Building a Business Presence in Asia, Part 2: Partnering for Success
Opening a business in Asia can be a heady experience. But before you can cut the ribbon on your new headquarters, there are still many issues to be worked out: customs and permits, banking and finance, scouting for potential locations, and adapting your business plan to local realities. Add that to the more than 2,000 languages spoken across the continent, along with a mosaic of markets, cultures, traditions and legal systems, and the process can seem overwhelming.
The good news is that you don’t have to go it alone. By forging an alliance with a local partner, you can access capital, experience, and on-the-ground know-how that might otherwise take years to generate. In the second part of our series on building a business presence in Asia, we will discuss why the partnering paradigm may make the difference between lasting success in your Asian venture, or just passing through.
It’s All About Guanxi
In Asia, personal relationships are an important part of overcoming many of the hurdles to business mentioned above. This includes taking time to get to know your potential business partners and cultivate a respect for local etiquette, whether that means accepting a late-night social obligation you might otherwise be inclined to avoid or exchanging gifts, called omiyage, with co-workers on the holidays of Ochugen and Oseibo.
The social aspect of business is often difficult for Western cultures to grasp. As professor Rosabeth Moss Kanter of the Harvard Business School points out, “North American companies…take a narrow, opportunistic view of relationships, evaluating them strictly in financial terms or seeing them as barely tolerable alternatives to outright acquisition.” This may lead them to see relationship-building as a waste of time or, worse, as a veiled form of corruption, rather than a necessary human element in Asian business life.
In China, the word for relationships is guanxi. As opposed to the narrower, Western definition of the term, however, guanxi also encompasses what we understand by networking, connections, or the mutual exchange of favors. In a millennial culture such as China, the origin of guanxi is complex, with its roots of loyalty and obligation going back thousands of years. More recently, during the Cultural Revolution of the 1960s and 70s, it is speculated that guanxi acquired renewed importance as a way to build trust in a climate of suspicion where people were encouraged to report on each other.
General Motors and SAIC: A Collaborative Success Story
And here is where local partnering can be essential for a business to make inroads in Asia. Guanxi alone does not a business make, of course. But the principle of trust-building, of the creating of situations where innovation can flourish across cultural borders, is crucial. Local alliances can help anchor your business in the new territory, providing it with a key collaborative advantage.
If you want to look for a collaborative success story in Asia, look no further than General Motors. Despite its rocky post-2008 performance in North America, over the past two decades, GM has made itself the leading automotive producer in China. Much of this achievement is due to a successful alliance with its partner, the Shanghai Automotive Industry Corporation (SAIC). GM and SAIC have teamed up in opening plants across China, from Shandong to Shenyang.
Beyond the mere creation of a national infrastructure, the collaboration also led to an impressive level of technological innovation: GM joined with SAIC in the introduction of automatic transmissions into China, as well as developing double-clutch transmissions and electric vehicles. So successful has the alliance been that they’ve recently signed an agreement to expand into the India market.
In order to fully embrace the guanxi ethic and the potential for relationships and trust-building it offers your ventures in Asia, resist the temptation to view the concept solely in opportunistic terms. As Professor Kanter concludes, business alliances “are living systems that evolve progressively in their possibilities. Beyond the immediate reasons they have for entering into a relationship, the connection offers the parties an option on the future, opening new doors and unforeseen opportunities.”
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