Paul Edwards MBE in conversation with David Clive Price
David: Hello. This is David Clive Price and you’re so welcome today to the Asia Business Network ‘Expert Series’. Coming up we’re going to talk about winning in Southeast Asia business and how you can grasp the opportunities on offer in one of the world’s most dynamic regions. And we have an awesome guest in the expert’s chair today. Paul Edwards had a long and distinguished career in the army, which included service around the world and as a defence attaché resident in Malaysia with similar responsibilities for Vietnam and Thailand.
At various times Paul has also worked in Singapore, Indonesia and Burma. He speaks Malay-Indonesian and he’s an expert in relationship management. Now Managing Director of Strategic Effect Limited, Paul mentors and successfully enables companies to develop their exports, particularly to Southeast Asia. So we’re thrilled to have him here today. Paul, welcome.
Paul: Thank you, David.
David: So, to kick off I think we should look at the wider picture. What do you think of ASEAN as a market for British or Western businesses? Is it worth the effort?
Paul: David, it certainly is worth the effort. ASEAN is a very dynamic place. Just look at the mix of cultures and people, and the excitement of doing business whether living there or visiting. And then look at the figures, look at what’s happening — and I have been looking at ASEAN quite closely over the last 10 years — it is moving very definitely in the right direction. Of course it has a population of 620 million, and the demographics are good.
Within that 620 million, let’s take Vietnam as an example, some 50% are under the age of 25. They are moving forward, they are changing. They have total trade of circa USD2.5 trillion driving a combined GDP that is not too dissimilar. And they are sustaining growth. This is not just a spurt, it’s been happening for some time, and if you average it out it would probably be around 5% growth.
But probably the most exciting thing is that ASEAN is evolving to become a very useful common market place in Southeast Asia, with the added benefit now of ASEAN plus six. That is to say the associated countries of China, India, Japan, South Korea, Australia and New Zealand – giving it an inter-regional trade element.
In addition to the powerhouses of Singapore and Malaysia, Burma/ Myanmar is now opening up as a result of gradual political change over the last five years. It’s not there yet, but it’s definitely moving in the right direction and a lot of companies and countries are acting on that. In addition, ASEAN is rich in natural resources.
But most importantly, the near future is very exciting because ASEAN has targets for market integration that include free movement of goods and services, elimination of tariffs, free movement of skilled labour, free movement of capital investment, and of course harmonisation of the rules to provide a single window for processes and procedures. So that is all hugely encouraging.
Western companies are now able to focus on a single country in ASEAN but also branch out to neighbouring markets because business is being made so much easier. Another factor that makes ASEAN markets attractive is the perception of Western brands. I often wax lyrical about the British brand and how compelling that is to various Asian countries. But there are other Western brands that are particularly attractive to ASEAN consumers. The USA, for example, has a number of really popular brands as well as the European brands for fashion and the Germans with automobiles.
So to answer your question, it’s certainly is worth the effort. It’s an exciting market and it’s an exciting time for that market, David.
David: Well, thank you Paul for that fantastic overview of the ASEAN market and the 10 nations plus six, which offer a further gigantic opportunity with ASEAN as a platform for expanding business into all parts of Asia. I wonder what you think, Paul, is the most important enabling aspect of doing business in such as extraordinary region with so much connectivity. You mentioned using one market as a platform for expanding it into another. What do you think is the most important enabling aspect of doing business in ASEAN for foreigners?
Paul: I think relationships are so important in just about every country in ASEAN.
David: I couldn’t agree more.
Paul: Relationship building is really the key enabler and associated with that is getting the right partner. Whether that is an agent or distributor, or a partner for a joint venture, whatever it may be. My advice would be to get proper advice, and do your homework. Now, there are many different directions that advice can come from. So for example, in the UK there is the UK-ASEAN Business Council. There are chambers of commerce in the UK and in other countries, as well as in the ASEAN countries themselves.
These are all sources of good information to take further advice and where possible, to have an introduction to a partner or representative in country, because really, that is the first step.
Paul: And there are two requirements for relationship building. The one is with the partner, because clearly that needs to be built. And then there is another type of relationship that needs to be built with potential customers.
David: Well, relationships, of course, are not always easy to build if you think of them purely in terms if business in the immediate future, leading for example to a deal. Do you see there are particular aspects of building relationships in ASEAN that are slightly different or a lot different to the way that we make our own business relationships in Western countries? And is this an important factor for building up business going forward?
Paul: David, it’s highly important. And as you know, relationships are built on trust and confidence. And therefore, there is a need, even in the early stages, to be very careful about how that progresses — for example, even down to answering emails and other communications. And again, take advice because ASEAN or the Southeast Asian nations are very much driven, as you know, by language and culture. This is extremely important because we communicate through both.
David: And there are so many cultures within the 10 nations plus.
Paul: I can’t think of anywhere else in the world where there is such a diverse and exciting mix of cultures and languages other than within the ASEAN grouping.
David: It is really extraordinary. The other day I was reminded that Unilever has one product suite for the US and UK, two product suites for Latin America, and 10 products suites for ASEAN. So that tells you by itself the amount of targeting to local cultures and the differences in those local cultures, which I think a lot of people do not always understand. They think of ASEAN as just one big region and yet within that region there are so many different cultures even within markets. Would you agree?
Paul: Oh, absolutely even within markets and what you just said does not surprise me in the least, because there are many differences in languages, culture, religion, what people believe in, their traditions, standards, how they expect to conduct themselves, which in turn, drives how they’ll react, how long it will take for them to get back to you, how their decision making works and who does it.
Paul: Often at the highest level. That needs to be taken into account when doing business in ASEAN countries.
David: Because networks, of course are also important, aren’t they? Within each of these countries and their different cultures and societies are networks that stretch out beyond those national boundaries to all the other nations in ASEAN.
I was at the APEC CEO summit in Bali a couple of years ago and I remember going into the delegates hall and seeing this huge sea of people in business suits and national costumes of the different ASEAN nations (because it was on ASEAN), and they were all meeting, greeting each other, trade delegations here, representatives there, business leaders there, all from the different countries, all shaking hands, exchanging the latest news and it was a sort of a reminder in one place of just how inter-connected these markets are.
And I guess for foreign companies, a reminder of how they must get connected them selves, plug in to those networks because they, after all, are your local and your regional competitors.
Paul: Yes, they must do that. We talked about relationships. Well, a network is a network of relationships and the more people know you the better and that engenders trust and confidence as we’ve said before and people are more likely to do business with you. But also you mentioned updating. That’s also a method for obtaining intelligence across the region — business intelligence on exactly what’s going on and what people are thinking, what the latest is.
David: Yes, I think you hit the nail on the head there – intelligence: cultural intelligence, competitive intelligence, business intelligence. They are all to do with the groundwork, or the homework as you say, Paul.
I wonder if we could come to specifics for a moment. Let’s imagine — because you have been in Malaysia in the army and also doing business in Malaysia and you speak Bahasa Malay — I wonder if you could give us an idea of how a business meeting, for example, would function in Malaysia, what one should be aware of, how one would prepare for it, etcetera.
Paul: Well, David, I think once again, the common theme here is do your homework and take advice. And the first part of that homework should really be about when to go and have that meeting. So to the likes of you and I, we would see it quite obvious to avoid Ramadan.
Paul: As you know, certainly in Malaysia with a majority population of Muslims, Ramadan is quite important. And this month, of course, on the 18th Ramadan starts, and that goes on for a month. But at the end of Ramadan, on a day in Malaysia called Hari Raya, there is a great celebration, they have a lot of open houses, and that goes on for two weeks. So that is a time frame that one should avoid. It’s not impossible to do business during Ramadan, but it should be avoided because it could cause embarrassment — they would not be able to entertain you in the way they would like.
The other time of the week to avoid is certainly Fridays. Friday mornings are often possible before 11 am, but certainly not after that for various reasons. And then, research needs to go into who is attending a meeting, who is the most senior.
David: Yes of course.
Paul: Does he or she have a title? Titles are granted as honours in Malaysia by both the king and the sultans, and they are very similar. So you could find somebody is a Dato or a Datuk, or slightly higher, Dato Sri or a Tan Sri, all the way up to being a Tun, which is the highest level of award. That’s quite important because it dictates how he or she is addressed, because although Mr. Najib is the Prime Minister of Malaysia, he would be addressed as Datuk Sri Najib. And when I speak to my friends, such as the Chief of Army in Malaysia, I will call him Tan Sri. I will not call him general and again, you wouldn’t call somebody Mr. if they are a Dato. You would call them Dato. So that’s quite important.
David: Yes, I think honorifics are all part of knowing the local culture all over Asia. And they’re all aspects of doing this homework, of getting insights into those cultures. Being able to give gifts at the right time with the right colours, the right numbers, these are all parts of the etiquettes that you should know and that you should be ready to make mistakes with in order to learn. But the most important thing, I’m sure you’ll agree, is the readiness to get inside those cultures. Are there any pitfalls that you would say you should be particularly aware of in a business context in the different ASEAN countries?
Paul: I would the biggest thing to avoid is causing embarrassment or loss of face intentionally or unintentionally.
David: Absolutely, yes.
Paul: Because that really can be a showstopper, along with being impolite or rude, which is probably linked to it — for a number of reasons. Firstly, they won’t tell you, certainly not in Malaysia and I can think of two or three other countries where they won’t tell you, when you have upset them. You simply won’t be invited back. And I’ll give you one example. I was present at a meeting between the government of a certain ASEAN county and a very large company, whose name I won’t mention. And at this meeting everybody really knew what the outcome was going to be.
For a variety of reasons the company could not do the work that the government wanted. But at the end of the meeting, a very senior person from the government was extremely upset. He wasn’t upset at the news that the company couldn’t do it and they were withdrawing. It was how the company’s CEO gave that news, which was extremely blunt and short.
David: I see.
Paul: I then overheard the minister say that he would not do business with that company ever again. So it is a total showstopper. That is why, although some people — and you and I have discussed this before — will put culture and etiquette further down the list. Actually, it’s top of the list of business priorities because getting it wrong means the business is not getting to happen in the first place.
David: That’s a really good tip – and thank you Paul, this is been a really great conversation. I really appreciate the time we’ve taken to do this. Just before I let you go I just have one final question. What is the biggest, most crucial factor to bear in mind for doing business in Asia or preparing your self to do business in Asia?
Paul: I would go back to the relationships and the introductions. And I would say the most important thing is to have a solid introduction to a very good partner. It is essential to have someone on the ground who is representing your interest on a day-to-day basis and is able to subsequently advise you on how to avoid all of the pitfalls and to really get you, your personal brand and your company brand, really well thought of in the country concerned and moving forward in accordance with all the business rules. These rules currently are slightly different from country to country but hopefully they will be harmonized under the current targets that ASEAN has set itself.
David: I’m sure businesses will want to think very carefully about that and about all your recommendations, Paul.
So that’s it for today. I’d like to thank Paul Edwards for being my guest. And if you’d like to know more, please visit Paul’s website at http://www.strategic-effect.com, which is also there at the links below. And be sure to listen in to more news and views on doing business in Asia at Asia Business Network Expert Series to which you can also subscribe on iTunes.