The Singapore Law Gazette

How Asian Businesses Approach Relationships and Dispute Resolution

It is often said that the pendulum of cross-border economy and disputes (which inevitably follow) is swinging from the West to the East, that is Asia. Today, the world is going through insurmountable shifts, all impacting or centred around economy.

With economic growth serving as the world’s primary engine fuelled by advancements in technology and digitalisation and with international dispute resolution work as prolific as ever, two crucial aspects, culture and emotion are often overlooked.

One may wonder how culture and emotions influence favourable outcomes for clients in a dispute or why culture and emotions matter at all in business.

In this article, the author presents the truth behind cross-cultural aspects in business-to-business (B2B) relationships and how lawyers should be more culturally and emotionally attuned to building business relationships as well as resolving disputes, particularly those with an Asian nexus.

Cross-Cultural B2B Relationships

Earlier this year, the International Chamber of Commerce (ICC), Jus Connect, and McCann Truth Central announced the release of a six-part global research report (Report) which elucidated the role of emotion, culture, and behavioural tendencies as well as their impact on B2B relationships.¹For more information about the project and to access the full Executive Summary of the Report, please visit: New report unveils dynamics of cross-cultural B2B relationships  – ICC – International Chamber of Commerce (iccwbo.org). The extensive research involved 1,701 quantitative interviews with B2B decision-makers in nine countries and 20 in depth interviews with business and dispute resolution leaders.²Ibid.

This project was intended to be a tool for lawyers, business leaders, and decision-makers alike concerning cross-border business partnership vis-à-vis dispute resolution. The Report itself serves as a playbook of cross-cultural trends and practices.

The six-part of the research highlights the following:

1. Emotional influence in B2B. Contrary to popular belief, B2B relationships are emotionally charged, and cross-culture elements shape such relationships.
2. Business culture fluency reduces friction. Cultural fluency holds greater power than we realise in determining the course and outcome of any business deals be it short-term or long-term.
3. Contracts or people? While a well-drafted contract is always important, parties must also consider cultural perspectives that meet their commercial needs while formulating and negotiating the terms and conditions of a contract.
4. Win-win is better than win-lose. Interest-based outcomes are certainly the end goal to parties not only when entering into business relationships but also when and if disputes arise.
5. Siloed departments limit business success. Business relationships are collective efforts, and collaboration between different teams, i.e. business and marketing, operations, and legal teams, is in fact determinant to the success of business relationships.
6. One size does not fit all. B2B industry is extremely dynamic and far-reaching, and no single approach works for all. The growth and strength of B2B relationships requires a diverse and inclusive pool of talent with different backgrounds, genders, ages, and professions.

Culture and Emotions in Business Relationships and Dispute Resolution

The first part of the Report which focuses on “Emotion in Business” was published on 20 June 2024 and unveils the following findings:³For more information on the first part of the Report and to get a full copy of it, please visit: The Truth about Cross-Cultural B2B Relationships – ICC – International Chamber of Commerce (iccwbo.org).

1. Business relationships are emotional endeavours.
2. Business relationships start on a positive.
3. Emotions fluctuate during the journey creating engagement and moments of attention-based risk.

Cultures and emotions are intertwined. When we do transactional work, little do we realise that emotions are cultural reflections, and diverse cultures shape the ways of people expressing their emotions. Subsequently, business behaviours represent cultural expectations; these are cues that we often ignore, whether we work in law or in business. An interesting observation is drawn from the ways that Westerners and East Asians understand truth, among other things, is illustrated below.

Historically, in ancient Greek civilizations, the Greek followed “law of the excluded middle” which was an idea first conceived by Aristotle and renders that in a debate between two people, one must be right, and one must be wrong, with no middle ground.⁴Drake Baer, “The fascinating cultural reason why Westerners and East Asians have polar opposite understandings of truth”, accessible at: Cultural Psychology of the West and Asia – Business Insider. On the other hand, in ancient Chinese civilizations, the Chinese followed the “doctrine of mean” which was introduced by Confucius over two millennia ago, and maintains that in a debate between two people, no one is completely wrong or right for what is true simply lies in the middle.⁵Ibid.

These cultural approaches are just two out of many. They are all ancient and modern, and form part of our socio-justice and business fabric. When we discuss about Asia, it is important to note that the region has different clusters from an economic and culture standpoint.

When it comes to how Asian business approaches relationships and dispute resolution, the Report uncovers key data which shows that:

1. In China, business actors practice hierarchy and hold seniority in high regard so this is very likely to lead to micro-behaviour traits such as copying a supervisor on an email chain.⁶ICC, Jus Connect, and McCann Truth Central, “Executive Summary of The Truth About Cross Cultural B2B Relationships”, p.24, accessible at: PowerPoint Presentation (dailyjus.com). It bears mention that business culture in China is largely influenced by the Confucian principle of Guanxi (关系)which refers to the importance of personal connections and strong networks in business opportunities and growth.⁷See also: Donna Huang, Vera He, Xiangshan Guo, and Hanh Hyunh, “Cultural Fluency Improves Business Fluidity Rings True in China, Asia Law Portal, accessible at: Cultural Fluency Improves Business Fluidity Rings True in China – Asia Law Portal – A forum for discussion of news, information & opportunity in the Asia-Pacific legal marketsGiven the Chinese culture, there is a strong preference of amicable methods of dispute resolution to maintain harmony, and so when giving feedback or response, it will be done discreetly so as to not offend people.
2. In India, contrary to the culture in China, a direct communication style is favoured even if it may offend other people, and issues (if any) will be addressed promptly without being escalated to supervisors.⁸ICC, Jus Connect, and McCann Truth Central, Executive Summary of The Truth About Cross Cultural B2B Relationships”, p.24.

Conclusion

The pendulum is still swinging towards Asia, pivoting on cross-border business and dispute resolution, and with the right and balanced approach between cultures and emotions, it will eventually rest on the centre.

As law adapts to economy trends, and not the other way around, lawyers must have an understanding and appreciation of different cultures, exercise sensibility when engaging with peers and clients from different backgrounds, and be receptive to the emotional aspects of transactions and disputes to better grasp the associated risks which would be helpful when making decisions and formulating strategies. This is particularly crucial for matters with Asian nexus.

The author thanks Sophie Seet for her invaluable research assistance.