Building Trust and Relationships in Southeast Asia
by: Erika Visser, Associate partner of Hofstede Insights
Why should I read this document?
As a group culture, in Southeast Asia building trust and long-term relationships are essential elements to ensure successful business dealings. Without the knowledge to navigate relationship-oriented cultures, business dealings will most likely be short lived and very likely fail. A short-term, task-oriented attitude will not serve you well in this region.
Important!
5 most important things to know about building trust and relationships in Southeast Asia:
- Foreign investors are always mistrusted until their trustworthiness has been proven
- Thus, before conducting business in Southeast Asia, always aim to build successful long-lasting relationships first
- Strong business relationships are not formed overnight, it takes a lot of patience, time and effort to invest in these
- Building trust in western countries can be done by showcasing achievements and by presenting the quality of the product. As for Southeast Asians, trust is built in a more emotional way
- Effective communication, socialising and maintaining harmony are key elements to building long-lasting relationships and trust
"All countries in Southeast Asia have a high PDI and low IDV score, in addition, most countries in this region are long-term orientated. These scores indicate a longer term outlook and the importance of trust and prioritising relationships over short-term gain. If lower PDI / high IDV countries do not grasp the importance of this longer term connection, face-to-face meetings and relationship over tasks, they will not be able to succeed."
How do you build a relationship in Southeast Asia?
- Find a trusted third-party connection and a translator* if needed.
- Choose a long-term relationship over short-term gain.
- It’s a marathon not a sprint, so invest your time and effort.
- Patience, commitment and communication is a continuous process.
- Be sensitive to implicit communicator needs.
- Keep communication channels open.
- Try to understand the local customs better and find out what people like to do to build relationships. For example, go to karaoke, share traditional lunches or dinners, play golf, etc.
- Through mutual respect. Approach your Southeast Asian counterparts as equals with humility and respect. Do not assume if you are the expert internationally that you have earned your Southeast Asian counterparts’ respect. “Gaining and maintaining respect in Vietnam is like exercising: do it routinely, it does get easier and you are eventually rewarded. Stop and you find yourself back to square one (Venture Outsource 2017).”
- Do not get down to business too quickly. Multiple informal meetings will be used to establish trust and build relationships before business topics are breached. Follow your Southeast Asian counterpart’s cue with the help of a third-party interpreter.
- Be friendly and polite and honour appropriate titles.
The Role of Effective Communication
Effective communication is key to establish successful long-lasting relationships, thus understanding the differences between high and low context communication is important. Southeast Asian countries are high context communicators which means that Southeast Asians are implicit communicators, they use body language and subtle messages that can usually not be interpreted by low context more explicit communicators. Thus translating implicit messages linguistically and culturally is important as you might be given a ‘yes’ answer when the answer is a clear ‘no’ and your counterpart is trying to save face.
Third-party connections with a greater insight into each country and their way to implicitly communicate are key to help understand and respond correctly to this style of indirect communication, without offending your Southeast Asian counterpart. Always keep communication channels open and stay in touch often, but never be too direct, noisy or confrontational. Multiple face-to-face meetings are essential. A mere phone call or video conferencing will not suffice. It is also important to understand the hierarchy of relationships as it has great influence on how business partners work together. Southeast Asian countries are all hierarchical due to the high PDI and people accept and depend on unequal relationships. Subordinates should give face to, and thus never criticize, their superiors. Power holders on the other hand are entitled to certain privileges due to their position and status. It is important to understand this hierarchy and not to try to disrupt it by going through the incorrect channels. Building rapport with the right people and having status as a foreigner is key in allowing you access to the right channels (through the right connections). Disrupting the hierarchy can erode trust and could damage or end business relationships.
*Translators in Vietnam and Thailand are essential as English is not as widely spoken throughout these countries as in the rest of Southeast Asia. Ensure that translators are certified and experts in the type of translations that you need (for example: banking, real estate, healthcare, etc).
What causes disruption in the hierarchy of relationships?
- When a foreign negotiator does not have the status to deal with the higher ranking Southeast Asian counterpart
- Openly criticising Southeast Asian authority figures
- Going through the incorrect communication channels
- Sending a manager or staff member with a lower rank to deal with a higher Southeast Asian official
- By substituting the person that a key Southeast Asian figure has dealt with in the past
What should you always take into account?
Harmony is key in Southeast Asia, and thus respecting and giving face to your Southeast Asian counterparts is essential. Southeast Asian people strive for harmonious relationships and it can be lost by openly criticising, insulting or by singling out an individual from the group, thus bringing shame to the group. Other ways to lose face are by challenging authority, showing anger, refusing a request or disagreeing with someone in public. Mostly Southeast Asian long-lasting relationships are complex and the lines between business and personal favours can be blurred. This type of business and personal connection strengthens the relationship and is not linear like we can see in western countries.
What are good conversation topics?
Small talk is important to building rapport and can include questions about hobbies, interests and personal questions about family. Talk about the traditional food in a positive way and be curious showing your Southeast Asian counterpart that you want to learn more about their culture. Learn a few words to greet your Southeast Asian counterparts in their own language to show your interest. Small gifts like snacks, pens or keychains from your country can also be a good way to build rapport. Avoid alcohol or pork/pig leather gifts in predominantly muslim countries such as Malaysia and Indonesia.
What are you expected to disclose?
You might be asked multiple personal questions about your family, your children, your age, etc. In some countries it is impolite to ask these types of personal questions and you might feel offended. However, asking personal questions is a way for your Southeast Asian counterpart to gather information to see whether you are reliable and trustworthy. If you feel uncomfortable to answer sensitive questions you can try giving an indirect answers or try steering the conversation in another direction without offending your Southeast Asian counterpart.
What are really taboo or inappropriate topics?
Try to avoid topics about religion and politics. In Thailand, avoid talking about their late king, the royal family and the military that is currently running the country. In Vietnam, avoid talking about the colonisation by the French, the war between north and south Vietnam, and the role that America played. In Indonesia, Malaysia and Phillipines, avoid talking about their colonisation histories - these are very sensitive topics and should not be discussed. Do not talk about own achievements and attributes, be modest and humble.
What body language conveys the right message?
Southeast Asian people mainly rely on nonverbal communication including facial expressions, tone of voice and body language. Nonverbal communication tends to be subtle, indirect and Asians may hint at a point rather than making a direct statement as this may cause the other person to lose face. Rather than say "no", they might say, "I will try", or "I’ll see what I can do". This allows the person making the request and the person turning it down to save face and maintain harmony in their relationship. If you are unsure about the response that you received you could continue the discussion, re-phrasing the question in several different ways so that you may compare responses. Silence is important and pausing before responding to a question indicates that they have given the question appropriate thought and considered their response carefully. Responding to a question hastily can be considered as being rude. As body language is deemed more important than what you say, avoid using rude gestures like putting your hands in your pockets. Self-control is important in public and thus avoid emotional outbursts or using a lot of hand gestures when talking. Southeast Asians may also laugh at what may appear to outsiders as inappropriate moments, to conceal uneasiness.
Short case study
A newly established fortified beverage company in Australia sought out a company in Malaysia to perform product development and contract manufacturing of its products. The Australian business owner claimed to have formerly held important positions in multinational beverage companies and hence had strong connections and good relationships with importers, retailers and buyers; promising extremely attractive (but ultimately unsubstantiated) business projections.
The Malaysian manufacturer commenced product development efforts, purchasing specialty ingredients at their own cost to formulate samples. Despite initially agreeing on a fixed quantity of samples, the Australian customer turned out to be rather demanding and after multiple rounds of delivering and reworking samples (exceeding the limit agreed upon), the Malaysian manufacturer requested a nominal payment of AUD1,000 to offset the cost of producing additional samples.
The Australian business owner did not react positively, sending a barrage of strongly worded emails accusing the Malaysian manufacturer of “cheating” and commenting “I know how you people operate”, all the while still demanding that more samples are produced free-of-charge. This aggressive behaviour was all the more shocking given that during early days the Australian business owner visited Malaysia with his family to meet the manufacturer and the mood then was friendly. Needless to say, the Malaysian manufacturer immediately declined to continue the relationship.
Takeaway: While titles and relationships are important in Malaysia, one should not try to position oneself as superior to others and only make superficial efforts at building relationships. Being aggressive and talking down to others in an effort to bully them into compliance is extremely counterproductive. Having humility and being respectful will help you build trust and take you much further. If you are unable to continue the business relationship for whatever reason, it is best to exit gracefully on good terms and keep the relationship intact for potential opportunities in the future.
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