Understanding Business Culture In The Philippines

How does a business meeting in the Philippines lead to closing the deal? Business relations grow strong slow and steady. Yet, persuading a partner requires more than persistence. It starts with understanding their culture and background. How and when to approach a partner and not sound offensive? How do you recognize the key people who […]

How does a business meeting in the Philippines lead to closing the deal? Business relations grow strong slow and steady. Yet, persuading a partner requires more than persistence. It starts with understanding their culture and background.

How and when to approach a partner and not sound offensive? How do you recognize the key people who are worth influencing? Can you negotiate? And, how to do it all by following the right etiquette?

In this article, we show three stages of engaging with your future business partner. How to prepare for a meeting, how to leave a good impression during the meeting and how to close the deal.

Key Influences of Business Culture in the Philippines

The Philippines business culture is a blend of different western and eastern influences. The Catholic church also plays a major role.

The society is hierarchically structured as elsewhere in Asia. For example, “keeping a face” is very important to Filipinos. In business, avoiding both conflict, disagreement and public contradiction comes by default.

Being friendly does not necessarily mean that the negotiations are going well. They may want to avoid or silence an argument.

How to Prepare for a Business Meeting in the Philippines

Use your personal connections to get a high-level meeting

The more (important) connections you have the easier it will be to do business in the Philippines. Business takes time. The best way to arrange high-level meetings is by a personal introduction by a common contact.

Know the Family Hierarchy in the Philippine Business Culture

Business culture in the Philippines sees that family-run businesses have a strong hierarchy. Key family members control how the company operates.

Note that foreigners are often hired as middle managers. They apply the decisions made by senior management. Maintaining a good relationship with middle managers will benefit you in the future. They will soon start working daily with you. Thus, do not spend too much time selling to people that don’t have the power to take your deal forward.

Don’t count on starting from lower level employees and building your way to the top. This rarely works and you should instead put your efforts to getting connected to the real decision makers right away.

Be on Time But Expect Your Partners to Be Late

Meetings in the Philippines often start later than agreed. Foreigners may find this unusual, although it is common in the local scenery. In fact, the more senior your business partner, the more likely they are late.

That does not mean that you can be late. In fact, you should never be late yourself. If your meeting takes places in one of the bigger cities then expect the traffic to be horrible. Plan to arrive at the meeting place an hour in advance and don’t expect to have more than 2-3 meetings in one day unless they are located nearby.

Learn When to Offer a Gift to Your Partner

There are two times when a business gift or treat is appropriate. The first gift during an early stage of developing relations. The second as a conclusion of satisfactory negotiations.

Get to Know the Local Etiquette

Avoid jokes about religion. Don’t directly confront people during a meeting, even if they said something you strongly disagree with. Remember the “keeping the face” aspect – let people keep their public reputation even if they made a mistake.

Avoid excessive eye contact as this may come across as being overly aggressive.

Communicate Clearly

Start off with a clear introduction to what you plan on discussing during the meeting. Despite your expectations, don’t rely on the participants’ individual initiative and communication.

English is the Philippine business language. But avoid making assumptions about partner’s behavior coming from the flawless language. Their communication style as well as talking in riddles is a strong hint of Asian roots. Therefore, it’s not rare that the non-natives find Philippine body language misleading.

Even if an offer is on the table, do not force an immediate answer. Your partner will find it very hard to say no. If partner offers you a confirmation, view it with caution. They may offer this to avoid conflict during the meeting but will withdraw after. Your role is to follow-up giving them a chance not to lose face on the spot.

You know a deal is a deal when a “yes” is accompanied by a written confirmation. If your partner tries to ignore discussions about the specifics of the deal then it’s a sign that most likely the “yes” you heard was just to please you and the negotiations are not actually successful yet.

Choose the Right Attire for a Business Meeting

Locals take good care of their appearances during both social and business occasions. Thus, it is important for you to also meet partners looking well-groomed.

Your appearance gives partner the first idea whether you are worthy to do business with. Make sure you look the part.

Men should wear a suit and tie, women should wear modest business attire.  Of course assuming that’s a standard in your industry. Don’t go to a business meeting wearing shorts or casual wear, no matter how hot the weather might feel for you.

Leave a Good Impression During the Meeting

Exchange business cards

Hand your business card using both hands. Put the received business cards on the table for the entire meeting and show interest in them. This also helps you to remember your partner’s name which you should be using several times during the meeting. Never put the business card directly to your pocket as it shows disrespect.

Build rapport with small talk

Greet the eldest or most important members first, following the hierarchy. Small talk is a very common method to build relations. Even if you wish to get straight to business, do not skip the small talk. It is a natural part of the business culture in the Philippines and thus vital for you to engage in.

However, don’t treat small talk as a random chat before you get to the real business talk. Use this time to display your likability, genuine interest in the subject and most importantly – to gather intelligence about your prospective business partner.

Avoid faking your interest in some subject just because you think your partner would like it. People can sense whether you’re sincere or not.

How to Negotiate in the Philippines

Bargaining is common amongst entrepreneurs in the Philippines. Negotiations are effective if you have the skills. Push the deal in a direction that benefits you most but make sure to cover the interests of both.

Although, it’s important to know where to stop. Don’t shout or impose anger at your partner if negotiations aren’t going like you expect. Note that negotiations may take longer than planned. The pace of doing business in the Philippines is relatively slow. Be ready to constantly re-assure that you, your company and your product are valuable without being overly pushy.

Negotiating a Lower Price

Filipinos may refuse bargaining if they are the ones buying. Then it’s mostly “take-it-or-leave-it”. Sometimes they also say that their funds are limited. When they decide to negotiate further, you likely need to improve your initial offer. Prepare that in advance and leave some room for negotiations.

It is common that they remind you of your competition to receive a lower price. If you do not give in, they will continue negotiations. They need the upper hand and wish to see if they can convince you. If you cannot accept their price demands, they will push credit terms and delivery dates.

Negotiating a Higher Price

If Filipinos are selling, they are likely reminding you of the demand on the market for this purchase. It is often that they invite several customers to discuss the deal together and then bargain at the same time.

Entertaining Your Prospective Business Partners

You may achieve a lot of progress in a relaxed dining atmosphere instead of a formal meeting room. Note that a few drinks before dinner are also not unusual in the Philippines.

Common entertainment locations are bars, restaurants, and hotel lounges. Don’t be surprised to find yourself at a karaoke bar. Partners sharing a meal is a common and important part of developing relations.

Note that business is almost never the first topic during dinner. The point of arranging a dinner is making people feel more comfortable with each other.

The inviting party is usually paying. Restaurants in the Philippines commonly add a service charge to their bill but a tip is not included. Depending on the service you receive, consider adding around 5%-15% tip.

Reach Emerhub via the form below for further tips on doing business in the Philippines. Our team will assist you with visa submission as well as help you set up a company.

Since 2011, Emerhub has helped over 500 companies of all sizes enter Southeast Asian markets.

Get in touch with Emerhub by filling in the form below to discuss how we can help your business thrive in Indonesia.