Asia-Pacific Business Asia-Pacific Marketing Federation Certified Professional Marketer Copyright Marketing Institute of Singapore Organization 1) Course objectives 2) How to study the subject 3)Desired outcome 4) Contents Course Objectives вЂў To provide a foundation of business and marketing practices unique to the Asia-Pacific region. вЂў To familiarize candidates in general economic and business climate affected by the PEST environment. вЂў Foreign investments and their impact on Asia-Pacific countries. How to study the subject вЂў Recommended reading list вЂў Magazines and periodicals in Asia-Pacific example Asia INC,Asia-week вЂў Newspaper reports of happenings in the AsiaPacific region вЂў Useful to take part in group discussions to assess how the political and economic issues of the day,changing business landscape (example mergers and acquisitions) impact business decisions. Desired Outcome вЂў Understand how changing PEST environment in the Asia-Pacific region impact managerial and business practices вЂўAppreciate relationship between business and government вЂўUnderstand the dynamics of interactions and influence of the countries within the Asia-Pacific region and the regionalisation and globalisation of their state and private enterprises. Contents вЂўOverview of the Asia-Pacific region вЂўThe Macro and Micro-environment вЂўMarketing practices вЂўManagement practices вЂўSome key pointers - The Chinese family business - Negotiation techniques вЂў Conclusion Overview of the Asia-Pacific Region вЂў North-East Asia - Japan, Korea, Taiwan, China вЂў South-East Asia - Myanmar, Laos, Thailand, Cambodia, Philippines, Vietnam, Malaysia, Brunei, Singapore, Indonesia, East Timor вЂў Rest of the Asia-Pacific Region - Australia, New Zealand, Nepal, Bhutan, Bangladesh, Pakistan, India, Sri Lanka Brief history of the colonisation of the Asia-Pacific Region вЂўIndia, Burma (now Myanmar), Malaysia, Hongkong, Singapore previously colonised by the British вЂўMacau colonised by Portugal вЂўIndo-China colonised by France вЂўIndonesia colonised by Holland (Dutch) вЂўTaiwan and Korea colonised by Japan вЂўPhilippines colonised by Spain and U.S.A. Impact of colonisation вЂўApart from Thailand and Japan, no country in the AsiaPacific region was spared from Western influence вЂў400 years of Spanish presence and another 50 years by Americans has resulted in a Westernised culture in the Philippines вЂўMany Dutch words have crept into the Indonesian language вЂўLegal systems in India, Malaysia, Singapore and Hongkong are still based on the foundations of British law. The chaebol system in South Korea is very similar to the Japanese keiretsu system Why the strong interest in the Asia-Pacific Region вЂўPotential to fulfill needs of some 2.5 billion people about 60% of the worldвЂ™s population вЂўNeed to understand the wide diversity of cultures culture influence needs and business practices вЂўStages of economic development range from underdeveloped nations, e.g. Myanmar, Laos, to developing nations, like Malaysia, to Newly Industrialised Economies, like Singapore and Taiwan, to fully developed nations like Japan - presents both threats and opportunities Why the strong interest in the Asia-Pacific Region вЂўHuge potential for infrastructure projects вЂўRapid changes in political leadership in several Asian countries e.g. Philippines, Thailand and Indonesia вЂўEmergence of consumer credits вЂўIT demand in U.S. accounted for nearly 40% of economic growth in Asian countries in Year 2000, outside Japan Association of South-East Asian Nations (ASEAN) вЂўFormed in 1967 - today comprise of Thailand, Malaysia, Singapore, Indonesia, Philippines, Brunei, Myanmar, Laos, Vietnam and Cambodia вЂўSet up as a group for closer economic, social and cultural cooperation вЂўTrade between ASEAN partners (except Singapore), still not very significant вЂўEconomies of ASEAN countries dominated by Chinese, although they form only about 6% of the regional population ASEAN Free Trade Agreement (AFTA) вЂўLaunched in 1990 вЂўSupposed to convert ASEAN into a free trade zone or at most 5% duty by 1st Jan. 2003 вЂўRaw or unprocessed agriculture to be included under AFTA вЂўNo progress made in the area of services EAEC & APEC вЂўEAEC _East Asian Economic Caucus - an economic grouping without Westerners вЂўComprise of ASEAN and Northeast Asian economies вЂўNo significant progress in this alliance вЂўAPEC - Asia-Pacific Economic Cooperation Forum (ASEAN + China, Taiwan, Hongkong, South Koreaa, Japan, U.S., Canada, Mexico, Australia, New Zealand, Papua New Guinea and Chile) вЂўAPEC not truly an Asia-Pacific body as U.S. and Canada contributes to a large portion of the trade Newly Industrialised Economies (NIEвЂ™s) вЂўConsist of South Korea, Taiwan, Hongkong and Singapore вЂўMost successful economies in the world with sustained growth rates of 7-8% p.a.(until the 1997 economic crisis and the 2001 global downturn) вЂўThe only economies in the developing world likely to catch up with industrialised countries in terms of technology, infrastructure and per capita income вЂўOne of the key drivers of the economies of Taiwan and Singapore is the electronics industry The Macro and MicroEnvironment вЂў Business is affected by key changes in the macro and micro-environment вЂўChanges can present opportunities or threats for businesses вЂўFactors affecting the macro-environment are political, economic, social and technological вЂўTrading practices, channels of distribution, the competitive environment, form part of the microenvironment The Political Environment вЂўPolitical systems can vary from democratic to totalitarian вЂўDemocratic system - multiple centres of power, none of which is powerful enough to completely control decision making вЂўExamples of democratic systems in the Asia-Pacific region: India, Indonesia (a new democracy) вЂўTotalitarian system - political power is highly concentrated in a small elite group вЂўExamples of totalitarian systems: Myanmar, Laos Political Ideology вЂўPolitical philosophy covers issues as government intervention, role of market forces and attitudes towards profit and risk towards a foreign firm вЂўRanges from capitalism to socialism вЂўCapitalism - private ownership of business enterprises is encouraged вЂўSocialism - public ownership of businesses is common, with substantial government regulations of the workings of a free market вЂўChina is a mixture of capitalism and socialism, whilst Vietnam is a socialist state Political Ideology вЂўNationalism could affect attitudes towards foreign made products and foreign owned companies вЂўJapanese, for example, favour Japanese made products, although the trend is slowly changing вЂўSome Indian extremists are against their government encouraging the presence of foreign companies вЂўProcurement of goods or services for government use usually preference is given to local companies Political Instability/International Politics вЂўPolitical instability can have a deterrent effect on foreign investments e.g. few foreign investors dare venture into Indonesia now вЂўInstability also means a higher degree of political risk, like unexpected introduction of import controls and expropriation of foreign assets e.g. Myanmar вЂўDifferences in political opinions and strained relationships between countries affects business вЂўExample, Muslim countries do not buy goods from Israel, human rights activists in Western countries boycott goods made in вЂ�sweat shopsвЂ™ The Legal Environment Most countries have laws and regulations covering: вЂўForeign imports вЂўForeign direct investment (e.g. companies in Malaysia require bumiputras to have a share in the company) вЂўForms of market entry, such as licensing and franchising вЂўHow products are marketed (e.g. advertising restrictions, product registration The Legal Environment There are laws governing foreign imports. Legislation may change from time to time, depending on the need. Laws governing imports include: вЂўTariff/non-tariff barriers вЂўQuotas вЂўSubsidies to domestic producers вЂўBuy local campaign (the Malaysian government had such a campaign during the 1997-1998 crisis) вЂўExchange controls The Legal Environment Reasons for government control of foreign imports: вЂўProtect strategically important industries вЂўReduce unemployment вЂўPrevent dumping вЂўProtect local industries The Legal Environment While most governments encourage Foreign Direct Investments (FDIвЂ™s), there are often rules and regulations governing foreign investments, such as: вЂўInvestment if only on a joint venture basis (as in many construction companies) вЂўLocal content requirement вЂўExport/import requirement (e.g. in Myanmar for every $100 worth of goods exported, only $20 worth of imports is allowed) вЂўTransfer pricing controls The Legal Environment Marketing of products may be subjected to the following controls: вЂўSafety standards, registration, labeling requirements вЂўPrice controls (especially for essential products like cooking oil, rice) вЂўAdvertising content (scantily clad Caucasian models are not allowed in Malaysia), sales promotion techniques вЂўExclusive dealerships (e.g. it is very difficult to change a dealer in South Korea, once the appointment is made) The Economic Environment вЂўEach Asian country has its own currency. The convertibility of a currency determines how difficult it is to convert one currency to another вЂўFull convertibility means that both residents and nonresidents can purchase any amount of foreign currency вЂўHard currencies are usually fully convertible, e.g. US$ вЂўSoft currencies are non convertible, e.g. Kyat (Burmese) and Dong (Vietnamese) currencies The Economic Environment Governments impose various exchange restrictions to control their limited supplies of foreign exchange. Examples of exchange restrictions are: вЂўLicensing - exchange rate fixed by government licenses which require all recipients and exporters who receive foreign exchange to sell to the central bank at the official buying rate вЂўMultiple exchange rates вЂўImport deposit requirement вЂўQuantity controls The Economic Environment Types of risk exposure in international business: вЂўTransaction exposure - foreign exchange rates on settlement date вЂўEconomic exposure - most broad type of exposure that has long term effects: costs, prices, sales, profits, investments вЂўTranslation exposure - consolidation of financial statements into different currencies into home currency or reporting currency The Economic Environment вЂўCurrency exchange rates can be greatly affected by political changes e.g. the Indonesian rupiah changes substantially with each major political development вЂўRegional economic groupings (AFTA,EAEC, etc;) will impact economies of both member and non-member countries вЂўChinaвЂ™s entry into WTO will have a profound effect on the other SEAsian economies The Social/Cultural Environment Understanding the social/cultural environment in each country is important because: вЂўProduct features, packaging and advertising strategies must be sensitive to cultural differences вЂўBusiness negotiations involve individuals from different cultural backgrounds - misunderstandings can arise from lack of knowledge of cultural backgrounds вЂўChoice of markets to penetrate may be influenced by cultural factors, e.g. it is generally easier to introduce a product to another country whose culture is similar to the home country The Social/Cultural Environment вЂўSome managers are very international in their outlook. вЂўSuch managers recognise the fact that different people from different cultural backgrounds behave differently вЂўOthers believe that what works well at home should work well abroad too вЂўThere are various terms to describe such management orientations The Social/Cultural Environment Management orientations: вЂўEthnocentric - home country is superior. Whatever methods used to market products at home should be applicable to foreign countries too вЂўPolycentric - each host country is unique вЂўRegiocentric - sees similarities and differences in a particular region in the world. For example, Asians, generally speaking, have certain similarities when compared with Westerners, but within each Asian nation there are differences The Social/Cultural Environment Management orientations continued: вЂўGeocentric - has a world view - sees similarities and differences in home and host countries. Managers with a geocentric orientation seek to create a global strategy that is fully responsive to local needs and wants. вЂўExamples of companies with a geocentric orientation General Electric, Hewlett Packard The Social/Cultural Environment Main elements of culture which impact on marketing are: вЂўReligion вЂўValues and attitudes вЂўLanguage (both verbal and non-verbal) вЂўNames and customs (a name like вЂ�LostalotвЂ™ - an antiwrinkle cream from Shishedo, would not sell in HK or Singapore) вЂўManners (Japanese, for example, would find a direct вЂ�noвЂ™ rather offensive) The Technology Environment вЂўIT and communications infrastructure advance at different rates in different countries and at different rates even in the same country вЂўSingapore is highly developed in the IT and communications infrastructure. India is the IT capital of Asia, yet barely half the population own home computers The Technology Environment вЂўApart from, product and process technology change is also changing the competitive environment of many industries/countries вЂўSingapore, for example, has embarked on a major, government sponsored research into life sciences вЂўNew product, process and information technologies allow companies to seek competitive advantage in global markets The Micro-Environment Knowing the macro-environment of countries in the AsiaPacific Region is not enough. One must also be familiar with the micro-environment. The micro-environment includes: вЂўThe competitive environment вЂўImpact of multi-national companies (MNCвЂ™s) вЂўDistribution chain вЂўCommon trade practices вЂўThe company - including market entry strategies and risk management The Competitive Environment In doing a competitive analysis of foreign markets, it is necessary to first of all look at the competitive structure. Having done that, the company looks at the competitive position, then finally formulate a competitive strategy to minimise risk of failure in market entry. The Competitive Environment вЂўCompetitive structure - the broad competitive environment and structure of the industry including the number and size of competitor, the extent of competitive rivalry, exit and entry barriers, the relative power of buyers, and the threat of suppliers вЂўCompetitive position - an analysis of the companyвЂ™s strengths and weaknesses in relation to its competitors вЂўCompetitive strategy - the overall generic strategy of the firm in the foreign market (cost leadership, differentiation, or focus) Impact of Multi-national Companies Multi-national companies from U.S., Europe and Japan and to a lesser extent Taiwan and South Korea, have a strong presence in many Asia-Pacific countries. They often dwarf the thousands of small businesses in each country they are in, and thousands of workers are directly or indirectly employed by them. It is therefore important to understand the impact MNCвЂ™s have on the home and host countries. Impact of Multi-national Companies вЂўSetting up operations in foreign countries could mean loss of jobs for people in the home country вЂўIt also means an outright transfer of technologies and outward flow of capital вЂўHome country exports are reduced Impact of Multi-national Companies вЂўOn the other hand, there is a profit motive - costs could be too high in the home country вЂўOverseas trade barriers - high import duties by host country may encourage setting up of operations there вЂўHuge domestic market in host country вЂўClose to source of raw materials, cheap and skilled labour Impact of Multi-national Companies вЂўUtilisation of cheap labour may be interpreted as exploitation by people in the host country вЂўThe capital market will favour MNCвЂ™s rather than small businesses, thus crowding out locals вЂўOn the other hand, MNCвЂ™s provide employment for host countries вЂўEarns foreign exchange for the host country вЂўTransfer technologies to the host country Distribution Chain A typical distribution arrangement in Asia-Pacific countries is for a manufacturer to appoint a sole agent to take care of the marketing and distribution of his products. The sole agent will then distribute through a system of wholesalers, who in turn distribute to retailers. Very often, agents have branches in key towns to give better logistics support. Each branch would have its own warehouse and administration team. Distribution Chain Typical distribution chain: Manufacturer (overseas) => Agent/s => Wholesalers => Retailers => Consumers Manufacturer (local) => Wholesalers => Retailers => Consumers Manufacturer => Agent => Supermarket chains/hypermarkets Distribution Chain вЂўThe emergence of large independent chains and hypermarkets in many Asian cities, and the advent of ECommerce, is beginning to challenge the traditional distribution route. вЂўHypermarkets like Makro and Carrefour are often serviced directly by the agent вЂўVery often they act as wholesalers themselves вЂўIn IT savy countries, bigger supermarkets have introduced orders via computers Distribution Chain вЂўGovernment tenders are normally dealt with directly by the agent вЂўIndustrial equipment which require regular servicing are also usually sold by the agentвЂ™s own outlets or through exclusive distributors вЂўThis arrangement is necessary because each distribution point has to have properly trained personnel Distribution Chain Advantages of using an agent/distributor by a foreign company: вЂўThe foreign company may not have extensive contacts or resources required to penetrate the new market вЂўContacts are vital particularly when dealing with government or government owned companies вЂўMay bypass constraints or business ethics or practices Common Trade Practices вЂўChinese businessmen in China and some traditional Chinese businessmen in other parts of Asia prefer to conduct business in informal settings like over dinners or karaoke lounges вЂўAustralian and New Zealanders prefer the negotiation table вЂўSocialising, relationship building, is an important part of the business process вЂўFace saving is an important issue Common Trade Practices вЂўSmuggling and barter trade is common вЂўParallel imports from one Asian country to another could seriously affect business вЂўCopyright laws and implementation is still in its infancy вЂўCorruption is still rife in many parts of Asia Common Trade Practices вЂўCredit terms in the trade may vary from 30 - 90 days вЂўSmall retailers normally purchase in cash from wholesalers, for fast moving consumer goods вЂўTraditional Chinese wholesalers sometimes sell at cost, and use the cash to roll over to maximise the credit terms given to them The Company A company, whether or not it is within the Asia-Pacific Region or outside of it has to have the appropriate capabilities if it desires to do business in the A-P Region. The company, for example, has to: вЂўHave a geocentric, rather than ethnocentric, orientation вЂўHave adequate production facilities to cater for the export market вЂўBe prepared to make changes in product and packaging requirements even for small batches вЂўHave an export department The Company вЂўThe export department must have sufficient staff e.g. one person taking care of ten markets is not sufficient вЂўKey personnel must be familiar with international risk management, cross cultural issues and other factors (such as appropriate market entry strategies), associated with doing business outside oneвЂ™s home country Market Entry Strategy The basic elements of a foreign market entry strategy are as follows: вЂўAssessing products and foreign markets - choosing the product/market вЂўSetting objectives and goals вЂўChoosing the entry mode - direct export, contractual arrangements like appointing an agent or joint-venture, or investment вЂўDesigning the market plan вЂўMonitoring and controlling the operations Market Entry Strategy Choice of entry mode can determine a companyвЂ™s success or failure in a foreign market. Direct export: вЂўAt a fairly basic level, companies export products based on вЂ�best priceвЂ™ to an import agent recommended by friends or associates, or contacts made at trade exhibitions вЂўCompany personnel rarely visit the import agent and there is little marketing support Market Entry Strategy Direct export - conвЂ™t вЂўAt a more involved level, company personnel makes regular visits to work with the agent вЂўThere may be sales representatives paid by the company but attached to the agentвЂ™s office вЂўA company may also have a regional office in the country of import вЂўSuch an office normally have a full sales and marketing team Market Entry Strategy Licensing: вЂўLicensing is an arrangement whereby one company (the licensor) makes an asset available to another company (the licensee) in exchange for royalties, license fees or some other form of commission вЂўA company with advanced technology or strong brand name can use licensing to improve its profits вЂўFor example, Disney can license its brand name to another company to put the brand name on caps, shoes, etc; in return for a fee Market Entry Strategy Franchising: вЂўFranchising is a form of licensing in which the franchisor provides a standard package of products, systems and management services вЂўThe franchisee provides market knowledge, capital and personal involvement in the management вЂўWell known examples are MacDonaldвЂ™s, Kentucky Fried Chicken, 7-11 chain stores and petrol stations Market Entry Strategy Joint ventures: вЂўIn a joint venture, the foreign partner and local partner share ownership вЂўThey share profits as well as risks вЂўIt could be in the form of a manufacturing plant, a distribution network or massive capital/technology injection, as in huge infrastructure projects involving the building of airports, highways and communication systems Risk Management вЂўManaging risks when doing business in your home country and managing risks when doing business abroad can be quite different вЂўOften, you are familiar with the people, the environment, the culture, the systems and the companies you deal with, when doing business in your own country вЂўHowever, once abroad, risk exposure increases substantially - from possible currency exchange losses to copyright piracy, to outright dishonesty on the part of the people you do business with Risk Management It is important to understand the process and tools of risk management. The risk management process: Risk identification вЂўWhat dangers and possible events can be harmful to the company? вЂўWhich possible losses of money, material and equipment must be taken into account/ вЂўWhich events outside the company can disturb or interrupt its operations? Risk Management The risk management process Risk evaluation вЂўWhat will be the possible maximum/minimum cost of a damage event to the company? вЂўHow often are they expected to occur? вЂўHow likely are the different loss events? вЂўHow critical is each loss event for the existence of the company? Risk Management The risk management process Risk policy decisions вЂўWhich of the identified risks is the company prepared to accept? вЂўAgainst which others are protective measures (e.g. accident prevention) indicated? вЂўHow much money can the company make available for risk reduction? Risk Management The risk management process Risk control вЂўWhich measures should be taken to increase the companyвЂ™s security against unforeseen events? вЂўWho will be responsible for these measures and the control of their effectiveness? Risk Management Tools of risk management Risk avoidance: A conscious decision by the company not to engage in certain activities because the dangers are considered too great to be acceptable. Risk Management Tools of risk management вЂўRisk reduction: Measures designed to improve the security of the companyвЂ™s operations вЂўRisk transfer: Measures designed to shift all or part of the known risk to another company, usually a supplier or a customer - by agreement or through a change in company rules Risk Management Tools of risk management Risk division: Reduce danger to the company overall by removing risk concentrations (e.g. warehouses) to several locations - or by spreading the risks over several markets, products or operational units Insurance coverage: Determine for which risks the company requires insurance coverage, and combining it with other risk control measures wherever possible Marketing Practices вЂўHeavy advertising is still perceived as good marketing by many small and medium size enterprises вЂўEnvironmental marketing is gaining ground, though still a problem with some chemical industries in India and timber companies in Indonesia вЂўAnimal rights activists are almost non-existent in Asia and has little impact on marketing activities Marketing Practices вЂўEthical marketing is self-regulated - consumersвЂ™ voice is not as strong as in the West вЂўIn-door promotions with gifts and lucky draws are popular in many parts of Asia вЂўBillboard advertising is prominent in Hongkong, and key cities in China and Indonesia вЂўTV remains one of the most popular medium Management Practices Management styles in Asian companies vary considerably, depending on the size of the company, the number of Western trained managers in the company, and whether the company is a Western MNC or a branch office of an MNC. Or, sometimes, within the same company, there is a mixture of both Western and Asian styles of management. Management Practices McKinseyвЂ™s 7-S framework can be used as a basis for comparison between Western and Asian styles of management: Strategy вЂўWestern style - planned. Usually top down, rigid. View may be too narrow. Ideas from the top may not necessarily work вЂўAsian style - flexible. Customer and staff feedback considered. Staff has ownership of ideas Management Practices Structure вЂўWestern style - complex. Usually several layers. Communication both upwards and downwards take a long time to filter through. Result is loss of valuable time. вЂўAsian style - simple. Structure usually flatter, allowing for quick feedback e.g. Giordano, the Hongkong clothing chain, has a fairly flat structure Management Practices System вЂўWestern style - sophisticated. High degree of control. Rules and regulations abound to ensure conformity, e.g. IBM вЂўAsian style - minimum. Enough to keep track, but not to choke. Staff feel that they are trusted Management Practices Style вЂўWestern style - bureaucratic. High division of labour. Result is minimum contribution from staff because each staff sees himself/herself as just one of the cogs in the wheel вЂўAsian style - entrepreneurial. Quicker response to customer needs Management Practices Staff вЂўWestern style - well qualified. Very often, young, inexperienced graduates are appointed to key positions. This frustrates lower level, less qualified staff вЂўAsian style - Street smart. Staff can relate to all levels Management Practices Share values вЂўWestern style - guided by mission statements which are not often put into practice. Class conscious - management and staff often have separate canteens and separate toilets вЂўAsian style - values are put into practice. Top management often spend time on the shop floor not just walking around but actually doing the work Management Practices Skills вЂўWestern style - analytical. Volumes of reports are required daily, weekly and monthly. Detailed analysis carried out. Often too much analysis, too little action вЂўAsian style - a bit more chaotic. вЂ�LetвЂ™s do it firstвЂ™ mentality Management Practices вЂўвЂ�YesвЂ™ men still prevalent вЂўSeniority takes precedence over meritocracy (although this is slowly changing) вЂўRespect for hierarchy вЂўConsensus building (widely practiced by the Japanese) Management Practices вЂўTrust is very important. Contracts are signed, but the spirit in executing the contract is often more important than the contents of the contract вЂўMuslims in Malaysia are given time off for prayers on Fridays вЂўVery often in family owned enterprises, the owner or his son functions as the patriarch - overseeing and approving every policy, major or minor The Chinese Family Business вЂў Overseas Chinese have a tremendous influence in business in the Asia-Pacific Region, particularly in South-East Asia. вЂў For example, Chinese comprise only 2.5% of the population of Indonesia, but they control 73% of the market capital. Likewise, in Thailand, Chinese form only 14% of the population, yet they control 81% of the market capital вЂўIt is therefore important to have an understanding of the Chinese family business The Chinese Family Business There are two dimensions of the Chinese family business: вЂўBusiness involving core family members вЂўBusiness involving clans - non-family members, but sharing the same surname or originating from the same province in China The Chinese Family Business вЂўIn a business involving core family members, the owner and key family members hold important management positions вЂўPower and authority rests with the owners and leadership is autocratic вЂўmanagement style is paternalistic The Chinese Family Business вЂўThe owner regards business as private property of the core family and is reluctant to share ownership with others вЂўSome large Chinese companies, although technically public, are family controlled and influenced вЂўKey family members occupy top management positions вЂўSecondary key management appointments goes to relatives The Chinese Family Business вЂўThe structure is small and simple, with concentration on sales, service or production вЂўOnly a few larger businesses develop functional departments вЂўRules and systems are often absent (except for the more liberated businesses which hire professional managers) вЂўFunctions and roles of positions not clearly defined The Chinese Family Business вЂўSpecialisation level is low, with a lot of generalists dealing with a range of activities вЂўPersonal relationships and feelings take precedence over objectivity (giving rise to the вЂ�yesвЂ™ men mentality) The Chinese Family Business вЂўManagement control is characterised by emphasis on loyalty and subjective assessment mechanisms вЂўThere is often a suppression of professional talents вЂўThere is also a lack of an institutionalised succession mechanism The Chinese Family Business вЂўChinese clans, particularly the Hakkas, are very closely knit вЂўA Hakka businessman in East Malaysia, for example, will be glad to assist a fellow Hakka in Singapore, even if they are total strangers вЂўThis close association has made it easier for Chinese to develop guanxi (connection/relationship) and guanxi-wang (networking) amongst themselves Negotiation Techniques With Chinese and Japanese wealth dominating much of Asia, it is worthwhile looking at the negotiating styles of the Chinese and Japanese, as negotiations are often the pivotal point in any business deal Negotiation Techniques вЂўAlthough Chinese and Japanese are culturally different, they share many similar negotiation techniques вЂўThey often push for further concessions after agreements are made вЂўThey are usually tough negotiators Negotiation Techniques вЂўChina and Japan are relationship oriented rather than contract oriented вЂўTheir negotiating teams are normally larger than their Western partners вЂўBoth China and Japan do not like detailed and restrictive contracts Negotiation Techniques There are some differences in negotiation techniques between the Chinese and Japanese: вЂўChinese are willing to comprise, whereas Japanese see compromise as defeat вЂўChinese have a more hierarchical approach in decision making whereas the Japanese are more consensus seeking вЂўJapanese tend to set a more polite tone to proceedings. Chinese are less likely to be so formal Conclusion The various slides are just snippets of what candidates need to know. It is not comprehensive, and candidates are expected to read widely, and more importantly, to be able to critically analyse the impact of the various changing forces in the environment, as well as the behavioural/cultural patterns of Asians on business.