Are you negotiating with Asian partners, customers or suppliers? Here are four tips to produce win-win outcomes

By Raj Wilson

Australia’s recent free trade agreements with major Asian markets have opened the door to a myriad of new business opportunities and helped place Asia on the horizon of many Australian entrepreneurs.

Yet while highly valuable, these agreements only go part of the way to helping to clinch the deal.

A bigger part of the equation lies in how effectively a business can build relationships and negotiate with Asian partners, suppliers and customers.

While there is no one blueprint for success, here are four insights to help get your next deal off to the right start and deliver lasting, quality outcomes for your business.

1. Patience is a virtue, as is preparation

Too often Australian businesses entering Asia for the first time seek quick wins and speedy returns on investment. But overnight success stories are rare and the reality is that often years of preparation are required.

When professional services firm Nihao Global launched in China in 2013, the translation and research company made a six-figure profit in its first 12 months of operation and quickly expanded to 19 major cities.

But this success was the result of years of planning and in-market knowledge. As Nihao Gloabl’s Australian president and founder Nigel Blair says:

“So many foreign companies entering China assume it is just like their home market or other regional markets. But it isn’t. They tend to fail due to a lack of a real understanding and knowledge of undertaking business in China, which leads to incorrect or ill-informed decisions.”

Negotiating with Asian stakeholders requires a greater degree of patience, preparation and adequate research, particularly when it comes to carefully selecting potential partners and clients.

2. Understand the impact of culture

A strong understanding of how culture affects the negotiation styles of both parties to an agreement is crucial.

No two Asian markets and cultures are the same, and nuances and differences can exist even within a country.

In Indonesia, for example, it often takes several meetings before coming to an agreement, with initial meetings serving primarily to establish relationships. Politeness and humility are required, as is an avoidance of rushing others, criticising ones counterparts and issuing ultimatums. The role of intermediaries can often be invaluable for progressing negotiations behind the scenes.

3. Pursue mutual outcomes

Seeking solutions that work for both sides, and employing strategies and tools to resolve outstanding issues, is crucial to negotiating effectively in Asian cultures.

Applying a win-win approach to negotiations helps ensure a long-term partnership that benefits both parties.

South Australian jam maker Beerenberg has been selling jams to Indonesia for over 20 years, with Indonesia now its third largest export market, behind Japan and China.

While the company initially focussed on jam sales to luxury hotels, successful negotiations with its Indonesian distributor, Masuya Graha Trikencana, enabled Beerenberg to expand rapidly into Jakarta’s major supermarkets.

Ensuring that there was mutual benefit in the arrangement for the distributor was key, and it involved a high level of trust.

“Having people you can trust and work with is absolutely vital. If you’ve got a solid relationship of trust you’re halfway there,” says Beerenberg managing director Anthony Paech.

4. Focus on relationships

As Paech’s comments imply, the importance of building long-term, trusted relationships with local counterparts cannot be overlooked and is vital to a successful outcome in negotiations.

Yet it also presents one of the biggest challenges for Australian businesses throughout the region.

In fact, a 2014 survey commissioned by Asialink Business with support from the Business Council of Australia and the Australian Industry Group found establishing relationships with Asian partners was the primary difficulty for Australian businesses of all sizes, flagged by 17% of SMEs and larger corporates alike.

Building long-term relationships takes time and investment. Asian counterparts usually prefer to establish a strong relationship and develop personal connections before closing a deal or finalising the business matter at hand.

So expect to spend plenty of time at meetings, social functions and banquets and don’t be surprised by personal questions, for example about your family.

And once you do finalise your negotiations and establish your local partner? Listen.

As Paech says: “If you’re not trusting what they’re telling you, you can waste a lot of money trying to get things right.”

Raj Wilson is the director of marketing and external relations  for Asialink Business and has over 20 years’ experience in assisting Australian and international businesses to achieve results in Asia. Asialink Business provides practical training, information products and events and networking opportunities to help organisations and individuals do business with Asia. 

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