Small Business Today Magazine AUG 2014 SIVER STONE EVENTS | Page 17
EDITORIALFEATURE
Differences between U.S. and
East Asian Business Cultures
By Ludmila (Mila) Rusakova Golovine
E
ast 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 281-5890810, or visit her website at www.masterword.com.
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