In Southeast Asian business cultures, such as Malaysia, Indonesia, Singapore, Thailand, Cambodia or Vietnam, hierarchies are of great importance. That is why the seating arrangements in the conference room, for example, are never left to chance. Each negotiating party sits at one side of the conference table. High-ranking participants and decision-makers sit with their backs to the wall, usually facing the door and the side where the foreign negotiating partners are placed. Negotiating partners of both sides who are on the same hierarchy level sit directly opposite each other. The interpreters kneel, sit or stand behind them.
Here are our Top 10 Tips for successful negotiations in Southeast Asia:
1 – Keep Up With Several Talks Taking Place Simultaneously
Negotiations in Southeast Asia are always conducted with a counterpart of equal rank. Therefore, several smaller rounds of talks may take place simultaneously in which representatives of both sides negotiate specific points. Then, the results are passed on to the large round of negotiators. And don’t be surprised, if your Southeast Asian partners exchange little notes with each other during the talks. There is always more than one communication channel.
2 – Emphasize What You Have In Common
In many countries, it is common practice to clearly state your negotiating aims, quickly describe the main points, and swiftly get to the heart of the matter. Efficiency is the key point here. Southeast Asian business people, however, start negotiations by emphasizing what both sides have in common. They are inclined to approach complex topics more slowly.
3 – Take A Circular Course
Negotiations in Southeast Asia are likely to take a circular course: issues are raised, dropped and picked up again later. This is primarily exercised when it comes to important and more challenging subjects that can potentially lead to a disagreement and the disruption of the all important harmony between business partners. As soon as the dust has settled, these sensitive issues are carefully brought up again.
4 – Learn New Aspects About The Other Side
Another of their aims is to learn more about their foreign counterparts during the talks and to identify new aspects that could be expanded further. Of course, Southeast Asian negotiating tactics are target-orientated, but they allow more time and scope for flexibility. If negotiations are complex and threaten to stagnate, they may consciously deviate from the relevant topics. They then go back over points of agreement and engage in small talk.
5 – Be Aware Of Last Minute Pressure
The real concerns, requests, and demands are often not expressed until shortly before the end of negotiations. Southeast Asians know that people from abroad often have a tight schedule, and they like to use this to their advantage.As a result, the foreign counterpart feels the pressure and is more likely to agree to a compromise favouring the Southeast Asian side. Furthermore, they also know that people from Western cultures often do not feel safe until a written agreement has been sealed.
6 – Prepare For Intense Price Negotiations
In Southeast Asian business cultures, price negotiations can often be a lengthy and tedious procedure. In general, Southeast Asian business partners and customers expect a movement in prices. They assume that allowance has already been made for this flexibility, i.e., concessions have already been calculated. They also often take that the supplier will provide after-sales service free of charge.
7 – Allow Time For Group Decisions
Reaching an agreement during negotiations in Southeast Asia is usually the result of group decisions. Experts are also part of the process and the actual decision-makers, who sometimes do not have the necessary specialist knowledge. As before in negotiations, they discuss possible recommendations in groups within their company. These recommendations are passed on through the levels of hierarchy. Allow enough time for this process to take place.
8 – Promote A Decision In Your Favour
Eventually, the highest-ranking person responsible makes the final decision which the employees involved accept without question. It is also possible that the actual decision-maker does not actively take part in negotiations. In that case, the necessary information on decisions to be made is passed on through hierarchy levels.
When you are waiting for a decision in Southeast Asia, do not forget that small talk is essential. Small talk strengthens a relationship, builds up trust, and promotes a decision in your favour.
9 – Accept The Flexibility Of Verbal Agreements
A saying in Southeast Asia says that a written text fades quickly in the sunlight. This means that a written agreement does not have the same significance here as in many other business cultures. Historically, there was never a civil code or code of commercial law in Southeast Asia.
However, verbal agreements have existed from time immemorial because Southeast Asian business cultures have always been highly people- and relationship-orientated. The smaller and less experienced in dealing with foreign business partners a Southeast Asian company is, the more critical verbal agreements become, but this also means the more flexibility there is in keeping to these agreements!
10 – Be Open To Changes
Whether agreements are reached verbally or in written form, this does not necessarily mean the end of negotiations as far as Southeast Asians are concerned! Contracts are more likely to be seen as a temporary result. They can be changed and adapted to an everchanging environment. This means that even after an agreement has been signed, further additional negotiations can take place. This is perfectly normal and has nothing to do with a breach of contract.