If you intend to open an offshore office or factory in another country to take advantage of a new, often larger market, or if you intend to migrate to a new country to apply your already seasoned business skills, you must be aware of the differences in customs and cultures that you will face in succeeding in your new market.
I believe that applying for and receiving a visa, investing your capital, and establishing the business are the easier parts of executing your new international initiative. Now it is time for partnering, marketing, pricing, selling, closing, fulfilling, and getting paid.
Experienced international business people will tell you that ignoring cultural differences is one of the top three causes of cross-border business failures. Rebecca Twose of Language Insight, a global provider of high-quality language services, writes in a blog post titled How Does Culture Affect International Business:
Culture is the ideas, customs, and social behaviour of a particular person or society. In a business context, culture relates to what behaviour is common and accepted professionally in one location compared to another. What may be acceptable business practice in one country may be very different from the approach used by businesses overseas.
Common Cross-Cultural Differences
Let’s examine some of the most important cultural differences you should look out for:
- How you communicate – The greatest communication hurdle will be the language barrier. If you speak English well, you should fare well because, in most countries, English is the language of business. But communication isn’t just about language. Communication is also about tone, mannerisms, and gestures. In my 50+ years in international business, my first rule has always been: “a smile is worth much more than misunderstandings and misinterpretations.”
- Your attitude (and theirs) – Friendliness, openness, curiosity, sensitivity, helpfulness, and respect will take you a long way in achieving your cross-market goals. The important point to remember is that, while you will want to exercise these attitudinal traits, the business people sitting across the table from you may not. After all, this is their sandbox you intend to play in. One approach that can work well is to take your time and build trust. If a transaction is meant to happen between two parties, the deal or the sale will occur when the time is right.
- Differences in Etiquette – In most countries, etiquette is a big deal and almost always the first cultural difference that you will face. You can start by knowing how to address someone when you meet them for the first time. Do you use the person’s first name, or do you address them as Mr. or Ms. until asked to do otherwise? My suggestion is to always go with the latter. How you address people falls under the broad category of formality. Formality includes many things that we take for granted in our own country. Things such as how to hand your business card to a business associate, when to stand, when to sit, and even shaking hands. During the Covid pandemic, shaking hands has been an even more complex challenge. By the way, etiquette also is important during Zoom meetings. Two more cultural differences to mention here include gender etiquette and bowing. Be very careful with gender etiquette. In many western countries, gender etiquette no longer exists; we should treat each other as equals. However, in many other countries, gender etiquette remains very important. As to bowing, if you are from a country that does not recognize bowing as a custom, do not bow. If, in your country, bowing is a traditional business custom, then indeed, feel free to bow, but do not expect your foreign counterpart to bow in return.
Some Differences in Customs
Here are just a few differences to look out for.
- Negotiating discounts – In many countries, being asked for a discount in price is very common. If you do not customarily give discounts, there are two ways to handle this difference. The first method is to quote a price that is high enough to accommodate a discount when asked. The second way is to very politely explain that your pricing takes into account several factors that include market pricing, volume, delivery dates, and other factors and that all customers are charged the same price.
- Payment terms – This one is simple. The payment terms in your new market should mirror the terms that are customary in that country, not the one you are coming from.
- Legal documents and contracts – International law is complex. Laws about trade, taxes, currency conversion, and contracts vary from locale to locale. Hire an attorney who specializes in international business and ensure that you’re following all of the necessary regulations for trade, work rules, contracts, and other matters that will be new and different to you. You may also need help navigating local filing and paperwork requirements, so seek out an attorney who specializes in business law in your new country or market as well.
Knowing differences in culture and local customs will give you an edge. One way to accomplish this task is to ask our firm to provide the market research that you will need to achieve your goals. Market research can include:
- Differences in business culture and local business customs.
- Industry analysis in your new country.
- Competitive analysis. Will you bring competitive advantages to your new market?
- Target market analysis. Who will you sell to? What are your best sales channels?
- Funding opportunities in your new market.
Yes, we are a U.S.-based consulting firm. However, we assist companies worldwide to achieve their cross-border goals and objectives. Let us show you some examples of our work.