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Doing business in Bangladesh

by: Walter Jahn, Associate partner of Hofstede Insights
Regarding culture-related issues, the following three topics are vital for a successful start in beginning a business relationship with Bangladeshi partners.

1. Developing relationships while starting to do business in Bangladesh

Creating trust between business partners is an important prerequisite before making a commitment, and this is true for any culture. Trust is commonly achieved through interpersonal relationship building, expertise, reliability and experience, although the importance of these individual factors may differ across cultures. In Bangladesh as a ‘collectivist’ society (see Bangladesh Country Profile or Country Comparison Tool for an explanation) it is vital to build trust by establishing personal relationships and people spend considerable time and effort on it. If you are from a more ‘individualist’ culture you may need to invest more time and effort as you would normally think necessary.

2. Negotiation skills

The importance of relationship building also has significance in negotiating. The Bangladeshi team will want to spend more time to get to know you and to build a trusting relationship. Therefore, you should not unduly hurry the discussions. This also implies that (chief) negotiators should not be changed during the negotiation stage. Relationship is built with persons and not with the company.

Carefully choose your own negotiation team because Bangladeshi culture shows very high ‘Power Distance’ rank, and status of the negotiation teams should match. At the beginning of negotiations, senior representatives, if not the CEOs would start off the talks. At that stage only the main issues and long-term objectives of the partnership-to-be may be addressed. In case the boss would not be present during negotiation, frequent reporting back to the boss will occur, a situation best to avoid. Do not approach negotiations as a win-lose situation but try and express the benefit of the deal for both sides. Again, be patient and prepare for several visits until agreement is reached.

3. Management skills

For implementing the business plan, an organisational structure, operation processes, staff, etc. need to be put in place. Technical issues aside, culture influences the way to manage this. Owing to Bangladesh’s high Power Distance, the management style is ‘directive’. The main features of this style are hierarchical, paternalistic centralised, with top-down control and rules in place. Employees are considered and consider themselves as subordinates and expect to receive clear orders. Be aware that this management style differs radically from many European cultures, i.e. those that are low on power distance and are individualist.

As a consequence of the above, managers need to create clear structures and job assignments and communicate in a manner that gives the staff a sense of predictability in their work situation.

You may notice reluctance by subordinates to speak up even if asked to in the presence of the boss. They would not want to risk contradicting the boss. It requires the right setting to speak out, such as who else is present, how familiar they are with each other, how a question is asked and given encouragement by their superior, if present. Instead of raising issues in a group meeting you may prefer a one-on-one talk.

Superiors show a strict but benevolent attitude toward their subordinates. If your own management style is ‘participative, adapting to a directive style is a challenge. Subordinates need to get clear orders and their work progress and performance need to be regularly followed up. Generally, this does not annoy staff. If you do not inspect often enough, your subordinates may feel neglected and may get demotivated.

Other important issues not directly related to culture

For doing business in Bangladesh handling Government bureaucracy is a challenge. There are numerous regulations to follow and clearances or licences are tedious to obtain. Unfortunately, asking for bribes is widespread. Your local partner may have the experience to handle this or a hired intermediary.

According to the World Bank’s “Ease of Doing Business Index”, Bangladesh only ranks 177 out of 190 countries, the highest-ranking country being New Zealand. Regarding ‘Trading across Borders’, i.e. the time and cost associated with the logistical process of exporting and importing goods, the country ranks 173. Despite these odds, Bangladesh is said to have good business opportunities.

Should your business involve setting up production facilities, you should pay particular attention to assure reliable energy supply and securing titles for land and property.
 

 

What to look for in a good partner

When looking for a business relationship your prospective partner as much as yourself should respect the different ways in communicating. Both sides should be aware of cultural differences and accept them for what they are. As shown earlier, culture is part of us and evolved during upbringing. Culture does not change quickly and willingly but evolves and changes slowly over generations. Ideally, both sides should show flexibility, but still the onus lies largely with the visitor or expatriate to adjust to Bangladeshi culture. Hence, take your time to get to know the Bangladeshi businessperson you intend to partner or work with in order to gain sufficient confidence and trust to be able to accommodate the cultural differences.

Conducting Meetings

Generally, meetings may be scheduled to exchange information, discuss issues that need to be resolved or agreed among the involved parties, to prepare and make decisions or for planning purposes. There would normally be a larger number of participants. However,, the reasons to call a meeting and the way it is conducted and who is invited are influenced by culture.

In the case of Bangladesh, being high on Power Distance and Collectivist, meetings with several participants are not the place to discuss difficult or even conflicting issues. It would be considered disruptive, impolite, and a failing of the management to let such a situation arise. This is better left to a dialogue between two. Often, meetings are a platform for the boss to convey decisions and other important matters concerning the participants. Meetings are also a means of creating a harmonious atmosphere in the group and reaffirm a sense of belonging. The participants should be informed beforehand about the purpose of the meeting. Meetings should best be scheduled in the late morning. Dress code is formal.

A particular form of a meeting is a ‘workshop’, which may be organised for brainstorming new ideas or, for instance, planning purposes. They do indeed require discussions, exchange of ideas and opinions and should produce proposals to be submitted to superiors for decision-making. Hence, workshops are less formal than meetings as described above. Generally, superiors would not be present during the course of a workshop not least because it is likely to inhibit the discussion (see paragraph above). However, it is very important, that a senior manager in charge is present during the opening of the workshop explaining the purpose and the expected outcome of the workshop. Equally, the superior(s) will be present during the wrap-up of the workshop, being presented the results. The workshop participants will be expecting a response from the boss; albeit no decisions will normally be taken at this point.

Behaviour - Conversation - Reasoning

As mentioned before, the Hofstede cultural dimensions of “Power Distance” and “Individualism versus Collectivism” also strongly influence behaviour in business interaction, such as:
 
  • Introduction to unknown persons should be done by a third party known to both.
  • Respect and deference is shown to people in higher positions.
  • Prolonged eye-contact is avoided and is considered as staring at someone.
  • Women generally show deference to men, do usually not shake hands with men and eye-contact between genders is avoided.
  • Generally polite and harmonious conversation style.
  • If in doubt politeness overrides ‘speaking one’s mind’.
  • Business interaction is not conducted in a hurry or forced. It takes time to evolve.
  • Arguments put forward may appear to many European as not following linear ‘rational’ logic. However, such judgement may be considered narrow thinking. Reasoning in Bangladesh, as is true in other Asian countries, is more ‘holistic’ by considering relationships and context.

Meals, Dining

Business lunches and dinner invitations have an important place in business life. There is greater overlap between business and the private sphere than in an individualist culture and such social occasions help to build and maintain relationships. This is important to create trust between (prospective) business partners. Try not to decline an invitation.

For the Muslim population, eating pork is forbidden and otherwise meat has to be prepared halal (prepared according to Islamic law). During the fasting month of Ramadan, eating during the day is forbidden. Therefore, do not invite Muslims to join a meal and do not eat yourself in front of a Muslim person during Ramadan. Wash your hands before a meal.

Curries of all varieties with rice are the main dishes in Bangladesh. A rich variety of spices and flavours is used. Popular dishes are for instance Kalia, Prawn Curry, Makher Taukari (Fish Curry), Reshmi Kabab (chicken kabab) and vegetarian dishes such as Masoor Daal (lentil), Saak-er Ghanto, Fulkopir Baati Jhaal, Bengali Spinach, chapati bread and many more.

Bengali Keta describes the way to invite for dinner, the hospitality and the way of serving food. After food is served wait until the eldest person has started to eat. Do not initiate to talk about business during dining. At a private dinner, the group of men and the group of women may eat separately and the men first.

 

How to manage people and build trust

Try to interpret the following case study.

A short case study

Frederik from Denmark travelled to Bangladesh to meet prospective business partners for the first time. He wasn’t quite sure how his first discussion would go and was a bit worried. However, he was received very warmly and felt very comfortable during the conversations. In his opinion, it all went very well. Most of his suggestions and proposals were received very well and he had good reasons to believe that a future cooperation was feasible. He met people who are courteous, consenting, sympathetic and very positive about his plans to do business in Bangladesh. A few months later, after a few more encounters with business people and officials, he was not so sure anymore. Getting things done on the ground turned out to be more difficult than promised and deadlines were regularly broken. To put it a bit starkly, despite the friendly and polite encounters, he got the impression that behind the friendly faces and affirmative statements to his questions, plans and requests, they simply lied to him. He was losing trust.

Such an assessment would be very unfortunate as it is most likely a wrong reading of the encounters. Clues for what happened can be found from explanations in Level 1 and 2.
 

Be especially careful with

Speaking your mind

Many European countries are individualistic (low IDV) and have low Power Distance (Low PDI) resulting in a direct communication style, with a strong tendency to say what one thinks even if it expresses disapproval, critique or negation. For a Bangladeshi, it is highly likely that this would be considered rather blunt if not outright rude, and may result in a loss of face. Use discreet language and a private one-on-one setting to convey potentially difficult issues.

Corruption

South Asia tops the list of regions affected by corruption. Corruption is an endemic problem in Bangladesh at all levels of society. Although bribery rates have declined over the past five years, the amount of unauthorised money paid for receiving public services is in fact estimated to have increased. See more information at Transparency International.
 

Useful Links

Business-related

European Commission / Trade / Bangladesh
Ease of Doing Business, a World Bank publication, Bangladesh
The Global Competitiveness Report 2016-2017, World Economic Forum (download, Bangladesh p. 110)
The Corruption Perceptions Index for Bangladesh by Transparency International
Some private (mostly accountancy) firms publish booklets providing information on how to set up and run business in Bangladesh, such as HBL (London), UHY (London), KPMG,  
Ministry of Commerce
International Chamber of Commerce Bangladesh
Dhaka Chamber of Commerce & Industry (DCCI)
Foreign Investors’ Chamber of Commerce & Industry Bangladesh
Bangladesh Export Processing Zone Authority (BEPZA)
Bangladesh Investment Development Authority (BIDA)
Bangladesh Small and Cottage Industries Corporation (BSCIC)
Bangladesh Knitwear Manufacturers & Exporters Association (BKMEA)
Registering a Company in Bangladesh, RJSC

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