How to start up business in Malaysia. Negotiation, communication and etiquette

Table of Contents

1.0 Location
1.1 History
1.2 Economic
1.3 Structure
1.4 Language
1.5 Culture

2.0 Business Etiquette
2.1 Business Meetings and Greetings
2.1.1 Meetings
2.1.2 Greetings
2.1.3 Names and Titles
2.2 Gift Giving
2.3 Business Card
2.4 Dress etiquette

3.0 Decision Making

4.0 Negotiation Style
4.1 Negotiation Style in Malaysia
4.2 Business Negotiation Language
4.3 Negotiation Time
4.4 Negotiation Etiquette

5.0 Communication Style
5.1 Conducting Business
5.2 High Context Culture / Non-verbal Communication
5.3 Concept of Face

6.0 Conclusion

7.0 References

1.0 Location

Malaysia is situated in Southeast Asia, consisting of Peninsula Malaysia which is known as West Malaysia and East Malaysia, also known as Sabah and Sarawak. The area covers up to 330,257 square kilometers. Malaysia is precisely located in between the intersection of two continents and the two oceans; North and South connecting with Asia and Oceania, East and West connecting with Pacific and the Indian Ocean. Thus Malaysia has a favorable geographical location, especially the west of Peninsula Malaysia is connecting the famous Malacca Strait. The Malacca Strait is an important channel for connecting the Pacific Ocean and the Indian Ocean (Malaysia, n.d.). Malacca Strait is the world's longest navigable, the largest shipping activities and one of the busiest strait, because of the average daily ship traffic are at least 200 or more, of which about 50% for the tanker (Malaysia Background, 2016). It can be said that Malaysia’s location in between the intersection of two oceans is not only beneficial to the economic development, but also strategically in a beneficial position.

1.1 History

The Union Chairman Tunku Abdul Rahman announced the independence of Malaya from British on 31st August 1957. Malaya, Singapore, Sabah and Sarawak together formed the federation of Malaysia on 16th September 1963 and the capital is Kuala Lumpur. On August 1965, Singapore quit from the federation of Malaysia (Gale, 2017). Malaysia is one of the founders of the Association of Southeast Asian Nations and a member of the Central Asian Regional Cooperation Coalition, the Asia- Pacific Economic Cooperation (APEC), the Non-Aligned Movement and the Organization of the Islamic Conference.

1.2 Economic

Malaysia is an emerging and diversified economic country. In 1990s, the economy of Malaysia leaps and bounds. Malaysia has become a prominent and diversified emerging industrial country in Asia and the world's emerging market economies. Tourism is the third largest source of foreign exchange earnings in Malaysia, knowledge economy services are also expand at the same time (Kuala Lumpur – Malaysia, n.d.).

1.3 Structure

Malaysia is a multi-ethnic and multicultural country. The constitution stipulates that Islam is the official religion of Malaysia and protects the freedom of religious belief. The government system is closely related to Westminster's parliamentary system. The legal system is based on the common law. The head of nation is king, also known as the highest head of nation. The head of government is Prime Minister (Malaysia Politics and Malaysian Political System, n.d.). Malaysia is divided into 13 states, including the West Malaysia which is Perlis, Johor, Kedah, Kelantan, Melaka, Negeri Sembilan, Pahang, Pulau Pinang, Perak, Selangor, Terengganu and East Malaysia which is Sabah and Sarawak. By 2015, the total population of Malaysia is 306,386 people, consists of Malay (55%), Chinese (24%), Indians (7.3%), and other races (0.7%) (Population Distribution and Basic Demographic Characteristic Report 2010, 2015).

1.4 Language

The official language of Malaysia is Bahasa Melayu (Thompson, 2016). From the past, during the time of British Colonial, English began to be used in Malaysia. Although Bahasa Melayu became the main language on 1968, English still widely spoken in Malaysia until today and became a second language of Malaysia.

1.5 Culture

Malaysia is a nation of peasant, and therefore it still maintains many primitive beliefs, especially the strong religious colors of all ethnic groups. The main religions are Islam, Hinduism, and Buddhism. As a result of multi-ethnic long-term common life, it leads to diverse cultural characteristics (Wijnen, n.d.). Malay, Chinese and Indian have their own unique culture. The government is trying to shape the national culture based on the Malay culture, carry out the national education policy, and pay attention to the universal education of Bahasa with a more complete Chinese education system. Due to the large population of Malay and the official religion is Islam, so Malays do not eat pork and only consume foods that are halal. They do not smoke, and they think the left hand is unclean thus they take items using their right hand. When eating, use their right hand to eat. It is considered a taboo to have physical contacts such as a touch the head and back of others and cannot use the index fingers to point. (What Not to Do While Travelling to Malaysia, n.d.).

2.0 Business Etiquette

Business etiquette can be defined as the set of protocols that is essential in a profession. In Malaysia, foreign businessman will need to be wary of the diverse culture of the Malaysian citizens, in terms of greetings, gift giving, dress codes, and dining customs.

2.1 Business Meetings and Greetings.

2.1.1 Meetings

Malaysia’s population is predominantly Muslims; it is advised to avoid scheduling business meetings on Friday as this is when Muslims perform their holy Friday prayers. Thus, the society respects the Malay community through this action. As part of the business culture, individuals should arrive in time for the meeting but the chances of waiting are existent. Malays and Indians have a laidback attitude towards time whereas Chinese may be more punctual of time. In the initial meeting, no decisions will be set as it is important to build trust and familiarity between the two parties. Furthermore, it is considered polite to respect people with a higher ranking position which is an example of Power Respect (Business Etiquette: Doing Buiness in Malaysia, n.d.).

2.1.2 Greetings

Greeting is an action that is considered as a welcome or recognition to another individual. Malaysia are composed of three races Malay, Chinese and Indian, therefore there are different mannerisms to greet the races.

1.) Malay

Malay men generally would greet by extending their hands with a ‘salaam’ where both individuals would shake their hands. Followed by a placement of a hand over the heart signifying “I greet you from my heart”. Malay women do not hand shake with men as it is seen inappropriate to their culture. Thus, men should wait until the women extend her hands first and then shake hands with her. If she doesn’t prompt a handshake, it would be respectful to slightly bow and have your hand placed on your heart at the same time (Hays, 2015).

2.) Chinese

It is perceived a proper action to shake hands with Chinese women but to be on the safe side, wait until she prompts a hand shake first. Whereas, Chinese men would have a lengthened but light hand shake.

2.) Indians

Indians shake hands with business partners of the same gender. A smile and a nod would be sufficient when greeting the opposite gender.

2.1.3 Names and Titles

For Malays, it is not common to address someone by their title and surname as first names. They address someone with “Mr”, “Mrs” or “Miss” followed by first name. For example, a woman named Azizah Saad would be addressed as “Mrs. Azizah” Addressing an Indian business professional would be the same. In the meantime, it is appropriate to address Chinese business partners with their title and their surname or just “Mr” and “Mrs”. Some Malaysians have a title by the government such as “Dato”, “Datin”, “Tan Sri” and “Datuk”.

2.2 Gift Giving

Here are the following guidelines of gift giving customs for businessmen based on facts and details. One rule that applies to all races is that generally gifts are not to be opened when given.

Gift giving to Malays

- Do not give alcohol because Malays cannot consume alcohol.
- Do not give toys shaped dogs or pigs to children nor give anything made of pigskin.
- Refrain from wrapping the gift with white paper as it signifies death and mourning.
- Refrain yellow wrapping paper as it is the color of royalty.
- Avoid giving food that is not “halal” meaning the meat should permissible for Muslims.
- Hand the gifts with the right hand only or both hands if the gift is large in size.

Gift giving to Chinese:

- Gifts in even number is appropriate because odd numbers are unlucky.
- Refrain from giving sharp items such as scissors; knives it shows the desire to break up a relationship.
- Do not give flowers as a gift since it is often for the sick and used at funerals.
- Bring a small gift like fruits, sweets or cakes when invited to someone’s home.
- Avoid wrapping gifts with colors of white blue or black since its traditional mourning colors and it is better to wrap gifts with red, pink or yellow.

Gift giving to Indians:

- Money should be given in odd numbers.
- Offer gifts with the right hand only or both hands if the item is large.
- Do not wrap gifts in white or black but instead wrap the gifts in red, yellow or green paper or other bright colors as these bring good fortune.
- Do not give leather products to a Hindu because Hindus worship the cow.
- Do not give alcohol unless assured the recipient can drinks.

Business Dining Customs

Dining customs are essential when discussing business matters. Most Malaysians business professionals have their entertainment in restaurants. After a major meeting, Malaysians will continue with either lunch or dinner to build the connection. It would be appropriate to also ask for a lunch or dinner a next time. If business matters will be discussed, often the spouses will not be brought to dinner (Malaysia Business Etiquette, 2014).

- Dining customs for hands: It is a taboo to pass around, serve and eat food with the left hand. Similarly, with gift giving customs, it is not appropriate to offer alcohol and pig when inviting a Malay business man and not to offer beefs to an Indian.
- Dining etiquette for utensils: Utensils etiquette depends on according to the individual. Malay and Indians typically using the fork as the scooper (left hand) and the spoon (right hand) as the utensil to consume the food. When dining with a Chinese businessman they may use a chopstick and a spoon for soup (Dining Etiquette, n.d.).

2.3 Business Card

The visiting party is the ones who give out the business cards first. It is appropriate to receive the card with both hands or the right hand. Always take a moment to check the card before putting it away. Given that Malaysia is a multi- cultural country, it is common to have the card in Malay and Chinese (Malaysia Business Etiquette, 2014).

2.4 Dress etiquette

Malaysian business professionals should dress with a suit, dark pants, a long- sleeved shirt and tie. Women should be wearing sleeved blouses with skirts or pants. It is common to have women wearing traditional dress such as saree and baju kurung. Any revealing clothing is not appropriate for a business meeting. Avoid wearing the color yellow as it is reserved for the royal family (Malaysia Business Etiquette, 2014).

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