What’s it Take to do Business in South East Asia?

 The first step in being successful in South East Asia is not assuming that business is done like it is in the US.

 by Kit Werremeyer

President, Southernstar Consultants, LLC

So, you’re a US businessman and you want to take a look at doing business in South East Asia.

To many Americans, hearing the term “South East Asia” brings back old memories of the US military involvement in Vietnam in the 1960’s and 1970’s.

Times have changed.  So has South East Asia.  Today, South East Asia,  a diverse mix of countries, peoples, cultures, religions and politics, offers many good opportunities for US businesses interested in working or investing there.

The countries of South East Asia are:  Myanmar (formerly Burma), Thailand, Laos, Cambodia, Vietnam, Malaysia, Singapore, Brunei, Indonesia, and the Philippines.  These ten countries are the members of an organization called ASEAN.  ASEAN is the acronym for the Association of South East Asian Nations.  ASEAN promotes the mutual interests and solidarity of the ten member countries.

Thailand, Malaysia, Singapore, Brunei, and the Philippines offer stable political, legal, banking and business environments.  Indonesia is slowly going through a transition to a more democratic form of government and is trying to implement positive changes in their legal, banking, and business environments.  Laos, Cambodia, Vietnam and Myanmar are significantly less developed and have much less certain legal, banking, political and business environments. 

The South East Asian countries are rich in natural resources and people resources.  All of the countries are interested in foreign investment, and can provide varying degrees of tax and financial incentives to foreign companies willing to invest in their country’s economic improvement.

A work force of college and university educated people, skilled labor, and unskilled labor is readily available at very competitive rates.

What’s it take, then, for a US company to do business in South East Asia?  Here are some things to think about:

Patience is Golden

The most important element of doing business in South East Asia is patience. You will need plenty of it.  Things just don’t happen as quickly or efficiently as you might like.  If you are used to closing deals in one or two meetings back home, you may have to have two, three, four, five, or more meetings to achieve the same result in South East Asia.  Everything takes more time to do in South East Asia.

 Walk the Talk

English is widely spoken and widely used in all the countries, especially in the business communities.  Even though you will be able to conduct most of your business in English, it will always be a plus for you to be able to speak at least a little of the local language.  Take the time to learn how to say a few greetings in the local language:  “Good morning”, “How are you?”, “Nice to meet you”, and “My name is ….”.  Even if you don’t say these greetings very well, your foreign counterparts will be pleased that you at least made an attempt.  It breaks the ice, too, when meeting people for the first time.  However, be prepared for misunderstandings to occur as English will be the second language of the people you are dealing with and their skill levels in the use of English will vary.  Be patient, speak slowly (or slower), clearly, quietly, and avoid the use of complicated sentences and slang.

 Time and Money

Be prepared to spend time and money developing and establishing your business.  Just because you arrive in one of the countries with the world’s best widget in your pocket doesn’t guarantee you instant success.  It will require time and money to develop your local business support services, arrange for and receive necessary local government permits, promote your products, and meet your local business contacts and prospective clients.  The same holds true if all you are looking to do is to develop a local supplier for export of goods or services back to your country.

 Get some help

Actually, get some local help.   Forget about trying to be superman and doing it all on your own, or you’ll take an early and frustrated exit from the country without results. Having a local associate, agent, or employee is a good idea.  You will need someone to provide assistance to you as you work your way through the local business, political, legal and cultural system.

It really helps, too, to have a local associate who speaks the language and can help get you from point A to point B in a hot, jam-packed city, or find a remote site way out in the countryside.

Partner, Partner

Having a local business partner can make sense, but may not be absolutely necessary. So don’t rush into signing up the first company or individual that claims he or she can open up all the local back doors to businesses and politicians.  Remember, once you agree to take on a partner, you’ve got him, for better or worse, for a long time.  Your new partner may be “politically in” today, and “politically out” tomorrow.  Careful is the watchword here.  Take your time, as you can always bring in a more permanent partner or investor at a later date. 

Culture shock  

The countries of South East Asia have many cultures, customs, no-no’s, and religious practices to be aware of.  And just because you finally figure out how you can comfortably work with the folks in Singapore, doesn’t automatically mean you can apply the same formula to the folks in Indonesia or Thailand! 

You will find there are many similarities in working with the people and respecting the cultures in each of the South East Asian countries.  You will find there are many differences, too, and this is where having a good local associate is very valuable.  He can keep you out of cultural trouble.

Here are some examples of social behavior to observe:  In Thailand, don’t say anything bad about or make fun of the King or Queen, or you could end up in trouble with the law.  In Malaysia, if a man and his wife are introduced to you as Datuk and Datin, that’s not their first names; those are conferred titles.  In Indonesia, the largest Muslim country in the world, it would be in very poor taste to offer pork to your local guests.  In Burma, don’t pat the little kids on the head. They are Buddhists, and they believe the head to be the highest and most revered part of the body.  In Singapore, Goh Chok Tong is the Prime Minister; his last name (surname) is Goh, not Tong.  Chok and Tong are his Chinese given names.  Chinese people place their last name first when introducing themselves.  You would address him as Mr. Goh, not Mr. Tong.  How would you like to be called Mr. Bob?

In doing business in South East Asia, it is important to understand the social and religious customs and practices of the people in the different countries.  It’s not too hard to learn about these customs and practices and follow them in your everyday dealings with the local people.

Knowing and applying these social and religious customs and practices will certainly help you be successful in your business activities.

 Did you do your homework?

There are a lot of resources available to the US businessman interested in learning more about doing business in South East Asia.

Economic Officers resident at the US Embassy in each of the countries can help provide country specific business information. The US Commercial Service, a division of the US Department of Commerce, also provides resident Commercial Counselors to help provide country specific business information.  A US Commercial Service office will typically be attached to the US Embassy in each of the countries. These Economic Officers and Commercial Counselors are excellent sources of information on the ins and outs of doing business in the country.

Some of the countries will have an active American Chamber of Commerce organization.  This is an organization made up of US businessmen and local businessmen who are living and working in the specific country.  These American Chamber of Commerce groups can organize meetings for companies interested in doing business in the country.  These meetings are excellent opportunities to learn about doing business in the country from American and foreign companies actually working there.  Check with the US Embassy in the country to see if a local American Chamber of Commerce group is active there and how you can contact them.

There are also many internet websites with information on the countries in South East Asia.   Check out the following websites: 

• The CIA World Factbook at http://www.odci.gov/ provides general information on all the countries in the world.  You can also find out the address and contact phone and fax for US embassies in the countries.  Go to this website and click on “The World Factbook” under Library and Reference.
   
• The US-ASEAN Business Council, Inc. at http://www.us-asean.org/ provides general and specific business related information on the South East Asian countries and on US businesses working there.  This site is devoted to promoting US business interests in the ASEAN countries.  Good site!

Doing business in South East Asia will be challenging and frustrating for an unprepared businessman.  However, for the businessman who has patience and does his homework well, the rewards will be there for him.

Copyright © Kit Werremeyer March, 2002