Top Tips for Business Negotiations in SE Asia
Tip 1: Each SE Asian country is different
South East Asia is a mixture of nations and cultures which have combined under regional block called ASEAN to assist with the development of the region.
These nations are Thailand, Malaysia, Philippines, Singapore, Brunei, Indonesia, Vietnam, Cambodia, Lao and Burma.
Each Nation has unique resources and are at various stages of development.
It is critical to understand each of these nations are different – sometime very different and should be considered individually when developing an export strategy.
Tip 2: Be Prepared to Negotiate
Negotiating is an in built part of Asian culture, and is unavoidable. Be prepared, and seek advice if unsure on how to develop your pricing strategy or do not have knowledge of these many variables.
Negotiating in ASEAN has become an art, and many Australian executives will when asked for their best price, immediately give the bottom price without realising this is only the beginning of the negotiating process and are then left with a lose/lose situation.
Tip 3: Develop a structured pricing structure
When developing export and pricing strategies a company should have a well structured pricing strategy.
Put simply, price list "A" which is what you would really like to achieve, price list "B" what you would consider your domestic wholesale price and therefore acceptable, and pricelist "C" which is your final offer.
Bear in mind that many ASEAN exporters, will expect you to consider quantity discounts, longer than normal payment terms, open account, and 90% of the time exclusivity.
You have to decide whether you are to bank roll your exports at low margins, the costs of using banking instruments (L/C’s), and if prices get to low whether this is a market suitable for you.
Finally one must consider shipping terms, FOB, C&F, ex-works etc., and the impact these pricing terms have on your prices.
One point to your advantage is the term exclusivity, this give you the right to demand minimum orders, minimum yearly sales and contribution to marketing and promotion costs in getting your product to market.