Sunday, December 27, 2009

Lessons about Business in Asia - it is not different

As I mentioned in my last post, in the last three weeks, I have been visiting Singapore and India as part of a International Business in Asia course (part of my AGSM MBA). While I have accumulated many ideas for new posts in the last few weeks, I think there is no better was to restart my posting than with a post that summarizes my main learnings from the trip.

Everybody talks about how different Asia is. About how business in India, China, Singapore or any other country in Asia is totally different then the western way of doing business. This is the frame of mind that I came with to a n educational trip in Asia (Singapore and Mumbai). However, I discovered  that there are no differences! Business is business. Everywhere.

“This guy is crazy”, you must think to yourselves. “Everybody knows that there are cultural differences and that companies have failed because they did not understand these differences”. And my answer is… You are completely right. Well, expect about the crazy part…

I am not saying that the countries are not different or that you do need to respect diversity before you venture into a new market. I am just saying, that this is what you would do when you will go to every country in the world. East or West. Let me go over some of the lessons I learned and try to explain this idea  a little more thoroughly:

1. Respect for the local culture - the fact that people from different countries differ from one another in habits, behavior, communication and heritage.  And companies should be careful not to make the assumption that if something works in one market, it will work in another. There is a need to first understand the culture, then tweak and customize the products and services to the local culture. However, this is true to any other “western” country. IKEA had to change its offerings when it came to the states. Starbucks failed when it came to Israel. No one would try to sell exactly the same thing in France and in Germany. Lesson: When you go into a new market, start by re-examining all your assumptions about customers. It is true in Asia as it is in any other place. Not doing it is just bad business.

2. Local differences – a theme the came up again and again in the trip is the diversity inside some of the countries. There are many Chinas and Many Indias was the theme. South India is not like North India. Different languages, different foods, different costumes and holidays. And again, the European market is not the same all over Europe.  Products that work in the UK do not necessarily work in Belgium. There are differences in foods and languages even inside some the European countries. The American market is not the same all over the states as some companies realized when tweaking their products to the Hispanic market in California and the Cuban market in Miami. Things that work in New-York will not necessarily work in Lo-s-Angles. Looking at countries as one segment or market is just not smart business. Lesson: Beware of the fallacy of the average (in the wider sense of the term – and see an interesting perspective of this here).

3. Time, Time, Time – people expect immediate successes. In real life going into a new market, starting a new business and overcoming cultural barriers take time. You wont succeed over night in the west. You will not succeed overnight in the east. Don’t let anybody else tell you otherwise. Lesson: Size of market does not guarantee immediate success no matter where you do business. Patience and perseverance are the keys to success (and see point number two again to understand why the size of the market is in some ways, a myth).

4. People are people – as this blog concentrates on managing people I tried to understand all through the trip if the difference in the culture has an impact on the principles of people management. Does people motivations for work differ? Does the role of a manager or a leader in these countries differ? My answer is – no, it does not. You will find the same diversity of people in Asia as you will find anywhere in the world and there is a need to understand it and leverage it. True, as a whole, Indians are more entrepreneurial in nature than Chinese and Chinese are more bound by conformity, but this is only as a whole. In the individual level, which is the most important level for the manager, people still vary. In this sense, sensitivity to communication methods is vital and understanding the preferences of each individual becomes even more important. Lesson: Managers face the same challenges everywhere, even though the tactical problems might appear to be different.

Countries and people are different. However, they are different in the same way everywhere. Smart business uses good processes and ignores assumptions and attempts to copy models from one market to another. This is true everywhere in the world.



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