Abstract
The Lao People’s Democratic Republic is a country in Southeast Asia characterized by a meaningful and multi-faceted culture. In the wake of recent changes, Laos retains distinguishing aspects representative of its Asian location, in addition to distinguishing itself in unique ways as a result of its history, customs, religion, people, geography, government, and business relationships, among other areas. In each of these areas, life in Laos creates a business environment worthy of effective consideration by an American business seeking to expand to another country or even to an entrepreneur wishing to begin a small business start-up. In addition, due to the way in which Laos now facilitates a business environment, there are multiple areas in which foreign direct investment (FDI) could also be considered. Under either of these business methods, there are cultural adjustments for which business leaders who possess an American business mindset must be prepared. Whether in its culture or the cultural effects on its business practices, Laos presents an intriguing study for a global business application.
Running head: GBCA: LAO PDR
GBCA: LAO PDR
Keywords: Laos, business, culture
Global Business Cultural Analysis: Lao People’s Democratic Republic (Laos)
Target market information, industry trends, cash flow projections, supply and demand factors, access to supply chain necessities and other core business concerns may dominate a company’s decision to do business in a foreign country, or influence an entrepreneur’s motivation to begin a start-up in another area of the world. While these are all essential to the success of a business especially from a financial and operational perspective, the key issue of the target country’s culture must not be ignored. Indeed, while facets of culture may not be quantifiable enough to build into a spreadsheet or craft into a supply chain, a business would only do detriment to itself by relegating cultural considerations to a hasty discussion at the beginning (or end) of the planning process.
For those companies or startups considering the Lao People’s Democratic Republic (henceforth referred to as “Laos”), there is no exception in this area. Indeed, for business owners who are well-adapted to the culture (business and otherwise) of the U.S., some of the elements of Lao culture will require extensive learning as well as time for acclimation. Laos has seen significant change in the recent past with the modification of foreign policy and its resulting impact on business (Phakdisoth & Kim, 2007; Stuart-Fox, 2010). This change, in combination with past and present cultural elements such as communication, religion, values, recreation, social structures, and education form an intricate environment which an American firm must investigate prior to forming a business relationship with Laos.
GBCA: LAO PDR 4
GBCA: LAO PDR 10
Major Elements and Dimensions of Culture in Laos
Communication
People groups and languages. According to the Central Intelligence Agency (2016), the country of Laos is ethnically diverse. Within the nine identified people groups, the Lao are by far the most dominant in number, with the Khmou, Hmong, and others trailing behind (CIA, 2016). Illustrative of this diversity, there are several major languages – Lao, French, and English – as well as assorted other languages belonging to the different people groups (CIA, 2016).
Important communication norms.
Nonverbal communication.
The methods of nonverbal communication demonstrate the value placed on honoring others (Country Watch, 2016). For instance, according to Country Watch (2016), the typical way in which to hail another person is by means of a show of obeisance with hands in (what Americans would consider) a position of prayer. If a persons’ hands are lifted more, more honor is assumed to be given. Deference is appropriate for older people (Country Watch, 2016). Another notable difference between American culture and Laotian culture is the area of emotional communication, as in Laos, the act of demonstrating emotional connection before others is not approved of (Country Watch, 2016).
Interpersonal interaction.
This aspect of honor also may be seen in interpersonal interactions, where a to-the-point style of addressing issues is not found (Culture Crossing Guide, 2014a). Based on information from Culture Crossing Guide (2014a), relationships and good perceptions appear to be more important than accuracy or being on the winning side of an argument, and deference is typical. A pointed, blunt manner of addressing a necessary issue is not the norm in Laos, and contentions involve some amount of culturally-acceptable triangulation in order to bring about peace (Culture Crossing Guide, 2014a). It is important to realize that with Laotians, there is sometimes more than meets the eye (Culture Crossing Guide, 2014a). Culture Crossing Guide (2014a) notes that the circuitous nature and deference given to others in their communication style does not necessarily reflect the reality of their thoughts, and an understanding of a Lao person’s words and conversation must be supplemented with an awareness of “non-verbal cues” (para. 5) which may belie what is literally said.
Due to these factors, Lao culture appears to fit well within the bounds of a culture tending toward “particularism” (Mind Tools, 2016, para. 7), as the first aspect of Fons Trompenaars’ seven cultural elements. According to Mind Tools (2016) assessment of Trompenaars’ research, a culture in this category will generally base what is important around other people and their desires and wishes, as is clearly demonstrated in Lao customs. The other side of the spectrum – “universalism” (Mind Tools, 2016, para. 7) – generally affords more value to set standards, as opposed to connecting with other people. For this element of culture, then, Laos and the U.S. may be found at very different sides of the continuum. In addition to this, these communication styles also point toward Laos being a “neutral” culture instead of an “emotional” culture (Mind Tools, 2016, para. 7) – Trompenaars’ fourth element. As may be inferred from the terms, in a neutral culture, individuals do not make an effort to connect with others through a deep display of sensation or sentiment (Mind Tools, 2016).
Religion
Religious climate in Laos. In terms of faith, Buddhism is the clear leader in Laos, with Animism and different variations of faith following (Wann, Li, Wang, & Nouansavanh, 2004). According to Wann et al. (2004), to a small degree, there is additionally some amount of Christian presence. Laos is currently included as a nation on the Tier 2 list of the U.S. Commission on International Religious Freedom’s groupings of Countries of Particular Concern (USCIRF, 2015). Interestingly enough, based on USCIRF’s findings (2015), from a brief overview of Laos’ constitution, it would appear that Laos holds something in common with the U.S. by acknowledging the right of its citizens to choose their own faith. However, this is only nominally the case (USCIRF, 2015). Recent assessment by the USCIRF (2015) has determined that the unfortunate reality of the Lao religious clime evidences discrimination especially against groups such as Christians and the Hmong people. From a legal perspective, this is permissible because of the Decree on Religious Practice from 2002, which effectively gives governmental leaders carte blanche to regulate matters and practices of faith (USCIRF, 2015).
Unfortunately, according to USCIRF (2015), the hostility toward Christians may be related to the idea that their faith is founded in a U.S. system. Likewise, the hostility toward the Hmong people is bred in the military support given by the U.S. to this people group during the Vietnam War as a deterrent to communism (USCIRF, 2015). Thus, in the area of the religious environment, Laos evidences to a significant degree an unhealthy aura of government sovereignty and an unfriendly attitude toward America (USCIRF, 2015).
Buddhism in Laos.
Buddhism in life.
While adherence to it is not quite complete, Theravada Buddhism is a dominant religion in Laos among the Lao people group (Every Culture, 2016d). According to Every Culture (2016d), some amount of syncretism is demonstrated through various practices of spirit worship, but some of the inhabitants of Laos have also become followers of Christianity. The practical, every-day application of Buddhism among the Lao takes place in various ways, from the more outdated practice of time spent as a monk for the males, to the role taken by males and females of linking the physical world to the spiritual realm, and several notable celebrations and traditional events include the basi and the boun (Every Culture, 2016d).
Buddhism in death.
Rather than the common destination of heaven or paradise found in other faith systems, Theravada Buddhism looks to Nirvana as part of the experience of the afterlife (Michigan State University, 2014). This process of moving from physical life to Nirvana, a state of peaceful happiness, through death may not be an uninterrupted process, however (Michigan State University, 2014). Reincarnation is also prominent in the after-death possibilities and ultimately may be incurred as a result of karma by an individual’s deeds (Michigan State University, 2014). The achievement of Nirvana is the goal after death (Michigan State University, 2014).
Values, Attitudes, Manners, and Customs
Attitude toward time in Laos.
For a task-oriented, motivated personality, life and business in Laos have the potential to be somewhat frustrating (Culture Crossing Guide, 2014b). This is due to the fact that, according to Culture Crossing Guide (2014b), the value afforded to time is found not in punctuality, but instead, time is more importantly lent as needed and the expectation is for reciprocation of the same attitude. These customs undeniably categorize the Lao culture as one thriving under a “synchronous time” mindset, as opposed to a “sequential mindset” (Mind Tools, 2016, para. 7), Trompenaars’ sixth cultural element. While precision regarding appointments and time goals is a core aspect of a sequential culture, a synchronous culture such as Laos will appear to be much more relaxed in comparison (Mind Tools, 2016). This is not to say that nothing is ever accomplished in this type of culture, that an attitude of openness to modifications in timing as opposed to stringency is the status quo (Mind Tools, 2016; Culture Crossing Guide, 2014b).
Values in times of change. Seasons of transition and change may sometimes reveal what is most esteemed and valued. One notable system of change in Laos has been the government-instigated “internal resettlement” (Baird & Shoemaker, 2007, p. 872) projects, which are intended to move along the assimilation between smaller people groups and the more mainstream Lao culture. In regard to the people subjected to these governmental decisions, this may be a revealing process, although it could arguably also be a political tool of assimilation focused on citizens in more remote areas (Evrard & Goudineau, 2004, as cited in Sinavong, 2014). Regarding the peoples’ values, according to Sinavong (2008), loyalty even in terms of housing proximity was noted among families and people groups. People who may be held in esteem are also important (Sinavong, 2008). Specifically, for the Hmong citizens the “religious/spiritual leaders” (Sinavong, 2008, p. 4) are esteemed, whereas for the Pao citizens, the “elders and village chief” (p. 4) are regarded. Research by Sinavong (2008) also demonstrated that religious ideas also are noted as playing a part in the resettlement, as several people groups in particular wish to communicate with the supernatural being connected with the destination. Also recognizable are the traditions surrounding meau dee (lit. “a good day”) (Sinavong, 2014, p. 9) for changing home locations. Thus, in times of change, the culture of the smaller people groups emphasizes the centrality of both their relationships and their religion.
Attitude of citizens toward government-encouraged unified village structure. In addition to what is treasured during times of transition, the way in which citizens respond to the controlling government may also be telling in terms of organic culture and what may be more imposed (High, 2006). For example, according to High (2006), while the government in Laos seeks to promote a culture of “solidarity” (p. 31) expressed through involvement for communal benefit, the impediments involved in actually meeting such an optimistic standard are noted, specifically through the example of one village’s inefficient involvement in maintenance of a certain village location. However, High (2006) also gives another example which demonstrates quite efficient solidarity on the part of one village – this time, in the context of keeping a low profile in order to avoid a draft imposed by the government. Thus, while solidarity is a value upheld by the Laotian government, the village people do not necessarily express this in exactly the hoped-for manner (High, 2006).
This concept of solidarity lends itself in an intriguing way to Trompenaars’ second element of culture, namely “individualism” as opposed to ‘communitarianism” (Mind Tools, 2016, para. 7). These elements are characterized by either independence and a kind of self-motivation, or the subjection of one’s identity to that of the community, respectively (Mind Tools, 2016). According to High’s research (2006), from the governmental standpoint in Laos, the Lao citizens need to adhere to a community mindset. However, from the standpoint of the Lao citizens, themselves, this concept of community (as defined by the government) is not always the most valued (High, 2006). Interestingly enough, however, as noted in High’s (2006) second example above, the community mindset is displayed in ways not insisted upon by the government, and the overall expression of culture in Laos is one of communitarianism (Sinavong, 2014). Again, for Laos and the U.S. specifically, the respective ways in which this aspect of culture is played out in each nation do not coincide.
Attitude of government toward people. As alluded to in the value placed on solidarity by the Laotian government, to some extent, the government view the citizens, and particularly “the village” (High, 2006, p. 25) as an account to be drawn upon for necessary resources for governmental objectives and plans. In fact, on a general level, there is not a high degree of respect afforded to the citizens of Laos (Country Watch, 2016). According to Country Watch (2016), communism reigns, revolutions are out of the question, and the basic liberties such as the ones valued by citizens in the U.S. are not a practical reality in Laos. With a significant amount of control and power, the government acts freely without some of the checks and balances present in the U.S. system (Country Watch, 2016). If a person comes under the disfavor of the state, fair arrest and quick trial is not guaranteed (Country Watch, 2016).
Country Watch (2016) notes that while this is the general norm for Laos, life may have an additional degree of bitterness under the present system for the Hmong people, due to unfriendly relations with the Lao people. Discrimination is evident even in the fulfillment of basic necessities such health and sustenance and outside entities are not given permission to help to allay these problems (Country Watch, 2016). Beyond the Hmong group specifically, Friedrichsen and Neef (2010) note that it is helpful to understand that what may be communicated regarding protection of the smaller people groups’ interests is not always trustworthy, as the true situation serves as a testament to efforts to engender conformity to the ways of the larger Lao social sphere.
From an examination of these various attitudes, it becomes clear that Laos could be categorized as a culture which emphasizes “ascription” over “achievement” (Mind Tools, 2016, para. 7). For a country with Laos’ history and emerging economy, this is as equally understandable as it is unfortunate. While equality through opportunity would be an exciting state for this country, it appears to be the case that the Laos culture values status more than what an individual is able to accomplish (Sinavong, 2014; Rehbein, 2007; Mariani, 2012).
Recreation
Celebrations and rituals.
The Boun Greh ritual.
The boun greh ritual is an interesting aspect of culture within Laos, because it is actually an expression of one of the less-respected, non-Lao people groups, the Kmou, and is done in celebration of a new year (Petit, 2013). A recently-created event, the boun greh is somewhat of a descendent of the greh – “an older, domestic ceremony” (Petit, 2013, p. 475). According to Petit (2013), an observed boun greh brought together Khmou people dispersed among several villages for the activities including an address by a founder of this event, “traditional songs” (Petit, 2013, p. 478), a meaningfully-decorated post, the application of chicken blood to “the lower legs of the elders” (p. 478) (symbolizing the leaving of the past and well wishes for the future), and a type of worshipful march and “procession counterclockwise around the post” (p. 479). Also observed by Petit (2013) was the tying of forearms with string, representing a benediction, and a subsequent enjoyment of food and dance. Interestingly enough, the manner of the boun greh event represents a cultural move away from the home and family and to a “big collective village ceremony” (Simana, 2003, as cited in Petit, 2013, p. 485) and is viewed by some Khmou as purposed for the eyes of public leaders and not being true to the more seasoned greh. The former accusation would appear to have some merit, but also could be an important factor of recognition by the Lao government of the Khmou people (Petit, 2013).
The Lao wedding ceremony.
According to Mariani (2012), the tradition of the Lao wedding has been somewhat of an interrupted one. Before 1975, what was originally already a lavish and lengthy festivity grew only more so until the government stepped in during 1975 and effectively cut short the tradition as the Lao people knew it (Mariani, 2012). Instead, the government mandated “a sequence of ideological formalities” (Mariani, 2012, p. 155), lacking excitement, yet representing the government-approved communications which were imposed. What was once an enjoyable time was transformed into a minimalistic, civic display (Mariani, 2012). Interestingly enough, however, according to Mariani (2012), one particular faction which this government-mandated shift was geared toward were those of Lao nationality who migrated back to their country from France following the communistic takeover. Placed in “senior technical positions” (Mariani, 2012, p. 155) and afforded a comfortable measure of job security due to the existing demand, these people learned to push the boundaries back toward a more favored rendition of the wedding festivities. Due to the customs surrounding the wedding, people incur significant costs and go to great lengths (even as far as the auction of property) to put on a wedding (Mariani, 2012). However, “the investment is partly offset by the financial contribution of the guests” (Mariani, 2012, p. 160), yet these monetary donations may or may not come with subsequent strings attached.
The Baci.
Literally meaning “invitation to the souls” (Singh, 2014, p. 1063), the baci is a traditional ritual with flexible application to significant happenings in Laos’ culture. In typical fashion, at a baci, a leader extends a request for the presence of the khwan or “spirit essence” (Tambiah, 1970 as cited in Singh, 2014, p.1063) at a large meal. Contributions to these beings are brought forth in a decorated manner, along with “white cotton thread” (Singh, 2014, p. 1064) which the participants share by “tying threads around the wrists of the recipients while wishing them blessings” (p. 1064). This act solidifies the attachment of the khwan (Singh, 2014).
In the same way that the traditional wedding ceremony celebrations were not favored by the government for a time (Mariani, 2012), the baci also experienced a relegation to the non-public sphere (Ngaosyvathn, 1990, as cited in Singh, 2014). However, this tradition too was subsequently reinstated (Singh, 2014). This fluctuation corresponded with the life of socialism in Laos and the end of the communistic government “in the former Soviet Union” (Singh, 2014, p.1064). Singh (2014) provides a first-hand account of a baci, describing the noted distinction between the governing individuals who deigned to participate and the village citizens who put on the baci, and drawing the conclusion that Lao leaders are somewhat able to utilize the baci for civic agendas.
Food
Every Culture (2016b) describes the cultural food eaten by Lao people as including “sticky rice” (para. 35) (eaten without the use of utensils), soup, and various types of meat. Uncooked meat is acceptable, but the effect of health programs have served to decrease this practice in urban areas (Every Culture, 2016b). Interestingly enough, there is somewhat of a gender divide evidenced even in the alcoholic consumption (and canine consumption) of the Lao people, according to Every Culture (2016b). For instance, “dog meat is considered a ‘strong’ male dish and is accompanied by strong liquor” (Every Culture, 2016b, para. 35), and alcoholic beverage consumption is more common among men with food eaten in between meals and during ritual events. However, women tend to drink at the celebration of New Year (Every Culture, 2016b). According to Every Culture (2016b), tourists should not be fooled at the presence of international eateries in urban areas – these are generally there for their benefit. If a Lao person were to eat out, the meal of choice would be feu – “a soup-noodle dish imported from Vietnam” (Every Culture, 2016b, para. 36).
Social Structures and Organization
Philosophy of Lao social structures. One particular perspective on the culture of Laos is very descriptive in the way it divides Laos into a governmental and marketplace sphere categorized as “patrimonial” (Rehbein, 2007, p. 71), and another sphere of the villages which are identified as a “kinship” (p. 72) way of life. The former categorization should be understood as referring to a mutual relationship based on “an exchange of protection against loyalty” (Rehbein, 2007, p. 71). According to Rehbein, (2007), villages are made up of relatives but the non-village sphere distinguishes itself from the family-orientation of the village by holding participants to higher standards of roles. One significant aspect of Lao culture is the value given to familial relationships and other bonds between collections of people (Rehbein, 2007). While this is notable in and of itself, it is more helpful to understand this fact in the context of the attitude toward the country as a whole (Rehbein, 2007). For instance, Rehbein (2007) notes that the Lao situation can be compared with that of Cambodia, which nation’s citizens evidence to a greater degree that they principally consider themselves Cambodians as opposed to participants in a more specific, lower-level social structure. This is not as much the case in Laos, as demonstrated by the aforementioned value place on familial and other bonds (Rehbein, 2007). In addition, there is a degree of self-stratification of the Lao citizens in terms of the size and position of the people groups, as those part of the majority Lao appear to have a stronger cultural position compared with the smaller people groups, which tend to lack “a writing system…national symbols or overarching institutions” (Rehbein, 2007, pp. 80-81).
Geographical distinctions of Lao citizens. The World Health Organization (2011) notes the trend in poverty in Laos as being concentrated around the “rural” locations, and specifically among “seven chronically poor provinces” (p. 4). This unavoidably expresses itself in instability even in terms of food (WHO, 2011). While the majority of families outside of rural locations are in a safe position, the rural locations are affected the most deeply in this aspect, as may be expected (WHO, 2011).
In the past, the stratification of the Lao people occurred along spatial lines, to some extent, intimating three strata according to whether the Lao people resided in the “lowland” (the Lao Loum people), the “midland” (the Lao Theung), or the “highland” (the Lao Sung) (Friederichsen & Neef, 2010, p. 569). According to Friederichsen and Neef (2010), this, in fact, still influences citizens’ view of themselves in modern-day Laos and plays a noteworthy part in the distinctions between the Lao people. Unfortunately, for the people groups lesser in number, there has been an associated negative stigma or prejudice sourced in the assumption that these people not as modernly adapted and less competent (Dang Nghiem Van et al, 1993, as cited in Friederichsen & Neef, 2010). Friederichsen and Neef (2010) note that land-use traditions and farm products are a tangible representation of the variances between the uplands and lowlands people. While rice has served the lowlands (i.e. the home of the larger Lao people group) well, the “swidden farming” (Friederichsen & Neef, 2010, p. 569) techniques of the upland people (i.e. the smaller people groups) have been targeted for elimination. Thus, while there has been evident stratification even in terms of geography in Lao culture, the government has not taken a strictly unbiased or unprejudiced approach in its treatment of these two groups.
Family relationships. Unlike the general situation in the U.S., the relationship between a husband and a wife in the Hmong people group is not completely exclusive – rather, a husband may have several wives (Every Culture, 2016a). However, according to Every Culture (2016c), this stands in contrast to the situation of the Lao people group, due to official guidelines forbidding this act. Interestingly enough, for the Hmong, the family as a group is a key part of religious traditions and practices (Every Culture, 2016a). It is not common that a husband and wife would effect a divorce, but perhaps this is due in part to the lack of enthusiasm for the woman’s kin to give back the money or value gained in conjunction with the match (Every Culture, 2016a). If this does occur, with the Hmong people, the husband is the individual to effect the divorce; among the Lao people, the wife is equally able to do this (Every Culture, 2016a,c). With regard to Hmong daily life, according to Every Culture (2016a), each person within a family who is able to work will learn farming tasks, and the situation is similar among the Lao (Every Culture, 2016c. Apparent in both of these ethnic groups is the integration of the children in the completion of the standard home and livelihood duties (Every Culture, 2016a,c).
Women in Laos. The implications of being female in Laos are multi-faceted. One positive aspect of the present-day situation include the tenet of the country’s law which appears to afford women just as many privileges and duties as are afforded to men (Fox, 2003). In addition to this, according to Fox (2003), there is also the clout possessed by the Lao Women’s Union in the government, the privileges held by women in regard to property possession, and the recognition of the need for attention due to females in the same degree as is given to males in the educational efforts of outside entities. Overall, according to the World Health Organization (2015), females are hindered by ingrained norms and boundaries regarding the proper place and profession, as well as issues with reproduction, labor, and dearth of quality education.
Education
Gender issues in Laotian education. According to Fox (2003), the educational climate is not at an optimal state in Laos for females. One example describes the inhibition experienced by the Hmong girls in one location in the northern area of the country found in the physical location of the school, which acted as a prohibitory factor in girls’ attendance, in addition to the general norm of non-attendance of girls (Fox, 2003). In the same example given by Fox (2003), one young woman was not able to attend due to responsibilities with siblings, even though the siblings, for their part, attended school. However, it is also noted that “class and culture are prohibitive factors for girls in Laos, yet not insurmountable, as there are many stories of girls gaining their desires despite social and economic threats” (Foster, 1996, as cited in Fox, 2003).
Interestingly enough, this unsatisfactory theme may also be recognized at the other end of the education spectrum, in the lack of significant female presence in the leadership or occupational roles in the education field (Fox, 2003). In a different study of several generational levels of Lao families, the authors discover a clear distinction between the women and men in terms of “schooling investments” (Estudillo, Mano & Seng-Arloun, 2013, p. 998), leaving the women with less formal learning than the men. However, the distinction was smaller in the last generation studied, leading the authors to conclude that equality has been achieved between education given to girls and education given to boys (Estudillo et al., 2013).
Integration of Culture into the Domestic Business Environment
Employment and Occupation Norms and Trends
Workplace communication and incentives. In the workplace, and especially in an international setting, it is helpful to know what is expected (Center for Intercultural Learning, 2009). In Laos, according to the Center for Intercultural Learning (2009), if contentions arise with other business employees, it is essential to understand that a public method of dealing with the perpetrator is not a wise strategy. In the same way, if another person is irritated, that Lao individual will most likely take an indirect route in interpersonal interaction in order to express frustration (Center for Intercultural Learning, 2009). Americans would perhaps consider this a manipulative method, but it is important that this is a recognized fact of Lao culture. Also, what American employees would consider incentives may vary from what Lao people would consider incentives, according to the Center for Intercultural Learning (2009). For example, threat of employment termination is a more negative incentive, while the pay and the state of the working environment are more positive incentives (CIL, 2009).
These considerations, and other aforementioned aspects of Lao communication styles lend credence to the idea that Laos is a “diffuse” culture as opposed to a “specific” one (Mind Tools, 2016, para. 7), according to Trompenaars’ third cultural element. As has been demonstrated, a diffuse culture such as Laos’ will deemphasize the particular purposes and aims associated with a job and instead emphasize the interpersonal connections established between coworkers (Mind Tools, 2016; Culture Crossing Guide, 2014a; CIL, 2009). According to Mind Tools’ (2016) assessment of Trompenaars’ work, contrary to the tendency of the business mindset in the U.S., in a diffuse culture such as Laos, there may not be a philosophy of segmentation between interpersonal connections and the actual business being done.
In addition, the manner of business communication discussed above evidences that Laos may have a culture tending toward “outer direction” as opposed to “internal direction” (Mind Tools, 2016, para. 7), due to the fact that disagreement is handled in more inconspicuous manner in the former directional leading. If a culture is more positioned in an outer direction stance, the population will tend to consider themselves molded by their surroundings and will tend to be more oriented toward people and maintaining peace (Mind Tools, 2016).
Women in the workplace and government. The story of Lao women’s involvement in the marketplace and the government continues in a similar pattern to that in the education sector. Namely, the standard of uniform treatment of male and female citizens is not quite the reality experienced by the female citizens of Laos (Asia Foundation, 2016). The Asia Foundation (2016) especially notes the lack of simplicity and ease experienced by women seeking to borrow funds for businesses, and the authority practically exerted by the males in governmental positions. While this is the present case, it will not necessarily remain the status quo in the foreseeable future. With assistance and training from the Asia Foundation (2016), Lao entities such as the Lao Businesswomen’s Association, the Lao National Commission for the Advancement of Women, as well as the Lao Women’s Union are already shaping the culture of the country to become a more inclusive workplace and government.
Entrepreneurship in Laos As varied as the different facets of business are in Laos, the culture will tend to be displayed in some way in each of them. According to Chen, Liao, Redd, and Wu (2013), Laos’ environment is not the most nurturing to entrepreneurial ventures. In one study of the impact had by a positive outlook on the achievements of a start-up business, entrepreneurial ventures in Laos were specifically chosen for the study due the dearth of encouragement (monetary and otherwise) from the government (Chen et al., 2013). One perhaps significant step forward in terms of entrepreneurship in Laos, however, may be seen in the fact that, according to authors Inmyxai and Takahashi (2010), Laos has seen “an increase in the number of self-employed female entrepreneurs in micro, small and medium sized enterprises” (p. 38).
A Comparison of U.S. and Laos Culture and Business Culture
Consumer Values
While it is generally understood that products and services in demand in one area of the world will not necessarily be a success in another area of the world, this concept is also demonstrated to a deeper level in the way in which, for the purposes of Laos, a service is sold and customers are engaged (Patterson & Smith, 2001). Beyond the strict idea of customer loyalty regarding the way in which a consumer will buy the same product or service in a consistent way, there is also the issue of the connection or “relationship” (Patterson & Smith, 2001, p. 425) with the consumer. Implemented from the standpoint of Hofstede’s cultural work, research by Patterson and Smith (2001) in this area sheds light on consumer values in Southeast Asia. For example, individuals in this context would normally place more value on knowing what to expect, in addition to placing importance on maintaining harmony in interactions (Patterson & Smith, 2001). Also, Asian nations tend to have “collectivist” (Patterson & Smith, 2001, p. 428) tendencies, in contrast to the independence valued in America. It is notable that, based on the findings of one study of Thailand, one point of commonality between the U.S. and Thailand which may also be inferred to other nations, points to the importance attributed by customers to “relational benefits that are over and above satisfactory provision of the core service” (Patterson & Smith, 2001, p. 437). One notable difference was found in the way that individuals in Thailand in some ways could practically, (not necessarily verbally) declare loyalty to a company with repeat business in exchange for rapport which would pave the way for “special treatment benefits” (Patterson & Smith, 2001, p. 437) down the road. This stands in contrast with the situation for Americans, for whom “confidence benefits” (Patterson & Smith, 2001, p. 438) were afforded a higher position. Thus, for Southeast Asia, a business does well to recognize the slightly different focus than in the U.S., and to leverage the ability to maintain loyalty and connection with customers, thereby creating a deterrent to the customers’ desire to use another business for the same need.
Importance Placed On Business Ethics
Perhaps one indicator of the ethical environment in any nation or region of the world is the effort afforded to the subject of ethics in education. Out of countries studied within the vicinity of the south of Asia and Southeast Asia, Laos was one of the few in which this topic was non-existent as a “field of study” (Srinivasan, 2011, p. 76), in addition to the topic of corporate social responsibility being lacking. Indeed, Transparency International (2015) reports Laos as nation 139 on a scale of 168, with its standard being founded in the ethical health of the “public sector” (Transparency International, 2015, para. 1). Thus, while Laos does not hold the lowest position possible, the less-than-optimal nature of this cultural dearth of value for ethics is a notable difference between the U.S. and Laos in terms of business.
Implications for U.S. Firms Looking to Conduct Business in Laos
SWOT Analysis
National strengths which may affect an American enterprise.
Present economic state of affairs. Described the World Bank (2015) as “one of the fastest growing economies in the East Asia and Pacific region” (para. 1), Laos’ strengthening economy is in some ways changing an aspect of the culture in terms of lessening the number of citizens in poverty. The government is (at least nominally) taking steps to utilize the nation’s assets such as “forestry, agricultural land, water, and minerals” (World Bank, 2015, para. 2), and Laos is now a participant both in the Association of Southeast Asian Nations (ASEAN) and the World Trade Organization, joining the latter organization after a multi-year progression of “reforms and negotiations” (World Bank, 2015, para. 3). Thus, for an American enterprise seeking to establish a business connection with Laos, these factors will help to some degree to pave the way.
National weaknesses which may affect an American enterprise.
Cultural weaknesses in the present economic state of affairs. While the statistics and results provided by World Bank data appear to be encouraging from a market perspective, the numbers must at some point be understood as representing citizens, and the changes must be considered from a cultural perspective as well (Rehbein, 2005). For instance, according to Rehbein (2005), the steps taken by the government, especially in regard to the economic milepost coming up in 2020, have included the citizen relocation efforts aforementioned. From a cultural perspective, this has forced change on the citizens, has impacted a certain type of their farming occupation, and has also perhaps given the citizens a negative self-view (Rehbein, 2005). They were impoverished, but now they know it (Rehbein, 2005). Thus, an American enterprise should recognize this unhealthy aspect of the Laos economy, brought on by a government which inflicts harm on its own citizens (Rehbein, 2005; Baird & Shoemaker, 2007).
Present state of affairs in economic relationship with Thailand.
One national business relationship very strategic to Laos is its business conducted with neighboring Thailand (Somchart Nanudorn, Phisanbutr, Rutchatorn, Phuboonbutr, & Na Sakolnakorn, 2012). Fortunately, the relationship is not one-sided, as Somchart Nanudorn et al. (2012) notes that data from 2007 demonstrated almost twice as many sales to Thailand compared with purchases by Laos. However, this is a difficulty-ridden portion of Laos’ business ventures (Somchart Nanudorn et al., 2012). For example, even though exports between the two countries seemed to be at a good level for Laos in the 2007 data, items from China would actually be more cost effective for the Lao people (Somchart Nanudorn et al., 2012). The people involved with doing business between Thailand and Laos cannot boast any “professional education in marketing management” (Somchart Nanudorn, et al., 2012, p. 560). In addition, the political culture in Laos does not allow for a dependable status quo in terms of standards and requirements (Maneerat, 2012, as cited in Somchart Nanudorn et al., 2012), and even the lack of quality “logistic infrastructure” (p. 560) or streets to facilitate the moving of items for sale are issues.
Economic comparison to Thailand. While Laos evidences an increasing amount of market improvement in the areas of GDP, farming output, “industrial production”, and “service production” (Wann et al., 2004, p. 255), the broad view points to many disadvantages when Laos is compared with the more able Thailand. Wann et al. (2004) notes that in the areas of transportation, technology, learning, and business leadership abilities in particular, Laos lags behind. Of course, the success of Thailand does not guarantee the failure of its neighbor, but for purposes of comparison, Laos does have a longer road to travel in terms of market development and competence.
National opportunities which may affect an American enterprise.
Tourism opportunity. For an American institution assessing opportunities within Laos, the tourism industry is worth consideration, based on research done by Phakdisoth and Kim (2007). This opportunity is founded in the environmental and physical assets inherently a part of the country, as well as its position in the midst of other nations which would be visited (Phakdisoth & Kim, 2007). Indeed, rather than remaining an undiscovered opportunity, tourism income in Laos has seen increase between 1991 and 2004 at “an average annual growth rate of 45.63 per cent” (Phakdisoth & Kim, 2007, p. 227). Interestingly enough, from a cultural perspective, one of the cited reasons for Laos’ attractiveness to visitors is its culture, according to Phakdisoth and Kim (2007). Another helpful aspect of the Lao tourism industry is that its success is not found to be dependent upon the stability or growth of individual earnings for would-be tourists (Phakdisoth & Kim, 2007). However, it is dependent upon other factors such as “social and political stability” and even other such things as “transportation and communication infrastructure” (Phakdisoth & Kim, 2007, p. 233).
International relations with U.S. According to Thayer and Pholsena (2010), Laos and the U.S. have not always been on the best of terms, including in Laos’ more recent history when Laos officially became the Lao People’s Democratic Republic. However, this situation has improved, with progress actually originally instigated by the U.S. desire to fulfill “MIA recovery efforts” in Laos (Thayer & Pholsena, 2010, p. 444). Laos was afforded a “Normal Trade Relations” (Thayer & Pholsena, 2010, p. 444) position with the U.S. in late 2004, and from a cultural standpoint, some factors prompting this change included the compliance with the MIA projects, as well as Laos’ work against drugs and terrorism. The Association of Southeast Asian Nations (ASEAN) has also been a medium for communication between Laos and the U.S., and the U.S. has demonstrated particular interest in environmental and community wellness in the Lower Mekong area of Laos, according to Thayer and Pholsena (2010). In these ways, if not in others, Laos and the U.S. now do have a mostly peaceful relationship, thereby providing more of an opportunity for American businesses to effectively engage in or with this nation (Thayer & Pholsena, 2010).
National threats which may affect an American enterprise.
Hindrances to exporting. Laos has been afforded a somewhat privileged position through the “Generalized System of Preferences” (Sayavong, 2015, p. 341) for over two decades now, which lowers the cost of exporting, and Laos is also a “Most Favored Nation” (Sayavong, 2015, p. 341) with the World Trade Organization. From an examination of Laos in isolation from other nations, the business function of exporting has appeared to be gaining traction, according to Sayavong (2015). However, even in addition to the drawn-out internal procedure for exporting, there is the real threat of the inhibitions which other nations receiving Lao exports may impose (Sayavong, 2015). Some of these nations are neighboring countries in Southeast Asia such as Thailand and Vietnam, and others are European, such as Denmark and France (Sayavong, 2015, p. 350). Specifically, “in Europe and Japan non-tariff barriers such as local content, quality control and rule of origin” (Sayavong, 2015, p. 351) can deter Lao export success. According to Sayavong (2015), in some of the other Southeast Asian nations, internal national stipulations and even unethical conditions create similar issues.
Foreign Direct Investment in Laos.
Greater Mekong Sub-region.
Nozaki (2014) notes that the Greater Mekong Sub-region is not limited to Laos alone. Instead, this area is shared by near neighbors of Laos such as “Thailand, Cambodia,…Myanmar, Vietnam, plus the Guangxi Autonomous Region” (Nozaki, 2014, p. 59), and together, these nations have produced an attractive opportunity for outside funds. The national participants of this sub-region engage in business with the other nations (Nozaki, 2014). As noted by Nozaki (2014), it is necessary to understand that due to the situation of Thailand and Vietnam, the business done within the nations of the GMS is not as critical for the economic well-being of these countries as it is for Laos, whose business relationship with Thailand is key. However, it is suggested that things such as “hard infrastructure building and arrangements of the trading systems” would help to enhance the business done within the GMS (Nozaki, 2014, p. 68).
Other regional, urban, suburban FDI destinations.
Besides the Greater Mekong sub-region, there is also information helpful for FDI considerations regarding how different types of locations throughout Laos are more natural choices for FDI, based on research by Phimphanthavong (2012). For instance, investment appears to follow infrastructure (Phimphanthavong, 2012). By way of illustration, the capital of Laos – Vientiane – and the nearby area which are privileged to boast a high “road accessibility” throughout the whole year, “are very attractive for large industrial investment” (Phimphanthavong, 2012, p. 182). This also positively impacts the dispersion of sales from Vientiane (Phimphanthavong, 2012). A step back, from an economic perspective, demonstrates that the “Central region” (Phimphanthavong, 2012, p. 183), in helpful proximity to Vientiane, is also a reasonable choice for “medium investment opportunities” (p. 183). An interesting difference between these areas and the business activities of the southern area of Laos is worth noting. While Vientiane appears to be a more modern host-city for the industries involving “mining, construction, and trading” (Phimphanthavong, 2012, p. 183), the south present an opposite prospect, with its inhabitants’ competencies in farming and its outputs. Finally, an intriguing aspect of business in the northern area of Laos evidences a specific tendency toward “small businesses” (Phimphanthavong, 2012, p. 184).
Opportunity through technology. Troilo (2014) cites Laos as an example of a country in the midst of development which is attempting to enhance the way of life of its citizens. In particular, Laos is noted as focusing on business start-ups and small business in hopes of boosting its business market (Tipton, 2009; Prime Minister’s Office of Lao PDR, 2004, as cited in Troilo, 2014). While this is good, it is recognized that what SMEs lack can be made up for by the establishment of cooperative efforts with other more sizeable entities (Lu & Beamish, 2001, as cited in Troilo, 2014). According to Troilo (2014), more sizeable firms are found to be “nearly 37 percent more likely than micro-enterprises (the comparison category) to adopt new technologies” (p. 11), but it is helpful to understand this in conjunction with the fact that the implementation of the “new technology” (p. 11) could have a significant positive impact on revenue. Thus, another potential application of FDI in Laos could be realized through cooperation with SMEs in order to enhance technology use and in turn enhance revenue (Troilo, 2014).
Cultural Adaptations and Accommodations U.S. Firms Should Expect to Make When Conducting Business in Laos
The issue of corruption at the governmental level. From a business standpoint alone, the recent economic shift in Laos toward a more capitalistic business style (though not to a full extent), including the receipt of outside funding, is a very positive move (Stuart-Fox, 2010). However, according to Stuart-Fox (2010), one negative factor is found in the fact that the overbearing government perhaps gained an advantage even in this change and the unethical dealing practiced in the government only extended itself. According to Stuart-Fox (2010), “An anti-corruption law was introduced, but it has never been applied to any senior Party member” (p. 35). Thus, for an American firm, it would be wise to enter into any Lao business opportunities with awareness and expectation that unethical dealings at the governmental and regulatory level will be an issue.
The impact of Trompenaars’ dimensions in Laos. As has been noted previously, many of the core cultural elements of Laos, as considered through research by Trompenaars, are at odds with the American way of life, business, and communication, among other things (Culture Crossing Guide, 2014a,b; Mind Tools, 2016). In particular, methods of business communication will need to be wisely modified by American business leaders or entrepreneurs in order to promote unifying conformity with Lao citizens and business people (Culture Crossing Guide, 2014a,b). Particularly, American businesspeople will need to learn to communicate in a less terse, straight-forward manner and for the sake of building connections with the Lao people, will need to learn to infer intentions which may be less explicit (Culture Crossing Guide, 2014a). In addition, based on information from Culture Crossing Guide (2014b), American business people must enter Laos with a malleable view of time considerations. Rigid business schedules should most likely never be created in the first place, or should be fully intended to be compromised or modified. While this may be frustrating at the beginning, this adaptation must be made for the sake of establishing connections with the Lao people.
Conclusion and Recommendations
When considered from a cultural perspective, Laos is indeed an intricate study for an American business enterprise to consider. Perhaps this stems in part from the varying people groups and their respective cultural nuances (Every Culture, 2016), as well as from the lack of unity between them partly as a result of governmental policy (USCIRF, 2015; Baird & Shoemaker, 2007). In addition, while Laos has become more of a nation of interest in terms of business and economic health (Phakdisoth & Kim, 2007; World Bank, 2015), it does remain on the lower end of the global spectrum as a “Least Developed Country” (World Bank, 2015, para. 2). From an overview of the business and cultural aspects of Laos, an American business enterprise should consider Laos as an opportunity. However, this should be done only with a deep awareness of the various cultural customs, governmental actions, and proposed areas for FDI aforementioned. A business seriously considering Laos as a base for operations should perhaps look further into the political risk aspects of conducting business within Lao borders and could also more circumspectly assess the possibility of joining together with a Lao business or entrepreneur (Troilo, 2014; Inmyxai and Takahashi, 2010). The economic and cultural trajectory of Laos will be worth noting as time progresses, pointing this country either on a path to further business success or turning the environment into one more difficult for business
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