PrintIntroduction
The US is slowly emerging from a huge recession. Some European countries are trying to repair a broken system. Trying to conduct business in South America in a “mañana” mentality can be frustrating. As such, drug companies need to focus on Asia for growth. With 2/3 of the world’s population at over 4 billion people, the potential market in Asia is huge. In fact, Asia was the first region to pull itself out of the global recession.
From Roche’s well-known R&D facility in Shanghai to Novartis’ $1 billion investment in China, more and more drug companies are developing R&D, setting up clinical trials, increasing sales and marketing, and building manufacturing facilities in Asia. Pfizer has also established themselves in India with sales of approximately $159.52 million (November 2009) and over 2,300 associated personnel. Pfizer has also set up a state-of-the-art manufacturing facility in Maharashtra, India.
Paramount in succeeding in this market is fully understanding the Asian cross-cultural issues. Setting up a business that is sustainable for the long term means taking the time and resources to account for local Asian business practices and culture. For example, in China, setting up R&D centers and clinical trials means building the foundations in establishing good relationships with Chinese physicians and government officials. Down the road, these relationships can be very helpful in drug registration and product launch.
Diversity of Asia
As “Asia” is a broad geographical term, cultures differ vastly from India to Indonesia to Korea. There are many native religions and philosophies, including Buddhism, Hinduism, Taoism, and Confucianism. In addition, each country can have a very different makeup of religions. For example, Korea is 25% Christian, 30% Buddhist, while the remaining 45% constitute other religions. On the other hand, China tends to mostly be Taoist and Buddhist. Indonesia is 89% Muslim and 7% Christian, with the remaining 4% consisting of other religions.
Ethnic diversity in Asia also varies widely. In Malaysia, 30% of the people are Chinese and 9% are Indian with the majority of the remainder being native Malay. In China, there are over 50 national minority groups. 14% of Thailand’s population is Chinese while the rest are Thai. However, in countries like Japan and Korea, the population tends to be very homogenous with very small minority populations.
Across generations, there are also differences. Globalization has begun to lead a trend away from collectivism and toward individualism in many Asian cultures. Of course, Japan still makes most decisions on a consensus basis. Successful organizations in Asia oftentimes include executives from different cultures that need to work together to be successful.
Another issue to keep in mind is the vast diversity within one country. For example, China and India cover such vast geographic territory that it does not always make sense to have one overall strategy for the entire country. Almost every region (in China and India) is very different with its own specific dialect, languages, cultures, and levels of income. Therefore, understanding the regional differences and also city differences for these larger countries is also very important.
Cultural Sensitivity and Perceptions
Western executives working in Asia must not come across as “ugly foreigners.” They must take the effort to understand that each Asian country is different. For example, a Western Caucasian may not be appropriate as a country manager in Japan unless they are truly global and have spent many years in Japan/Asia. On the other hand, how could we expect a Japanese company operating in the US with a Japanese executive who does not know English to be successful?
One must also be aware of the corresponding perceptions and stereotypes. Some common positive perceptions of Westerners from an Asian perspective include being confident, energetic, egalitarian, independent, free, and creative. On the other hand, negative Asian perceptions of Westerners include legalistic, argumentative, know it all, culturally ignorant, insincere, and demanding. There is also an issue with foreign companies being too US or European-centric and not being really globally minded.
Of course, these are general stereotypes that are not applicable to all. Also, not all Asian countries share the same Asian attitudes, values, and mindsets. However, these notions amongst Asians do exist and it is important to assuage any possible doubts. By implementing initiatives that demonstrate cultural sensitivity, you can develop a more cohesive, cooperative business in Asia.
Relationships are the key to doing successful business in Asia. Senior Western executives meeting once or twice a year with their Asia team does not constitute a close relationship in most Asian countries. Western executives that see their Asian counterparts 6-8 times a year (for work and social activity) are generally more successful. Sending out holiday cards yearly with personal hand-written messages, frequent phone calls, and e-mails are all important in forming close ties with your Asian offices, affiliates, or partners. While e-mails to fellow Westerners may start with “Dear Bill: attached find these documents…” in Asia, people generally greet each other via e-mail with small talk about the weather, etc. before they get down to business. Other courtesies include being aware of major holidays and sending appropriate greetings, such as the Chinese New Year.
Personnel
With Asia’s rapid growth, there is a talent war in finding qualified, experienced business and regulatory personnel in the pharmaceutical industry. Make sure to respect your employees and highlight the opportunities for advancement at your company.
While a truly global Japanese executive can sometimes succeed in East Asia, local Japanese that are not international players may have trouble operating outside of Japan where other Asian countries still do not feel comfortable working for Japanese. Similarly, while a truly global Indian executive can sometimes succeed in East Asia, a local Indian that is not that global may have problems getting Japanese and Chinese executives to follow her/his leadership.
In short, hiring the right people to maximize the market opportunities means picking personnel who are not only technically versed in their area but also culturally sensitive. They must be adaptable, flexible, and versatile to adjust plans accordingly to each Asian country. Then, Western drug companies must make sure to provide enough incentives and retention strategies so that the top employees are interested in staying at the company.
Cross-cultural education is also important at the Western headquarters. There should be educational seminars on the relevant Asian countries for the appropriate personnel. Arranging VIP trips to Asia (or vice versa with Asians coming to the West) can also foster stronger relationships and bonds. In addition to executives traveling to and from Asia, it is also a good idea to have your Asian staff work at your Western headquarters for a short period of time. This way, they can get the appropriate technical training and also feel more connected to the company and Western employees on a day-to-day basis.
Organizational Structures
Putting the right structure in place is key. For example, since a drug company’s business is often times the largest in Japan, most companies set up a separate office specifically for this country. Then, foreign drug companies will usually set up a regional hub for their Asian activities in Singapore or Hong Kong covering the non-Japan Asian markets. In a general sense, the Japan office should report directly to the Western headquarters, and not through the non-Japan office in Singapore or Hong Kong. As simple as this concept may be, some foreign drug companies have Japan reporting to Singapore or Hong Kong. This can be humiliating to Japanese executives especially if their sales are greater than all the non-Japan Asian countries combined.
Dealing with Regulatory Bodies
When dealing with regulatory agencies and governments in Asia, it is important to keep in mind that each Asian country will have their own specific requirements and procedures. Local Asian offices of Western drug companies should be involved in face-to-face meetings with local regulatory agencies and make sure the headquarters knows exactly what is happening. In almost all situations, countries such as China, Japan, and Korea will require documents in their native language.
Western executives simply showing up at an Asian government regulatory office for a key meeting generally will not help your cause and may actually hurt you. While the practice of lobbying is common in the West, it is less acceptable in certain Asian countries. When communication is necessary, let your company’s local Asian staff or local Asian distributor’s regulatory staff deal with the local regulatory body directly.
In some countries, disclosing all information and setting up pre-consultations before a product registration is customary. For a meeting in Japan, the MHLW expects the drug company executives to wear formal dark suits with a white shirt and a dark tie. In other Asian countries (especially in Southeast Asia), the government regulatory entity may be a bit more casual with no tie or jacket needed. Therefore, having personnel who are knowledgeable on these particulars is crucial.
Conclusion
By recognizing the nuances of cultural diversity in each specific Asian country, your company will be guaranteed a higher level of success and long term sustainability. From developing relationships to sending out yearly holiday cards, international executives and regional Asian directors must take the effort to train themselves and their team on Asia cross-cultural issues. Many regulatory and business issues stem from a lack of communication, a lack of building strong relationships, and misunderstanding of the mentality and culture present in the individual Asian countries.
Ames Gross is the president and founder of Pacific Bridge Medical. He is recognized nationally and internationally as a leader in Asian medical markets.
