The following two cases illustrate some cultural elements which managers must pay attention to when delivering projects in Asia.
A US Company Procuring Telecommunication Bandwidth in China
A US Telecom was building a regional VPN network for an international client in the late nineties. The project was managed by a US and a Hong Kong project manager, with the support of local teams all across Asia. The network required local bandwidth in several Chinese cities. The international portion of the network was ready. The local project team went through normal application process and was told that the circuits would be ready in three months. One month later, bad news broke out. One of the local telecoms told the project team that due to demand upsurge, new cables needed to be installed requiring six more months of work. Circuits would only be available by then.
The project team immediately assessed the situation. On the one hand they worked on a backup plan based on a redesign of the network, hence bypassing that Chinese city. On the other hand they tried to understand what indeed happened. The first question that came to the mind of the US and Hong Kong project manager: Was the local telecom trying to ask for something "funny"? However, the local Chinese team dismissed this possibility, and suggested that there might really be a bandwidth demand problem.
They then tried to work out a scheme to get the Chinese telecom to re-prioritize their request. They were aware of the face culture in China, and could not afford making the Chinese telecom people lose face, so a formal escalation was ruled out. As a US Telecom they were not an ingroup member, so could not get favor based on relationship though they did enjoy an excellent relationship with them. Since both the US Telecom and the international client were well known in China, they decided to play along that line. They invited senior managers from both companies to come to that Chinese city all the way from the US, and set up a special meeting with the local telecom. In the meeting, they emphasized the importance of this project to their business and to this Chinese city, and pleaded the local telecom to support them. After the meeting they went through the normal ritual, i.e. having dinner and Karaoke. Miracle did happen. Two weeks later, they were informed that the circuit would be available according to the original schedule.
A Hong Kong Company Delivering an Interior-Design Project in Korea
A Hong Kong-based interior design company was awarded a contract to renovate a building in Korea in the early 2000. Their client was a European embassy. This embassy did try to manage this project themselves, and appointed a project manager out of their home country. After a year they hardly got the project off the ground, and they came to this Hong Kong Company which had been their vendor in Asia for a long time.
The Hong Kong Company helped the embassy prepare a RFP, and chose a local Korean contractor as their prime through a proper tendering process. They were aware that there might be collusion problem among Korean bidders, but decided there was not much they could do about it. They hired a local Korean site supervisor on contract basis to supervise the project and the performance of the prime contractor.
After the project was half way complete, problems started to surface. There were instances that subcontractors refused to ship their deliverables because they had not been paid by the prime contractor, even though the Hong Kong Company had not failed to pay the prime according to contract. They also had some quality problem with the prime contractor. The local site supervisor was not effective, and seemed to be on the side of the prime contractor hiding problems from the Hong Kong Company. The project could not possibly meet its original schedule.
This is an illustration of several cultural concepts. Local Koreans belonged to an ingroup of the same nationality. A foreign company, even from Hong Kong which is part of East Asia, was seen as an outsider. When dispute came up, it was uncommon but not impossible that local parties colluded to protect their ingroup members. The local business practices were also an issue. Only locals who were familiar with the local environment could possibly minimize the negative impact from these practices.
They chose a project manager in Hong Kong and sent her to Korea on site for two months. She acted as a communicator between the clients and the prime contractor. She also monitored the performance of the contractor on behalf of her company. Performance started to improve and the project was finally completed to the satisfaction of the client, albeit late by around two months.