What are the cultural challenges when it comes to expanding in the Asia-Pacific?
Allyson Stewart-Allen, Chief Executive at International Marketing Ltd, joined us on the second day of Elite Business on 12 March as the keynote speaker for the Overseas Expansion talk, speaking about the Asia-Pacific and why businesses should immerse themselves in these lucrative markets. She spoke about the importance of understanding the cultural norms and ways of life in each country, and why building relationships are crucial in making or breaking a business deal.
When it comes to taking your business international, it’s important to study the market to see where your brand will fit best, and also to consider other costs, such as tariffs on goods. The Asia-Pacific is one of the UK’s top export markets worth billions with fantastic trade prospects ‘ but only if you get it right. Just because you have a working model for exporting to Europe and the US, doesn’t mean you will be successful trading in other regions, Allyson said. Each country has a different way of doing business, and it is critical you get an understanding of their cultural norms to ensure your success.
There is some research from 2018 that Barclay’s Bank conducted that found 57% of consumers in China are prepared to pay more for goods that are made in the UK and the perception is that UK-based brands have much higher quality, Allyson said. It’s also worth noting in 1999, China was the UK’s 26th biggest export market and the 15th largest source of imports. In 2019, only 20 years on, China was the UK’s sixth-largest export market and the fourth-largest source of imports and accounted for 4% of British exports in total. Looking briefly at Japan in 2019, Britain’s exports there were 3.6% of the total, 2.6% to South Korea, 2.5% to Hong Kong. So, across the whole Australasia region, the UK exported roughly 2% of all goods and 3% of services. So, if we think about the UK’s top 25 export markets in 2019, China was at position six with around £30 billion in value, Japan at number 11 with nearly £15 billion, Hong Kong at number 12 with nearly £14 billion, Australia £12 billion, Singapore £11 billion and South Korea, nearly £7 billion. You have a lot to win in getting it right in the Asia Pacific region, but you have to do your homework in each country. You cannot take the template that’s been so successful for you in the UK or other parts of Europe. It’s critical you get that cultural understanding and context if you are going to be successful.
It is vital to learn about the culture of overseas territories you wish to expand to, Allyson said. The needs and demands of your customers abroad can be vastly different to those in your area, and what works locally may not work internationally. Therefore, it is important to immerse yourself in the region and gain a wider understanding of their ways of life to fit the needs of the market.
The size of the prize for you is significant when you get it right, which will require localisation, which will require cultural understanding, Allyson explained. The next thing to do is make sure that you adapt. Some things work really well in these parts of the world that we think are funny, but your approach in the UK may not translate literally into the Asia-Pacific region. So, it’s imperative that you immerse yourself, that you understand the culture, that you know how to negotiate, communicate and influence people there, and that you know what adaptations that you need to make if you’re going to be successful in that very region. Because we know that South Korea, Japan, Australia and China are all extremely different from each other, just like the EU. So, the more you understand those nuances, the more likely you are to be really successful.
When building relationships in international territories, how important are boots on the ground? Are face-to-face relationships much more valuable than discussing business over a Zoom call? Allyson believes nothing beats an in-person meeting. And in certain parts of the world, such as the Asia Pacific, building relationships in business is fundamental ‘ and that can take several weeks to form.
In certain parts of the world, if you don’t have the relationship first, you’re never going to be allowed to do business, Allyson said. And in the Asia-Pacific, in particular, relationships really count. And face to face really counts. So, you can’t just show up and show your spreadsheet and get down to start talking about the details. You actually have to take a couple of weeks to get to know them, be allowed to call them by their first name, a few karaoke nights before you’re even allowed to talk about business… Talking about business conversations are off-limits until you’re in an office setting. The whole reason for the karaoke nights, the meals… it’s part of the bonding and the foundation set before you do the business.
How can businesses learn about cultural differences in the country they plan to expand to if they cannot travel there? Allyson advised firms to do some research online or read books about the dos and don’ts in each country. Learning about the cultural norms in an overseas territory is incredibly useful when it comes to business. What is acceptable to do in the UK may be considered offensive elsewhere ‘ so it is important to be aware.
I think there are so many online resources that are at your disposal, such as Google, and you’ll find plenty of top tips, chapters, booklets and diagnostics you can actually take, that tell you the ways you prefer to do business compared to how people prefer it in other countries, Allyson added. There are also several books on how to negotiate with certain countries, have a look online and you will find several books that explain in detail the dos and don’ts for the country you’re researching about.