Understanding Business Culture in Southeast Asia to Win the Fast-Growth Market

Last week, I wrote this LinkedIn post where I shared how a typical working day looks like for me:

“As a kid, I always dreamed of traveling the world and exploring different cultures.

Fast forward 15 years and check out what happened

👇I am a Bulgarian, yet I am employed in Indonesia.

While I work in Jakarta, I have calls with my Singaporean colleagues at least five times a day.

I work with an American, Canadian, Hungarian, German, Singaporean, Indian, Nepalese, and many Indonesian colleagues.

Today, my day started by having a call with the US discussing the expansion of Hong Kong-based companies to the states.

Then transitioned to a session with South Korean startups where we discussed how we can help them enter Indonesia, Vietnam, the Philippines, and Singapore.

Shortly after, I talked to a Singaporean partner about helping a few Australian startups expanding to Southeast Asia.

To find myself following up on a Japanese client expanding to China.In between, I had a few 1:1s with Indian and Indonesian colleagues.

And wrapped up the day reviewing proposals to mentor a Dutch and a Russian startup on impact investment in Indonesia.

Did I mention that I am educated in Denmark, lived in Taiwan for half a year, completed a summer school in China, and spent 4 months working in Greece?I guess it does not get more culturally diverse than that 🌏”

Since the post got a lot of engagement, I wanted to share a bit more about the challenges of working with multiple cultures and, in particular, how you can be successful in understanding and applying business culture in Southeast Asia.

My journey to cultural intelligence

Although I hold a Master’s degree in Culture, Communication, and Globalization, there are times when working with so many different cultures tends to get confusing.

Degrees and books are helpful, but nothing beats the first-hand experience.

If you focus on learning all theories around doing business with different business cultures in Southeast Asia you risk exhausting yourself mentally. It’s not humanly possible to be continuously aware of all cultural dimensions such as how people perceive time, risk, authority, decision making, and even the physical space between you and the person you are talking to. That’s mentally draining, and chances are you will misunderstand a lot of what you are observing anyway.

You do not need to become an expert on the topic of cultural differences to be effective. After working for 11 years abroad of my home country and running a business that helps the mobility of businesses around the world I have narrowed down my focus to two tactics:

  • Work on your tolerance and emotional intelligence
  • Learn the basics of culture differences

Business culture in Bulgaria

I was born in Bulgaria, a small and beautiful country located in Southeast Europe. In Bulgaria, the culture is quite authoritative, meaning we tend to pay attention to people’s rank/status. The higher the rank, the more respect we have for a given person. Additionally, we have a very hierarchical approach to decision-making. Thus, the person who holds the highest rank would often single-handedly take all the main decisions.

While there is no right or wrong approach to culture, we tend to identify ourselves better with some cultures rather than others.

In my case, I am not too fond of very hierarchical cultures as I do not think that such an environment gives equal opportunities to everyone.

Business culture in Denmark

At the age of 18, I moved to Denmark to pursue a university degree and explore different cultures.

Organizations in Denmark tend to be quite flat structured, often encouraging inclusive decision making. Hence, there is a feeling of equality, no matter what your position is. Leaders tend to involve their teams in the decision-making process, and such behavior is expected from all employees.

The Danish style resonated with me, and I invested a lot of effort into embracing it. I thought that such an approach based on inclusiveness and teamwork would be highly appreciated, no matter where I end up working.

Business culture in Southeast Asia

Moving to Southeast Asia taught me a valuable lesson.

There is no leadership approach that’s applicable in every market. You are the foreigner, and as such, it is your responsibility to adapt.

For example, Indonesian culture tends to be top-down and hierarchical. Meaning, you need to act as a director, whereas my “Danish” approach encouraged me to act as a facilitator.

In my early days in Jakarta, I would bounce an idea and expect my team to actively brainstorm, implement a series of incremental changes, and then push to market the outcome. While that seemed like a sound approach, it caused a lot of confusion and my team perceived me as indecisive. The locals could not figure out how to adapt to my approach from one day to the next because my style was puzzling.

“The western management orthodoxy of pushing authority down in the organization does not fit easily into the emerging-market context.”
Erin Meyer, professor at INSEAD and author of The Culture Map: Breaking Through the Invisible Boundaries of Global Business

That experience taught me that it’s common for people from different countries to struggle with mutual incomprehension. Since then I have invested a lot of effort to become more tolerant, understanding, and to read at least one book on cultural differences annually.

Differences in business culture in Southeast Asia

The number of foreign businesses expanding to fast-growth markets keeps on increasing year over year. In 2018, alone, more than 250,000 companies were incorporated across SEA.

But to be successful in such pursuits, companies need to understand the relevant dimensions where their organizational culture differs from Southeast Asian cultures.

The following graph was developed by Erin Meyer to illustrate attitudes toward decision making and authority worldwide.

Understanding Strategic Culture in Southeast Asia

Most Southeast Asian countries fall under the “Top-down and hierarchical” section alongside countries like China and India.

It is common for western managers to perceive people from that quadrant as lacking initiative, while Southeast Asian cultures, in turn, may perceive western managers as incompetent or too direct.

Tips to consider about business culture in Southeast Asia

Always remember that you are perceived as the boss, not a facilitator

Consider the following, in many Southeast Asian countries, office buildings have separate elevators and toilets for senior management clearly separating the management and regular employees. That creates a high degree of power distance, hence why people expect you to be decisive at all times.

Giving feedback publicly is unthinkable

Losing face in public is a big thing in Asia, so never confront an employee in a group setting. There are better ways to deliver feedback. I typically do it in private, but even then, if the feedback is delivered too suddenly it may backfire. It helps to carefully build up the conversation, pass some positive observations, and only then deliver your constructive feedback.

Be clear in your communication; if you need input from your team, explain that and give them time to prepare

Southeast Asian cultures tend to stay quiet in meetings as they learn from an early age to speak only when they are sure what they will say is correct. You can say something like:

”During our next meeting, I will be asking for your input on these six questions. Please prepare because I will be calling on you.”

Pay attention to body language

Sometimes your team would have something important to say during a meeting but unless called by the facilitator, they will remain quiet. Look carefully for hints in your team’s body language as people might want to speak and are waiting to be called on. You can use the following sentence to encourage someone to speak:

”Viktor, you know a lot about this topic. Do you have something you’d like to add?”

Insist that everyone speaks global English

Other than Singapore, Hong Kong, and the Philippines, most countries would struggle to understand English speakers. Speak slowly and clearly and, if possible, recap the discussion before the end of the meeting to ensure everyone is on the same page.

It takes two to tango

When entering Southeast Asia, you will need to adapt to local norms, but the local teams will need to adapt to your culture as well. That process requires a lot of communication and even some training to ensure both sides are tolerant.

“If groups have different systems for reaching decisions, you must be explicit about the process.”

Erin Meyer, professor at INSEAD and author of The Culture Map: Breaking Through the Invisible Boundaries of Global Business

Learn how to build trust

Asian countries are relationship-focused, meaning, no matter how logical it may seem to do business with you if you have not invested in building a relationship the deal may not go through. You need to build an emotional connection early in the process. That would involve going out for meals and drinks (golf, karaoke, dinners at restaurants, etc.) without talking only about business during such activities. In most Southeast Asian countries the legal system is traditionally less reliable, and that’s why relationships carry more weight in business than written contracts. Only once there is a strong trust between you, you will end up with securing the deal.

The bottom line about business culture in Southeast Asia

Getting culture right is not easy, but you do not need to be an expert to be a successful leader. As long as you are working on your tolerance and emotional intelligence you will have a positive approach to situations that may not make any sense at first glance. Always recognize that simply because something is done differently it does not make it wrong. Be informed about the basics of doing business internationally and be flexible enough to adapt your style.

There is a lot of great literature on the topic; if you find culture intelligence interesting, I recommend reading Hofstede, Ed Schein, and Erin Meyer’s work.

Inspiration for this article:

This article was initially published in Viktor Kyosev’s (COO of Greenhouse) weekly newsletter, where he shares his views on the topic of startups, growth and fast-growth markets: viktor.substack.com

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