instability, organized crime, money-laundering & drugs.

Regional Realities & Shifts

  • Spectacular 1990s growth → Asian financial meltdown; rebuilding in 2000s but political flashpoints remain (Koreas, India–Pakistan, Burma/Myanmar, Thailand).
  • Economic “miracle” drivers: capitalism, hard work, frugality, limited government; technology accelerates catch-up.
  • EU plays larger role as U.S. influence eases; flourishing Asia–Euro trade & scholarly exchange.

Ancient Philosophies & Religions

  • Buddhism (origin India, \sim2500 yrs ago), Confucianism (China 551\,\text{B.C.}), Hinduism (India), plus Christianity & Islam deeply shape ethics, meritocracy, social hierarchy, fatalism, collectivism.

China

Geography & Demography

  • Land mass \approx9.6 million km$^2$; 4000 mi coastline; four quadrants: SE (60% population), NE (Beijing, industry), West (Tibet & Xinjiang, resources), West-Southwest.
  • Mega-cities: Beijing, Shanghai, Chongqing (30 M), Shenzhen, Guangzhou; Macau ≈11 sq mi, world’s top gambling hub.

Modernization & Energy

  • Largest user of solar hot-water; huge hydro & nuclear projects; wind farms in West.
  • Produces \frac13 world steel yet consumes 2\times U.S.+EU combined.

Pride & Historical Context

  • “Middle Kingdom”; writing system >3000 yrs unifies culture.
  • Notable inventions: paper, printing.
  • Ming isolation (14th c.–1950s); humiliation by Western/Japanese imperialism.
  • 1949 PRC, Mao → Deng Xiaoping’s 1979 “open door”; WTO entry 2001.

Socio-political Framework

  • 1982 Constitution: National People’s Congress (NPC) highest power, elects President & State Council.
  • CCP dominance; movement toward collective (not personal) leadership.

Economy & SOE Reform

  • Priority: restructure state-owned enterprises (SOE). 20 M SOE jobs lost so far; 83 large state firms = >50\% market value.
  • Coastal south (e.g., Zhejiang, Wenzhou) = capitalist heartland, 91% private enterprises.
  • Forbes 500: only 11 Chinese firms—indicator of reform path.
  • Foreign Direct Investment (FDI) #1 globally; govt demands technology transfer (e.g., Siemens Maglev R&D).

Entrepreneurship Examples

  • Lenovo: \$16 B revenue PC giant; IBM PC buyout \$1.75 B (2005); global culture, rotation of HQs, “assume good intentions.”
  • Rong Yiren (CITIC) & Wong Kwong Wu (Gome) illustrate guanxi, wealth creation & prudent public image.

Corruption & Risk Areas

  • Endemic corruption despite 1993 anti-graft drive; issues: IP theft, counterfeit, blackmail.
  • Foreign firms advised to inspect supply chain, share management know-how, avoid bullying suppliers.

Negotiating & Etiquette

  • Group-oriented, high-context; saving face paramount, deception acceptable to protect it.
  • Slow pace can be tactic; nothing final until executed.
  • Business cards: double-sided (English/Mandarin); gold = prestige, red = lucky.
  • Banquets: punctual, toasts before drinking, reciprocate hospitality.

India

Macro Snapshot

  • Democratic “elephant”: slower but steadier than “tiger” economies.
  • High-tech hub: Bangalore—260 K IT/BPO workers; \approx25\% annual growth pre-2008.

History & Society

  • Aryan-Dravidian synthesis \sim1500\,\text{B.C.}; caste system (priests, warriors, traders, workers, dalits).
  • Independence 1947; republic 1950.

Governance & Economy

  • British-style parliament: Lok Sabha, Rajya Sabha; PM holds real power.
  • Reserve Bank manages rupee; public vs. private sector mix, rapid diversification of exports.

IT & Outsourcing

  • 4\text{ M} IT/BPO jobs, \$65\,\text{B} exports (≈7% GDP).
  • Competitive edge: 2\text{ M} English-speaking graduates/year.

Business Culture

  • Hierarchical yet relationship-focused; social freedom of sexes limited.
  • Greetings: “Namaste” with palms together; use honorifics (-ji, Babu).
  • Meals: know dietary taboos (beef for Hindus, pork for Muslims); repeated offers of food = courtesy.
  • Ethics: karma & dharma guide moral action; corruption/bribes commonplace; personal contacts crucial.

Corporate Example

  • Tata Group: operates in 85 countries; acquisitions—Tetley (2000), Corus (2 B), Jaguar/Land Rover (2.3 B); frugal engineering of \$2500 Nano car.

Japan

Context & Transition

  • From 1990s collapse to 2002 recovery via “hybrid capitalism” (mix of keiretsu + Anglo-Saxon reforms).
  • Four main islands, 4000 smaller; only 15\% arable land → group cohesion.

Cultural Tenets

  • High-context, subtle, consensus-driven; Confucian + Shinto + Buddhism.
  • Language layered for respect; indirectness preferred.
  • Lifetime employment, seniority pay, company unions (old model) → shift toward performance pay, temp workers.

Etiquette Highlights

  • Bow + light handshake; business card ritual; subdued attire.
  • Decision: define problem collectively, then rapid execution once consensus reached.

Pakistan

Geo-politics

  • Created 1947 partition; 97% Sunni Muslim; multiple ethnicities (Punjabi, Sindhi, Pashtun…).
  • Strategic ally in U.S.-Afghan war; volatile northwest tribal agencies.

Business Notes

  • Family/clan networks dominate; social stratification pronounced.
  • Work week Sun-Thu; prayer break Fri 1 p.m.
  • Hospitality integral; avoid left-hand use; women’s roles conservative.

Philippines

Snapshot

  • 7000 islands; Spanish + U.S. colonial legacies; majority Catholic (≈83%).
  • Economy: agriculture, remittances, growing BPO sector; oligarchic politics, patronage networks.

Cultural Pointers

  • Pakiksama (harmony) & hiya (shame) govern behavior; confrontation avoided.
  • Time: inquire “Filipino time” vs “American time.”
  • Gift etiquette: modest souvenirs; strong hospitality—expect repeated offers of food.

South Korea

History & Economy

  • Post-1953 division; chaebol-led miracle → 1998 restructuring (24 city banks → 12).
  • GDP/person ≈ \tfrac12 Japan; unification cost looming.

Cultural Essentials

  • Kibun = inner feeling/mood; avoid damaging it.
  • Vertical relationships; age & titles crucial; bow + handshake common.
  • Naming: family name first; use titles rather than names; business cards vital.
  • Gift giving expects reciprocity; careful negotiation circles toward core issue.

Vietnam

Quick Facts

  • Long S-shaped country, 2000 mi coastline; reunified 1976 as Socialist Republic.
  • Doi Moi reforms (since 1986): private enterprise, 100% FDI, WTO member, poverty <{10\%}.

Business Climate

  • Greetings: handshake + slight bow; use both hands for giving items.
  • Names: family + given; address with given name + title (e.g., “Anh,” “Chi”).
  • Gestures: no head-touching; palm-down beckoning.
  • Urban–rural inequality significant; rapid tourism & export growth (rice, seafood, petroleum).

Pan-Asian Business Insights

  • Common threads: collectivism, hierarchy, face-saving, indirect communication, importance of hospitality, consensus or elder approval, gift etiquette.
  • Key pitfalls: corruption, IP theft, slow legal systems, protectionism, political risk hot-spots.
  • Opportunities: huge middle-class expansion, infrastructure booms, technology transfer deals, outsourcing, green energy, education services.

Mind-Stretching Review Questions (from text)

  • How do traditional societies transition to technology & knowledge economies?
  • What advantages do overseas Chinese networks bring to Pacific trade?
  • Which cultural commonalities span Asian borders?
  • How should managers prepare for terrorism, pandemics, or insurgencies while doing business in Asia?
  • What is the new “Silk Road” significance for Central-Asian “-stan” nations?