Risks of Asia: How to nail down a square deal

October 11, 2017 Author

Risks of Asia: How to nail down a square deal

The Asian market did not only distinguish itself as the most important trading partner for Europe, it even established a popular target of people’s emigration. But the higher the exchange of goods and culture, the higher the risks of criminality as well. Read now, what matters for businesses in Asia.

Whoever wants to succeed in the Asian market should understand the special characteristics of it. Otherwise, all the cultural differences, the foreign traditions, and the unknown laws can be an insuperable obstacle leading to an abrupt end of a business. The Asian concept which matters most in the social and economic world is called “Guanxi” – an entire set of rules and regulations, which, if applied successfully, brings you a lot of social contacts you will probably need. It’s mostly European companies which send their employees or management members to Asia to do business and get an overview of the project. People unaware of Guanxi might commit the first irreversible blunder right here. In the best case, you will be a target of ridicule from here on, in the worst case the victim of a successful fraud attack. Although the Asian culture is marked by values of honour, respect, and decency, it’s not exclusively occupied by fair businessmen. There are, just like in the Western world, businessmen who try to profit through corruption and criminality. Partners sending wrong messages unwittingly or taking the risks of a deal on purpose, mostly underestimate the lurking danger of it. A faux-pas like this can have fatal repercussions for all the persons and companies involved.

Despite Guanxi, it’s the basic framework of business which should be appropriate. This means, it is always important to check who exactly receives your instructions, people you deal with—it’s not about the name on the business card, but the person behind. Spy and sabotage are issues too easily forgotten from Western businessmen. Who guarantees the information you give freely to stay inside the chosen circle? To know exactly with whom you close a deal is an inevitable basic of well-functioning businesses. Furthermore, it’s even important how representatives spend their leisure time in Asia: It is not uncommon to visit a location at a red-light district in Hong Kong or Manila, but this could be the foundation of a ruining extortion, and besides, especially investment actions are high-risk operations, because not all sorts of joint venture businesses are legal in Asia.

Businesses between Western and Asian companies have a high potential of being successful, pleasant and long-running. Deals like this are great to find, but they need to be well prepared. If you want to be on the safe side, you’ll need someone specially trained for this. You can call him an expert; we just call him Mr Black.

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