Customer relationships are key to securing sales and growing your business. But they can be complex. And that’s compounded by distance and cultural differences when western companies try to do business in East Asia (regardless of the extra difficulties posed by the current COVID travel restrictions).
I don’t believe in hacks or shortcuts to relationship building, but certain strategies – implemented well – can level the playing field for a newcomer to the market.
You’ve probably heard about the importance of ‘guanxi’ in China, of mutual trust in Japan and the way South Korean chaebol are run by families based on family values. But how does an ‘outsider’ get started in forging these vital relationships? Unsurprisingly, the answer is: “it’s complicated”. But let’s go through some tips to help you calibrate your approach to building a long-term, customer-centric plan for Asia.
What are business relationships?
We should first define what we mean by a business relationship.
It could be a company-to-company connection. For instance, large Asian OEMs often have trusted suppliers – such as tiers and system integrators – with which they’ve worked many times. This is particularly common in Japan where companies can even be tied by cross-shareholdings, meaning the deal-winning factor goes beyond profit maximisation.
Relationships can also be person-to-person – two decision-makers with a history of working together and delivering win-win results. You frequently run into this in Korea where, all other things equal, the offering backed by positive mutual history is the most likely to be chosen.
And relationships can be more loosely based on running in the same circles. In the fast-changing Chinese corporate world where people regularly switch roles and companies, staying on top of your network is key.
In all cases in Asia, it’s better to be in than out.
So how do you get in to begin with?
Give some to get some
One of the best ways to build a relationship with an Asian customer, whether you’re working with them remotely or with someone on the ground helping you, is to realise early on that it’s a two-way street. You want to be treated preferentially? Show some preferential treatment first.
For instance, one client of ours – a fast-growing semicon IP company in the telecoms sector – had developed a state-of-the-art product. Having made a few sizable sales in Europe and the US, it seemed simple to copy-and-paste the approach in Asia. And, to nobody’s surprise, the early stages of relationship-building with new Asian prospects went very smoothly.
But our client’s pricing strategy was inflexible – even though the deal we were discussing with an Asian customer would have reached much higher volumes (=royalties) than any it would have secured in the west. Some kind of discount – even just a gesture – was warranted to cement the relationship, but our client wouldn’t consider it.
The result? The Asian prospect turned to another supplier they knew and liked – even though their product was less sophisticated, and not even much cheaper! Sure, sometimes you must stick to your principles. But you should never ignore the principles guiding your Asian customers and partners, too. You wouldn’t believe how many times we’ve seen western scaleups go in front of Asia’s largest players and let their ego kill the deal.
Many young companies think a great product will sell itself. The tech world may seem like a pure meritocracy, but it isn’t – at least not in Asia. A great product, a team of star engineers and a track record in the west will certainly help establish your credibility initially in Asia – which is, of course, an important cornerstone. But to turn credibility into trust, and then trust into a relationship, you must help your Asian counterpart to boost their reputation internally.
The person with whom you’ll be negotiating will usually be a middle manager tasked with getting the deal ready for sign-off. My advice: exercise humility, find common ground and let them secure what their seniors will regard as a win for them and their company.
In this sense you can ‘give face’ – as the phrase goes in Asia – by tactically giving ground. And this can go a long way. The middle manager to whom you show respect and help deliver what their boss will perceive as a win will eventually become a decision-maker in their own right.
I can’t stress this enough: in doing business with large corporations in Japan, China, Korea and Taiwan you’ll rarely meet the CEO to shake on a deal in a Hollywoodesque meeting inside a fancy boardroom atop a glass-and-steel skyscraper.
But you will spend a lot of time in R&D labs going over spec sheets with the engineers, and in coffee shops getting off-the-record updates from the project lead to whom you so graciously gave a discount last time.
These are the gatekeepers you want on your side – the people who can push your agenda up the ranks. And it shouldn’t be all shop talk – it’s important to make a human connection by discussing the sports your kids play, your favourite vacation spots and the new, electric Hyundai you had delivered last week.
Taking the time to chat strengthens relationships – and may even spark a friendship. Even though I left Korea a few years ago – after a wonderful 10-year stint – I keep in touch with my former customers at LG, SK and Samsung. Whenever we meet in person, it’s beer and karaoke time! More importantly, though, my colleagues in Seoul can tap into these relationships whenever they need to. “Just say Michal sent you,” I tell them.
So, how do you identify a gatekeeper?
It’s largely a matter of persistence – with a good degree of trial and error. We’ve been trialling and erring for 30 years and now have built up a network of 90,000 people with whom we’ve worked and agreed deals on behalf of our clients. And many of these are the gatekeepers we keep going back to with new clients and technologies.
Building such an extensive set of connections took time, patience and perseverance. And that’s the real key to successful, long-term business relationships in Asia.
So, learn about the people you want to work with, show flexibility, recognise they’re building something for themselves too, and don’t give up when the first deal falls through.
Michal Waszkiewicz (Blog article)