Wednesday, 14 November 2007

Business Culture in the Central Asian States

The former Soviet republics of Central Asia - namely Kazakhstan, Kyrgyzstan, Uzbekistan, Turkmenistan and Tadjikistan - have come a long way in liberalising their economies since becoming independent countries at the start of the 1990s. While for much of the twentieth century, these countries were largely closed-off to trade and commerce with the outside world during their time under central authority directed from Moscow, in the 1990s they have become increasingly open to foreign businessmen.

The massive task of re-constructing their planned Soviet economies to ones based on market institutions, has called for voluminous capital injection into these states and resulted in their governments actively seeking to co-operate with the international business community. Many vital sectors of their economies, including oil and gas, mining, agriculture, telecommunications, power, steel works, and tobacco, have been officially open to foreign businessmen for much of the past decade, resulting in an increasingly cosmopolitan business environment emerging in a number of these countries. While their economies were previously monopolised by government enterprise, they have become highly diversified in recent years, still consisting of many state-owned companies, but also catering to a thriving private sector, numerous foreign investors and representatives of foreign companies, as well as joint-ventures between the foreigners and locals.

However, despite this new-found economic cosmopolitism, doing business in Central Asia's former Soviet republics remains a substantially more challenging experience than one may expect in the mature market economies of Europe, North America and other parts of Asia. In particular, from the perspective of business culture, one should appreciate that these are culturally very different societies to those in which we have developed our business acumen. Much of the population of the Central Asian countries hails from a Muslim civilisation that, while containing many of the personality traits from the Middle Eastern and South Asian Islamic societies, has been absorbed by the social values and the business practices which prevailed under the Soviet Union. The resulting business culture in Central Asia is therefore an interesting hybrid of Soviet formalities and protocol (very similar to that encountered in Russia or Ukraine for example), and Central-Asian Islamic cultural practices - conservative social values, respect for seniority, strong clans and family networks in business, as well as genuine hospitality and often a highly social attitude towards the conduct of business (i.e. relentless wining and dining as a means of developing the business relationship). Or, to put it in other words, a strong blend of the post-Soviet secular modernism mixed with the deeply entrenched cultural traditions of the Central Asian states. The business experience awaiting the foreigner in these countries can therefore be just as rewarding socially, as it can be challenging from the cross-cultural aspects of doing business itself.

In the first encounter with Central Asian business counterparts, one is likely to experience a relatively formal welcome, from either Slav or Asiatic men or women donning Western style business attire, eagerly handing out their business cards (and expecting you to do the same) and generally trying to present themselves as modern corporate citizens. The opening moments of the first encounter are likely to be filled with long-winded comments of welcome from the senior Central Asian business official, giving some background about their enterprise, before coming to the main issues of the their potential business cooperation with the foreign company. They are generally likely to conduct their dialogue in Russian, speaking through a capable English language interpreter. They will then expect you to reciprocate, telling them about your enterprise abroad and about how you can potentially work with them to develop a mutual joint venture, symbiotic for both parties. The officials are just as likely to be women as they may be men, since, despite the region's conservative heritage, urban women are an emancipated (and vital) member of the region's workforce and have been omnipresent in economic life for much of the past century.

It is rather important for the foreign businessman to develop a good relationship with their potential Central Asian partners during this first meeting, as it will set the standard for much of the subsequent meetings to come and will make the locals feel more comfortable in dealing with the visitors. Important points to note for the first encounter are to make the locals feel that they have your respect, particularly by maintaining good eye contact, being open-minded and courteous in the manner you construct business related comments, responding to their humour when necessary and (despite the fact that you are most likely coming from a more advanced country economically) avoiding pompous, or "imperialist", behavior. You will find that the local business population does not like to be talked at, as opposed to engaged in a dialogue between business partners perceived as equals, and promoting such a course of action will quickly lead to a rather burdensome business experience for the foreigner in Central Asia.

There are two further points of business culture to consider in this brief introduction to the topic. The first is that the foreigner should learn to exercise a good degree of patience with the locals. When travelling to countries like Uzbekistan or Turkmenistan for example, one will quickly see that the local workforce and business community has little experience with modern business practices equivalent to those long taken for granted in the advanced market economies. This means that the locals are likely to have far less experience in effectively managing a foreign investor's business that one would generally like. However, given their eagerness to learn, and all round good work ethic, its will be far more effective for the long run to persevere with local employees and show patience, rather than getting frustrated when things don't always go as planned. The other point is that much of the local Muslim population in these countries, is quite emotional in character and, as a workforce, can demand a lot of attention both in and out of the workplace. They may expect you to spend time with them on weekends, meet their families, and take up other offers of their - generally very sincere - hospitality. While this can at times seem exhaustive, it is generally recommended to accept such invitations where possible (despite one's desire to maximise their business input time), particularly if they come from the elderly or from people of seniority in business or society. Such gestures on the part of the foreigner will be taken as a sign of "paying your respect", and are often a vital ingredient in developing a harmonious business relationship in Central Asia.

Marat Terterov was born in Odessa, Ukraine in 1968 and is an Australian citizen resident in the United Kingdom since 1995. He has published a book entitled Doing Business in Kazakhstan and is presently completing similar business titles on Russia, Egypt and the Republic of Georgia. He has substantial experience relevant to business practice in the former Soviet Union, particularly in the Central Asian Republics, having lived and worked in Uzbekistan, Kazakhstan, Kyrgyzstan, as well as in Georgia and the Russian Federation.

1 comment:

MySpace Design said...

Very informative post. Thanks for a great article!