Case Studies: Cultural Diversity When Delivering Projects in Asia (1 of 2)

KUNG HEI FAT CHOY! GONG XI FA CAI! The Chinese New Year is coming this week. Let me wish all of the readers a successful Year of the Ox!

Let's continue our discussion about cultural diversity in Asia using two cases of project delivery in East Asia. Both encountered issues originating from diverse cultures and business practices.

Case 1: 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.

Analysis

This is an illustration of several cultural concepts we discussed earlier. 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.

Solution

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.

To be continued...

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