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Understanding Cultural Norms Can Make or Break Your Business
October 18, 2016 Elizabeth Thomas, Business Development Specialist, Office of Small Business

Interviewer - I recently had the pleasure of attending a roundtable on doing business in Europe and heard Bill Beaman of JephsonBeaman speak on the impact that understanding, or not understanding, local protocol and intercultural communications can have on developing and maintaining relationships between U.S. based companies and overseas buyers. If you want the competitive edge on getting that deal, read on.

Many exporters will be working in new areas of the world for the first time. How critical is cultural awareness to their success? How does it impact the business relationship?

Bill - When you are taking your business to new areas of the world, nothing is more critical to your success than acknowledging cultural differences and adjusting to them. Too often those who have built prosperous businesses think they have developed a formula for success that will translate anywhere and everywhere. They talk about their corporate culture and their “way of doing business” as if it is a new irresistible law of nature.

What they fail to realize is business relationships are an extension of social norms, and these norms differ widely from place to place. What comes across as an admirable intensity of focus in one culture can be seen as obnoxiously aggressive in another. What may be an informality that leads to bonding in one part of the world can be regarded elsewhere as disrespectful in its very lack of formality.

The bywords for those doing business in unfamiliar parts of the globe should be humility and respect. Be humble in recognizing that you do not truly understand their culture. And be respectful in adjusting to their culture rather than imposing your own.

How can exporters best educate themselves about the customs and cultural norms of their new trading partners?

Bill - A good starting point is to look up some of the better online resources. Embassy websites, for instance, usually have a commercial section that provides some helpful insights. The Economist provides country guides that are quite useful. And the International Affairs division of the US Chamber of Commerce is another excellent resource.

Ultimately, however, our firm strongly recommends direct coaching and training of personnel who will be operating overseas. There is no substitute for being tested in mock situations and discovering how you would respond—and comparing this with how you should respond. We liken the value of in-person training to a football team that, after spending many hours studying Xs and Os on a chalkboard, finally takes to the field and actually runs the plays. That’s how you learn your core strengths and weaknesses when it comes to adjusting to new cultures.

What are some of the pitfalls you advise your clients to avoid?

Bill - Just because something has worked for you in the past, in different environments, don’t assume it will work regardless of the environment. Americans tend to equate easy informality with bonding, when the default should always be toward formality. In many parts of the world—throughout Asia, for example—relationships are developed over time and premature familiarity is uncomfortable and even regarded as disrespectful. Similarly, Americans celebrate business “drive,” but discussing business too soon (before relationships are established) is wholly inappropriate in many cultures.

Can you site an example where a lack of understanding led to a deal falling through or a break up of a trading relationship?

Bill - A CEO who later became our client went on a business trip to Bangkok, intent on entering that market. He was giving a speech and cracked a joke that was somewhat off-color. There was tittering and giggling from the Thai crowd, which the CEO interpreted as appreciation of his humor. So he doubled-down and extended the joke … and was rewarded with more giggling. Only later did he learn that the giggling was a sign that his Thai audience was very uncomfortable. He found out the hard way about a cultural reaction in Thailand that is routinely misread by Westerners—and ultimately he failed in his efforts to take his business into that country.

On the flip side, can you site an example of where cultural sensitivity led to the formation of a partnership?

Bill - One client was hoping to do business in the Middle East and was complaining to us the process was taking far too long. He was annoyed that his correspondence with his business counterparts was protracted and seemed to remain on what he regarded as a surface level of niceties. We counseled that he give the process plenty of time as his potential partners in the Middle East were needing to get to know him at a pace that was comfortable to them. For them, it was about the relationship on numerous levels, not just the level of shared commercial interests. Our client made sure to express his impatience only to us and was a model of polite and unhurried courtesy to his counterparts in the Middle East. Ultimately, this approach—atypical for an American—secured him the partnership he wanted.

Learn More

Interviewer – Having worked overseas without the benefit of upfront education on the culture and societal norms, I can personally attest to the awkwardness of unintentional gaffs. If you’re thinking about new markets and want guidance on how to build successful long-term relationships, visit Bill’s website to learn more about leadership campaigns, thought leadership and other ways to grow your export business through cultural understanding at http://www.jephsonbeaman.com/services.html, and request a consultation from your local EXIM Bank representative.

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