Understanding Business Culture In The Philippines
Table of contents Key Influences of Business Culture in the PhilippinesHow to Prepare for a Business Meeting in the PhilippinesLeave a Good Impression During the MeetingEntertaining Your Prospective Business PartnersHow 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 […]
Table of contents
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.
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.
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.
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.
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.
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.
Let's grow your business in Philippines
Get in touch with Emerhub by filling in the form below and our consultants will reach out to you within a few working hours.
More articles from Philippines
Ways To Reduce the Required Minimum Paid-Up Capital in the Philippines
Planning to invest in the Philippines? Explore strategies for reducing the minimum paid-up capital when investing in the Philippines.
Customs clearance in the Philippines with an Importer of Record
Discover how an Importer of Record can help streamline customs clearance in the Philippines and save time and money for your business.
How to import food products in the Philippines
A detailed guide to the procedures required to establish a food import business in the Philippines.
Everything you need to know about the cost of registering a company in the Philippines
Looking to start a business in the Philippines? Here is a complete breakdown of the cost of registering a company in the Philippines.
Foreign Investment Negative List in the Philippines
The Regular Foreign Investment Negative List is a document released by the government to regulate the foreign ownership percentage in certain industries.
Payroll in the Philippines: Wages and Related Benefits
Understanding the ins and outs of managing payroll is essential for business owners. What do you need to consider when managing payroll in the Philippines?