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No matter how fast Australia is developing in terms of business, the concept of Asian Century, used to describe growing political and economic power of Asian nations, is still relevant for it. Indeed, such countries as Japan, China, Singapore, Indonesia, the Philippines, Malaysia, and others provide Australian businessmen with a number of promising opportunities (Carbaugh 2013).
In spite of their seeming independence, Australian companies that want to achieve more in international business must be made more Asia-capable and even Asia-sensitive. This does not imply refusing of their own culture in favor of one of the Asian traditions. On the contrary, it is quite acceptable for Asians to respect other cultures and beliefs. The point is that developing a more intimate understanding of the Asian culture and official etiquette, which has numerous peculiarities, Australian companies may enhance their success and solidify their position in the market (Moran, Abramson & Moran 2014).
Why it is challenging to Do Business in Asia
The most common mistake that Australian businessmen commit is relying exclusively on their own capabilities, finance, and human resources. The point is that no matter how hard they try to do business following the American pattern in Asia, they still have to reconcile themselves with the fact that they must have local partners for success. First, they have a deeper insight into the market and the economic situation; second, they can help develop an effective plan; third, people who can provide information concerning cultural peculiarities of business in Asia, will help avoid a lot of awkward situations, in which your actions may do harm even without you being aware of that (Binder 2016).
A knowledgeable team consisting of people, who are able to differentiate between essential cultural phenomena and insignificant issues, is a key to an effective operation. The point is that the issue of culture as well as diversity that Australians have to encounter when they work with Asian countries and communities, not only emphasizes the necessity of cross-cultural methods in business, but also makes successful companies stand out as those possessing high cultural sensitivity, which gives them a competitive edge (Ferraro & Brody 2015).
A lot of Australian startups in Asia fail in their attempts to do business since they are completely unaware of the Asian culture and its difference from what is accepted in Australia. Unfortunately, the list goes far beyond the dos and don’ts provided in popular sources.
Cultural Factors Australian Companies must recognize
It may sound ridiculous but in order to achieve success, Australian businesses should disempower themselves, become weaker, more empathetic, milder, more trusting, and more understanding. This means that they must step away from the typically American consumerism approach to business and accept the fact that other cultures cannot be judged by these standards, no matter how ‘safe’ and ‘sure’ some criteria may appear (Ferraro & Brody 2015).
For the purpose of understanding the behavior of Asians, Australian businessmen should bear in mind the following cultural factors that predetermine the behavior of their partners (Hofstede and Hall’s theories of cultural dimensions are to be applied):
- Most of the Asian countries saw a considerable expansion of the middle class that now continues to gain significance (Vaiman & Brewster 2015).
- Asians believe that Australians can now be referred to Western countries not because the country’s political and economic system alongside with the system of values but due to the fact that it accepted the superiority of organized violence, which means that the country has to improve its image before it enters new markets (Warner 2014).
- Since most of the Australian business is American-oriented, it could be difficult for business people to face the situation, in which the majority of employees are not ambitious: On the contrary, they are highly introverted, valuing conformity and compliance no matter how questionable the authority may seem. In many Asian organizations, meetings are organized not for discussion, motivation or sharing of ideas, but for receiving directions and introducing corrections in the working process (Vaiman & Brewster 2015).
- It could be rather weird for Australian businessmen to deal with collectivistic countries. The opposition between individualistic and collectivistic societies shows how much people tend to be independent from the team or integrate into it. In individualistic cultures (e.g. the United Kingdom, the USA, and Australia) each person is expected to be responsible only for himself/herself and his/her own family. In contrast, collectivistic societies (e.g. China, India, etc.) emphasize the importance of belonging: groups protect individuals, make them feel confident, strong, and supported. Therefore, managers must be prepared for the fact that interests of a team would always be more important for employees in Asia than their individual ambitious as well as the desire to stand out. Individualism Index (IDV) suggested by Hofstede can be applied to identify how much significance this or that nation attaches to social interactions over personal interests. This measurement is required for leaders to understand how they should designate tasks and what outcome they are to expect from each member of the working team. This can also be helpful in terms of motivation: The point is that cultures with high index would show all their potential when they are faced with personal challenges and have an opportunity to demonstrate their excellence, while cultures with low scores would be more productive being equal with others (Chhokar, Brodbeck & House 2013)
- People in Asia are not allowed to speak a lot in public as every mistake means losing face. It is especially relevant when you have to take part in negotiations. Australians are much more pragmatic and prefer to stick to the point, while Asians give preference to the succinct style: Much of what they do not say is actually implied (Warner 2014).
- Improvisation that some of Australian businessmen may like when they take part in business meetings with their foreign partners, is not really welcome in Asia. This factor is called ‘uncertainty avoidance”. This term is used to refer to the way a representative of a culture feels when he/she has to take action under unpredictable circumstances or some unusual context. Uncertainty Avoidance Index (UAI) is used to measure willingness and readiness of a nation to deal with such-like situations. High index (e.g. Japan. China) demonstrates that the culture does not feel comfortable when it has to encounter settings, in which not everything is structured according to the rules accepted in advance, and prefers to avoid any kinds of unpredictability; on the contrary, low scores (Australia, the USA) show that people are not afraid of uncertainty and can successfully solve problems and take part in business negotiations without even being prepared to them as they always use their imagination and creativity to deal with problems. When doing business, this indicator is necessary to understand how the working process must be scheduled and organized for people to feel safe and self-confident. Moreover, this also allows managers to assign creative task, choosing those employees that would be able to cope with them. (Warner 2014).
- Power distance in Asian countries is much greater than in Australia. This cultural dimension refers to the perception of power by those who do not have it. In business, it stands for the attitude of employees to the fact that their employers have more power and stand higher in the hierarchy. Any hierarchical organization presupposes that some people are more influential than others; however, this fact is accepted differently by cultures. Power Distance Index (PDI) is applied to identify the gap between those who have power and those who do not. There are countries with low (e.g. the USA, Australia, France), high (e.g. Japan, China, India, Russia) and middle (e.g. Germany, the UK) power distance index, which was generally determined by their historic development and attitude to their rulers. For leaders, it is essential to find out how their employees perceive power in order to avoid situation, in which their messages are misunderstood: e.g. low-PDI employees may disobey a command taking it as a sign of disrespect while high-PDI workers will not be able to work without being instructed and directed (Binder 2016).
- A lot of Australians find it surprising but the attitude to time is also different in Asian cultures as most of them are long-term-oriented unlike Australians who are used to expecting immediate profit when doing business. Long-term Orientation Index (LTO) is used to measure if people are willing to receive immediate results or if they are capable of long waiting. If the index is high (the highest one is registered in North Korea), it means that a culture prefers to have complicated, long-term plans with numerous tasks and short-term goals in order to obtain an ultimate result. On the contrary, low index demonstrates bottom-line orientation (Vaiman & Brewster 2015). That is the case of Australia.
Despite the fact that Australian companies are very careful about penetration into new markets, cultural awareness that is required to successfully deal with such complex cultures as those of the Asian region is still not their strongest point. However, they must bear in mind that the success of business in future will rely heavily on culture tolerance, mutual respect of values and beliefs, and other human factors that are underestimated now.
Binder, J, 2016, Global project management: communication, collaboration and management across borders, CRC Press, Boca Raton.
Carbaugh, D 2013, Cultural communication and intercultural contact, Routledge, London.
Chhokar, JS, Brodbeck, FC & House, RJ 2013, Culture and leadership across the world: the GLOBE book of in-depth studies of 25 societies, Routledge, London.
Ferraro, G & Brody, EK 2015, Cultural dimension of global business, Routledge, London.
Moran, RT, Abramson, NR & Moran, SV 2014, managing cultural differences, Routledge, London.
Vaiman, V & Brewster, C 2015, ‘How far do cultural differences explain the differences between nations? Implications for HRM’, The International Journal of Human Resource Management, vol. 26, no. 2, pp. 151-164.
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Warner, M 2014, Culture and management in Asia, Routledge, London.