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Foxconn Technology Group’s decision to locate in Wisconsin created a new link between the state and the company’s home country of Taiwan. It’s a connection many businesses are eager to take advantage of, whether as a Foxconn supplier or in another industry.
But experts are already warning businesses to be mindful of cultural differences that may make doing business in Taiwan more challenging than expected.
“I had no idea how different the cultures are,” Chris Murdoch, a Foxconn special advisor and the company’s first Wisconsin hire, said during a panel discussion at the Manufacturing Matters conference in Milwaukee in March. “The cultural issues are real.”
He highlighted age, communication style and hierarchy as just a few areas of difference.
Murdoch said the pace of change in the technology industry means Foxconn has to also adapt quickly.
“It may be something that you’re not used to – this company embraces change; it has to to survive,” he said.
As plans for Foxconn’s $10 billion LCD manufacturing campus developed over the past year, it hasn’t been uncommon for company executives to remark that their state or local counterparts have learned to operate at the “speed of Foxconn.”
At a recent Wisconsin Manufacturers & Commerce event, John Ohnesorge, director for East Asian legal studies at the University of Wisconsin Law School, remarked that, along with South Korea, Taiwan is one of the “great development success stories” of the late 20th century.
“It grew up in this environment of constant high-pressure competitiveness,” Ohnesorge said, noting that history rubs off on the pace of business. “Things will move very quickly.”
Joe Jurken, founder and senior partner at Brookfield-based The ABC Group, said a lack of government regulation in Taiwan over the years has developed an entrepreneurial culture where businesses are willing to identify and pursue opportunities.
“When they do that, they go full speed ahead,” Jurken said.
With opportunities to do business with Foxconn or other firms looming on the horizon, Jurken, whose firm helps businesses export to Asia, said companies should understand they may get opportunities that are larger than anything they’ve seen before.
“It’s important to be true to what you are as a company and not let potentially large numbers have you make business decisions that you might not make under normal business conditions,” he said.
Jurken recommended Wisconsin companies have their senior-level employees take a close look at their own financials, capabilities and potential capital expenditures and to be realistic with those discussions.
He said businesses can present their plans a little more directly in Taiwan than in other Asian countries, but it is important to have done homework in advance and know your own capabilities.
“I think it is important to be true to what you are as a company,” he said.
Jurken feels the Taiwanese are “closer to American business people than most understand” and relationships should be based on “the same mutual respect you’d have for another American company.”
But the presenters at the WMC event said there are some key differences. And at a Waukesha County Business Alliance event, Tim Sheehy, president of the Metropolitan Milwaukee Association of Commerce, said he’s already seen people making mistakes in interacting with Foxconn.
Chin-Sung Cheng, director of the economic division in the Taipei Economic and Cultural Office and the keynote speaker at the WMC event, said Taiwan has shifted from a labor-intensive economy 30 or 40 years ago to a more knowledge-intensive economy today. Still, many of the businesses in the country are small- or medium-sized firms, including many with family ownership.
That history has led to the development of a more hierarchical system, Cheng said.
Katy Sinnott, vice present of international business development for the Wisconsin Economic Development Corp., said just as many Wisconsin businesspeople value getting to know their counterparts at other organizations, so, too, do the Taiwanese. While many Taiwanese companies may have a strong hierarchy, she said it is important to build relationships throughout the organization.
“Without having that strong connection to members of the company it will be almost impossible for you to do business,” she said.
State officials have highlighted the relationship between Gov. Scott Walker and Foxconn chairman Terry Gou as a key reason the company picked the state. That relationship almost didn’t get started as Walker was scheduled to participate in an initial White House meeting by phone until his staff learned Gou was only participating in meetings at which a state’s governor attended in person.
Cheng said relationships can develop in formal channels, but it’s important to also pay attention to more informal channels. He said gift giving and attending business meals are important avenues to create connections, cautioning that Taiwanese hosts may continue to offer more food, but it is okay to say you’ve had enough.
Mia Chih-Chu Liang, director of the Taiwan Trade Center in Chicago, acknowledged that for older generations, business meals often led to the consumption of large amounts of alcohol, but said younger businesspeople increasingly don’t appreciate that approach.
“If you don’t feel comfortable with that, just say ‘no.’ They will understand,” Liang said.
When it comes to actual negotiations, Sinnott said just because Taiwanese businesspeople are agreeable doesn’t mean they’re always in agreement on a deal.
“There might be something holding them back and nobody is going to tell you until you ask a lot of questions,” she said.
She added the negotiation process in Taiwan can tend to be more drawn out and there’s often a push to get a little more out of a deal.
“I think there’s more of an effort to get a win-win,” Sinnott said, adding businesses will need to work with a company leader to get decisions made.
Ohnesorge said Taiwan intellectual property protections have improved a lot from the 1960s and ’70s, when the country was going through rapid economic development and trying to catch up to the rest of the world.
“Taiwan has a proper legal system, which makes it different from mainland China,” he said, noting it is more similar to European-based legal systems and operates with less litigation and some differences in drafting contracts.
Liang said Foxconn’s decision to build in Mount Pleasant has raised Wisconsin’s profile in Taiwan and made it one of the best-known states.
The two areas do already have some relationship established. According to U.S. Census data, Wisconsin exported $166.5 million in goods and services to Taiwan last year, the 23rd highest of any country. The state also imported $575.2 million in goods and services from Taiwan, making the island country the 10th largest importer to the state.
Ohnesorge noted the state’s universities have been training Taiwanese nationals for decades, especially in engineering, potentially providing a resource for businesses to connect with, although he added there’s no substitute for on-the-ground experience.
“If you’re going to do business in Taiwan, somebody should go,” he said.
“There’s nothing like getting your feet wet and visiting the country and building relationships,” Sinnott said.
Liang said while it may take time to build relationships, businesses shouldn’t be discouraged if they believe their product or service has a market in Taiwan.
“Once they decide on you, you better be ready to move quickly,” Sinnott added.