Doing Business with Asians

Why you are at a disadvantage when dealing with strategically sharpened

Asian minds and what you need to know to avoid ending up as a loser
By Felix Abt, serial entrepreneur, director and consultant.

U.S. foreign minister Henry Kissinger was one of the most cunning Machiavellian Western
politicians of the 20th century. When he became aware of the strategies the late Chinese Prime
Minister Zhou Enlai employed to him, Zhou complimented him by saying, You are very smart!.
Kissinger replied, You mean smart for an American - or any other non-Asian for that matter.
Zhou just smiled and said nothing.
In fact, whereas Westerners and other non-Asians are used to handling all kinds of situations by
means of intuition and reasoning, Chinese and other East Asians apply formalized strategic
thinking in competitive situations over non-Asians through which they gain superiority over their
ignorant and nave rivals.

Military Strategies for Markets that are all Battlefields

You may have heard about the classical Chinese treatises on military strategy called Bing-Fa*.
They are numerous and the first ones were written 3200 years ago. Bing-Fa are very popular with
Chinese and other East Asians. The 2400 year old Bing-Fa
called Art of War by the most famous Chinese strategist Sun
*Bing-Fa:
Tzu as well as a 1500 year old collection of strategical short
texts by various authors called The 36 Strategies have
Bing = Soldier; Fa = Skills
become part of the collective sub-conscience of educated
Chinese. The influence of Bing-Fa is not limited to China, but
extends to Japan, Korea and other Asian countries influenced by Chinese culture.
Bing-Fa strategies are not only applied to war, but also to politics, business and everyday life. In
China the contents of such strategies (and its historical background) are taught at school, in
literature, in peoples operas, and even in films and television.
The study of history, literature and philosophy has always been crucial in China as examinations
enormously important to individual advancement in many walks of life focused strongly on
these subjects. The Chinese examination system has been adopted by Japan and Korea to a
large degree. Whereas the lessons of history are hardly applied to everyday life and are largely
forgotten by by us after leaving school, Asian people follow the maxim: Use history as a mirror!
All Bing-Fa texts teach that the essence of successful warfare is deception. Although deception is
also used in Western warfare, it is considered unethical or
illegal in Western business practices. These attitudes tend to
The essence of war is
make Westerners and other non-Asians nave and vulnerable
deception. The capable
to Asian strategies of deception. The ability to mislead an
must display incompetence.
adversary has always been seen by Asians as admirable. This
When ready to attack,
does not mean that Asians are without honor but ethical
demonstrate subservience.
distinctions are cultural.
When close, pretend to be
far, but when very far, give
The Chinese proverb The market place is a battlefield
the illusion of being near.
(Shang chang ru zahn chang) implies that deception is
Sun Tzu Bing-Fa
legitimate for (economic) survival in (economic) war. Since
Asians believe that the marketplace is a battlefield and that life

is a series of battles they are convinced that mastering military strategy is essential for success
as well as survival.

Intelligence to Dominate Rivals: A Highly Cost-effective Strategical Tool

Carl von Clausewitz whose strategic theories greatly influenced Western military doctrines did not
attach much importance to espionage which he considered as unreliable. His Asian counterpart
however had a completely different view. Sun Tzu, a battle-hardened general, was convinced that
intelligence was the most important factor on the battle field in support of the methods of
deception and surprise and of conserving his own forces. But he also believed that, first and
foremost, every effort should be made to defeat an enemy by undermining his will and morale,
thus achieving victory before the actual outbreak of destructive and costly violence. He preferred
intrigues, disinformation, political and economic pressure and the like, based on accurate
intelligence, to violent confrontation. Intelligence is therefore a necessary tool to realize the
Chinese saying: The greatest victory is winning a war without a battle!
It is therefore not surprising that East Asian political and business leaders always systematically
used and continue to use intelligence as the chief catalyst of an accelerated industrialization and
development of their countries and enterprises.
Hence, numerous Asian businesses prefer to obtain
technological information through covert means rather than
develop their own. Thereby they can bypass the very high
investment in research and development and the high cost
associated with a lengthy product launch cycle. This can be
accomplished, for example, by buying a piece of equipment,
disassembling it, and analyzing the parts. The requested
training courses to accompany a purchase of new equipment is not meant to simply learn the
usage of the product, but to learn how to reproduce it, to refine it, and even to learn where to
avoid patent infringements. Seemingly harmless questions will be asked in order that a missing
piece to the puzzle may be passed to them by an unwary non-Asian engineer or an expert which
cannot resist showing off how much he knows.
Know yourself, know your
opponents; one hundred
battles, one hundred
victories. Sun Tzu Bing-Fa

When Californias Silicon Valley became the high-tech center of the world, many Japanese
companies opened offices among the hundreds of American high-tech firms. Nave American
engineers just made jokes about what they called Japanese spy stations. But to the Japanese
this was, of course, no joke.
Well-connected Asian business people can use their networks (including friends in police and
military forces) to their advantage and much to the disadvantage of their less fortunate
competitors. Of course, they can know every step of their rivals. A Hanoian entrepreneur, for
example, explained to a Vietnamese business magazine that he is always informed when a
competitor in Ho Chi Minh City, which is 1600 km south of Hanoi, forwards a new load of products
to Hanoi. He also knows about prices and other relevant details. As it takes 3 days by truck until
the goods arrive in Hanoi, he has enough time to defend his market position by massively
stocking retailers with his own products at lower prices in the meantime.

One should vary his plans according

to the situation of the enemy in order
to obtain victory. In the beginning
when enticing the enemy to battle,
one may appear to be as shy as a
young maiden. Then when the
enemy shows an opening one must
move as fast as a fleeing hare and
catch the enemy by surprise - Sun
Tzu Bing-Fa

Culture and Mystery used as Weapons

Asians know how to hide behind cultural differences
when it is to their advantage. They are well aware that
non-Asians are intimidated by the mystery of Asian
culture and they will use culture as a weapon to gain

advantage over them. Western journalists, politicians and businessmen are, for example, taken in
by the humble posturing of Asians. They should understand that in Asia humility is a weapon as
well as a virtue, explained Chin-ning Chu in her outstanding book, The Asian Mind Game.
Ms. Chu also says that Western orientophiles are often blinded by their enthusiasm for the lofty
and mysterious qualities of Asian culture. They tend to find exotic explanations for actions and
events which they might be more critical of if encountered in a Western context. Asians, on the
whole, are much more honest about their faults and shortcomings than the Western experts who
study them. Asian characters, like those of all peoples across the globe, are always a mixture of
good and bad, virtue and vice.
While European languages are linear and explicit and have very little space for contextual
interpretation. Asian languages are much more dependent on context. Even in translation, a great
many important things are never stated explicitly; they are assumed to be understood from the
context. In addition, one must take into account the Asian custom of indirect speech. Asians tend
to avoid saying unpleasant or negative things directly. For example, instead of saying no you
may hear: Ill see what I can do Ill do my best Ill think about it It may be difficult Ill try
While you should understand what these phrases mean, such a situation offers you an
opportunity to use your image as a nave non-Asian person to your advantage. Because you are
not expected to always understand Asian circumlocution, it is acceptable for you to call Mr. Li the
following week about the matter he promised to look into.
Openness and Trust: Huge weaknesses of ours
Asians recognize that we conduct business dealings at a relatively high level of integrity. They
appreciate that we are generally open, friendly and trusting people. However, these traits can
cause us to be vulnerable when negotiating with Chinese and other Asians as it is relatively easy
to take advantage of our weaknesses.
Ho-Tai (Backstage) and Kuan-Xie (Connections): Strategic Cornerstones
We think in terms of Whos the boss? Corner the boss and you will get your deal! In Asian
countries, and not just in China and Vietnam, the highest-ranking person is not always the boss.
Seniority and personal connections carry more weight
than titles. This is called Ho-Tai which literally means
Be so subtle that you are invisible.
backstage and it plays an important role in decisionBe so mysterious that you
making. I remember that a decade ago the most
intangible. Then you will control your
influential person, for example, of the Chinese Ministry
rivals fate. Sun Tzu Bing-Fa
of Foreign Affairs was not the prominent minister and
face of the ministry but a much less known vice-minister. For you as a business person, one of
the most difficult tasks in Asian countries is to identify and cultivate the real bosses of the
organization you are dealing with.
Kuan-Xie (or Guanxi), which literally means relationships, is another important concept to
understand if one is to function effectively in Chinese and related Asian societies. Together they
refer to an individuals personal influence and powerful connections. Anywhere in the world,
influential contacts can be a great asset. But one needs to magnify their importance many times
to understand the significance of Kuan-Xie in China and other Asian countries. For five thousand
years, guilty individuals have been pardoned because of Kuan-Xie and innocent individuals have
lost their lives because of lack of it. The ignorant have been promoted and the able have been
discharged. The importance of influential contacts is characteristic of all Asian societies. If you
have an introduction or reference from the right person, you will receive a warm welcome. If not,
you may face a distance that is difficult to overcome. Whereas this may be the case elsewhere in
the world, it is not as necessary a prerequisite to doing business as it is in Asia. Foreign
companies could save immeasurable work if they made the thorough identification and the
appropriate cultivation of the right door openers part of their business strategy in Asia.

Dont do what you cannot do successfully!

A little knowledge is a dangerous thing. It may be useful to understand how an Asian mind
strategizes, how it calculates its plans. Many formalized strategies including their historical
backgrounds have been studied for centuries and
passed on from generation to generation. Trying to
A good man does not fight a losing
apply these strategies in an Asian context can do more
battle. Chinese maxim
harm than benefit to you. Asians say they study The
36 Strategies not to practice deception on others, but to protect themselves from deceptions by
others. But someone must be practicing to deceive or there would be no need for such a
protection. The safest strategy for us non-Asians is to observe and play dumb. If your Asian
associates think that you are not well versed in Asian strategy, they will not spend a great deal of
time in disguising their strategies. But if they suspect your knowledge they may make their plan
more intricate and impenetrable.
*****
Published in May 2011 by RBC, Russias leading business magazine:
http://rbcdaily.ru/magazine/trends/562949988486402