Daily Archives: November 26, 2009

Have You Extended Your REACH?

If you haven’t, you might find that you’re shut out of European markets in 2010. You see, when January, only two short months away, comes around, another 15 substances must be reported under REACH. Furthermore, the EU is planning to add substances to the list every six months, possibly until the entire SIN List of 356 chemicals that have been identified as Substances of Very High Concern is on the table. If you can’t complete the necessary reporting, you can’t import into, manufacture in, or export from the EU. Right now, you just have 15 restricted substances that require mandatory reporting but the following 15 substances identified on the ECHA website will soon be restricted and require mandatory reporting as well.

Are you ready?

And are you ready for the Global RoHS initiatives? China, Japan, California, etc. … it’s not just the EU anymore.

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Overcoming Cultural Differences in International Trade with Thailand

Today’s post, which is partially based on materials from Dick Locke’s seminars on International Purchasing, is edited by Dick Locke, Sourcing Innovation contributor and President of Global Procurement Group.

This post is going to examine some of the cultural differences that you may encounter (as an American or Canadian Sourcing / Procurement Professional) if you are doing business with Thailand. We start by discussing each of the eight key cultural considerations outlined in our introductory post and then highlight a few other points that you should be aware of.

As per our initial post, this discussion is high-level and general in nature and, as Dick Locke points out in his classic text on Global Supply Management, while it is too easy to stereotype a country, individuals in each country will vary from the stereotype. You need to take time to get to know the people you will be dealing with because their behavior may be nothing like the usual behavior of the country in which they reside and there is always a chance that you might run into people who are trained to act like you … while in your presence.

Thailand, which has maintained unbroken control over its territory since 1238, is fiercely independent, astutely diplomatic, and a very distinct trading partner to deal with as over 95% of its population declare themselves as Buddhist, with the majority belonging to the Theravada school of Buddhism. As a result, in negotiations, you should be prepared to avoid direct confrontations at all costs.

  • Power Distance

    The power distance is high. In Thailand, authority and power are natural to the human condition and hierarchy is good for you. Decisions, especially sensitive ones, come from the top.

  • Uncertainty Avoidance

    Uncertainty avoidance is very high in Thailand. With security before risk-taking and a belief that easy work for sufficient pay is better than hard work for high pay, there is a large reluctance to initiate change.

  • Individualism

    There is a strong sense of familial and filial piety in Thailand and a strong desire to fulfill one’s place in society. As a result, individualism, as in most Asian countries, is rather low.

  • Polychronic vs. Monochronic Time

    Buddhists have a cyclical concept of time. Everything repeats. As a result, they are in no rush to seize an opportunity, as it will come again and success is as much due to luck as it is to anything else. They do not believe that the use of time equates with earning a living, reject the Western work ethic, and hate deadlines. As a result, they are much more polychronic than monochronic, but polychronic doesn’t really capture their views on time.

  • Personal / Impersonal

    They are very personable as long as you keep your “cool”, speak and act in moderation, stand close (without touching), and take your time. Negotiations can not be hurried and are usually preceded with 3 to 5 days of “getting to know each other” before business is even introduced.

  • Buyer / Seller Rank

    While Locke and his colleagues, who mirror Hofstede, indicate that the buyer is given high rank, I would argue that, despite appearances, it’s not really the case in Thailand. Buyers and sellers don’t have status or rank in the Thailand belief system, people do. Both senior negotiators will be equal and there will be a desire to work together to create harmony.

  • Importance of Harmony

    They have a deep desire for inward comfort, outward peace and acceptance of their place in society, and maintaining face for others. So harmony, which takes on somewhat of a different meaning than it does in many other Asian cultures, is important. However, their definition of harmony also includes balancing business and pleasure, which results in both being mixed at all times. Social interactions will regularly take place in the office and business discussion will regularly take place outside of the office at a dinner, social, or sporting event. It’s a harmonious continuum.

  • Importance of Face

    While hypocrisy is not always negative, saving face for others is of vital importance … and white lies are permissible if the goal is achieved. This is why many decisions will be ambiguous, as it insures that no one loses face.

Probably the most important piece of advice you can be given is to learn the basic teachings and beliefs of the Theravada school of Buddhism. It has such a large influence on their daily life as a whole that it will be difficult to really understand how they do business if you do not understand their dominant and ever-present religion.

Finally, as I strongly recommended in my first post, if you plan to start doing business with any new international country, including Thailand, you should do a thorough job on your homework. You can start with:

  • Dick Locke’s course on the Basics of Smart International Procurement (which is offered through Next Level Purchasing and counts towards the SPSM2 certification or ISM Continuing Education Hours), or
  • a customized seminar from Dick Locke’s Global Procurement Group. Dick Locke and his associates each have decades of experience doing business with over two dozen countries, including the fifteen biggest importers and exporters to and from the United States, and Thailand. A single day with an expert like Dick Locke could save you months of headaches.

Again, a big thank you to Dick Locke for serving as editor for this special series of posts and providing some up-to-date materials and information for the purpose of this series.

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