Understanding International Business Practices
When you travel to a new country, taking time to learn about the cultures you'll encounter is as an essential part of your preparations as making sure your passport is in order and bringing the right currency. Knowing what to expect in a foreign country doesn't just mean learning about its language, history and national cuisine. It also includes learning about the peoples' culture, attitudes and the behavior they exhibit and expect.
Understanding cultural attitudes is just as important when you're conducting business internationally as it is when you travel internationally. After all, being sensitive to cultural differences like the level of formality that's expected in a business meeting, the type of language you should use when greeting someone, and nonverbal cues can mean the difference between a lasting business relationship and a failed transaction.
What Kinds of Cultural Differences Should You Expect?
When trading internationally, you will undoubtedly encounter business practices that seem unusual or even strange. At first, it may seem difficult to deal with these differences, and you might feel as if the other parties should change their ways to accommodate you.
However, being patient and educating yourself about the cultural differences you can expect to encounter in each country will lead to better communication, greater understanding and a smoother, more efficient purchasing process.
While the rules and regulations of doing business in Europe may be similar, the ways of communicating and the overall business practices can vary greatly from country to country. In some countries, business is a slow process with an emphasis placed on personal relationships. While in others, decisions are made swiftly and logically, generally involving the creation of strict protocols.
For example, Northern European countries including Germany and France tend to have more organized, hierarchical and formal business structures. Planning and analysis are important and logic is prized.
In Spain, emotion is more acceptable in business, and greater flexibility is needed to respond to the changing business climate. Verbal discussions are more important than written information, and Spanish businesspeople may appear overly dramatic to many in the rest of the world.
Meanwhile, in the U.K., business structures are a bit more informal and humor is often used. The British feel strongly about the importance of teamwork and team bonding. They also strive to avoid conflict and tend to use indirect language to avoid confrontation.
In most of South America, personal business relationships are important and are built slowly and gradually. South American businesspeople are typically averse to risk, and take a long time making decisions. Business communications in South American countries are generally verbal rather than written; after sending an email or letter, you should follow up with a phone call. While being emotional is seen as a positive thing, showing respect is still critical, as management is typically very hierarchical. It's important to make sure you are dealing with a decision-maker.
People from Canada and the United States are generally known for being direct, but friendly, and who are quick to get down to work. Sometimes this strikes those from other nations as being too blunt. In general, Americans and Canadians share a propensity for straight talk, an appreciation for logic and a desire to move projects forward quickly, while in Mexico, like South America, relationships are very important, business takes time to develop, things are not a rush and the pace may seem slow.
Keep in mind, however, that all three nations are large countries compared to many nations, and attitudes can vary significantly within each country. For example, in general, the further west in the U.S. you travel, the more casual business attire and language become, while on the East Coast of the U.S., business is more formal and transacted more rapidly.
Business practices throughout Asia often seem exceedingly formal to those from the U.K. or U.S. because of the importance Asians place on status, hierarchy and showing respect. Businesspeople in Asian countries take a long-term approach to business relationships, and taking time to develop a close and trusting relationship is important. Being introduced to potential partners through a trusted connection or intermediary is helpful.
In China, business meetings start punctually and being late is regarded as an insult, so always arrive slightly early. Discussions always follow a set agenda; you should submit your agenda items ahead of time in writing, so your counterparts have a chance to review the topics before the meeting.
Japanese businesspeople are extremely formal and polite, but also usually aware that their business etiquette can be difficult for other cultures to understand. As long as you show respect and demonstrate that you are trying to observe their customs, they are typically very forgiving and patient.
When doing business in India, you will notice that there is very little confrontation, and everyone avoids overtly disagreeing with each other. Indian businesspeople consider it essential to maintain a calm and friendly attitude in order to earn the respect of those you're working with.
In Indonesia, there are specific procedures for dealing with business cards, which are generally exchanged immediately after the greeting. The cards should always be given and received with both hands, looked at carefully and treated with respect - just putting the card in your pocket is considered a sign of disrespect.
Business practices vary widely throughout African, due to the vast number of regional cultures you may encounter. It's important to consider not just the customs of the particular country in which you are conducting business, but also which region of that country you are in. In general, however, business in African nations is slower paced than in many parts of the world, and establishing trust is important.
As for South Africa, business practices there are in transition, largely due to the continuing transition from apartheid. It's important to do research on any company you plan to work with. While in general most South Africans are open, friendly and very physical - similar to Americans in their communication style - many companies are transitioning out of traditional hierarchical structures and still operate more formally. In addition, white South Africans tend to communicate more directly, while black South Africans are generally more indirect.
Preventing Problems Is Key
Obviously, it's impossible to generalize about every country you may do business with without resorting to stereotypes. Take the time to do some research and learn more about the cultural attitudes, business practices and protocols you can expect to encounter in the specific countries where you're considering doing business. Some areas that are especially important include:
Communication. Is communication in the country typically open and direct, or more subtle? Is disagreement expressed freely or does politeness matter more?
Authority. What type of respect for authority exists in the country's business culture? For example, Japanese business culture is very hierarchical, while in Dutch companies, management structure is more flat and anyone can challenge authority.
Trust. In less developed nations, trust is more critical and personal relationships often matter more than in first world countries, where laws and contracts protect business exchanges.
Time. What sense of urgency exists in the culture about responding to emails, returning phone calls or arriving on time for a meeting? In the U.S., for example, business typically moves at a rapid pace that can be off-putting to businesspeople from more leisurely cultures.
Obligation. Be sure to discuss every detail of your agreement with the other company, and ensure that the final decisions are on paper so that both parties have a clear understanding of their obligations to one another. This will also be a useful document to refer to if difficulties arise in the future.
Language. While businesspeople in most countries speak at least some English, the level of fluency varies widely. It may be useful to find an intermediary or translator to help you conduct business. In most cases, this person's ability to smooth interactions, prevent conflict and resolve problems will be well worth the extra expense.