Building Trust and Relationships in Southeast Asia
Why should I read this document?
- 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
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
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.
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?
What are good conversation topics?
What are you expected to disclose?
What are really taboo or inappropriate topics?
What body language conveys the right message?
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.
References & Links