Australian businesses reveal their negotiation tips for Asia

Street food in Singapore. Roslan Rahman/AFP/Getty Images

Asia’s growth is steady and undimmed by global headwinds such as Brexit hitting developed economies, according to the latest economic outlook from the Asian Development Bank.

China is on track to meet growth targets of 6.5% this year, India of 7.4% and Asia as a whole by 5.6%.

This growth, combined with opportunities created by Australia’s recent trade agreements with China, Japan and Korea, means Asia is increasingly on the agenda of Australian businesses wanting to expand to new markets.

And knowing how to negotiate successfully with Asian customers, suppliers and partners has become essential knowledge.

Here are three tips prepared by Asialink Business, a public-private partnership set up as the National Centre for Asia Capability.

    1. Understand the importance of culture

    BGP International is an Australian small to medium business focused on delivering fresh Australian produce across Asia and dealing with a diverse customer base.

    “In business itself, negotiations are always essential, but when expanding into Asia, you really to need more effective negotiation skills when you are faced with cultures that are different to your own,” says Prudence Barker, a sales executive at BGP.

    Barker says that a strong understanding of how culture affects the negotiation styles of both parties is crucial.

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

    “You need to understand how to negotiate across different cultures, in order to get the best outcomes for your business,” she says.

    2. Focus on relationships

    Building long-term, trusted relationships with local counterparts is vital to a successful negotiations.

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

    A 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.

    Long-term relationships take time and investment. Asian counterparts usually prefer to develop personal connections before closing a deal.

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

    3. Pursue mutual outcomes

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

    Asialink says 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 to Indonesia for more than 20 years and that country is now its third largest export market, behind Japan and China.

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

    Trust is a key.

    “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.

And finally, Asialink Business says, be patient and be prepared.

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.

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.

This can be particularly challenged for smaller and medium businesses.

“It can be difficult for SMEs in particular to have the resources and the time available to train their staff effectively,” says Barker at BGP.

She says it’s essential to make the most of available resources and training opportunities. Get your business and your staff up to speed and equipped with the right skills to expand into Asia.

(Raj Wilson is the director of external relations for Asialink Business and has more than 20 years experience in helping Australian and international businesses to achieve results in Asia.)

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