Although it comes as no surprise that customs and beliefs differ in various parts of the world, we often underestimate the extent of those differences.
You might be able to infer from the movies that Japanese businessmen don’t conduct business talks in the same way as their Western counterparts, for example. But cultural differences also have an impact on aspects of life in ways that aren’t depicted in films and other media, and many of these are often overlooked by businesses trying to break into particular markets.
If you enjoy travelling around the world, you might discover that interactions with locals are governed by sets of rules and etiquettes that differ from common business practice. It therefore isn’t particularly difficult to make a potentially serious error that could all but ruin your chances of securing a profitable trade deal whilst on a business trip in a foreign country.
In this article we look at some of the most notable cultural differences that could take you by surprise when dealing with business partners in overseas markets.
Why Is Learning About Cultural Differences Important for Business?
If you are the owner of a company, you might be wondering how learning about cultural differences could help your business. Even though the COVID-19 pandemic has disrupted world trade, this temporary situation doesn’t change the fact that people in modern times have much more contact with other cultures than was the case in the past.
It’s not that trade routes across oceans did not exist in previous centuries – they did, of course – but the value of goods exported throughout the world, even just several decades ago, was many times smaller and such shipments of goods to faraway cultures were nowhere near as frequent as they are today.
If you think that expanding your business into overseas markets could prove extremely beneficial, you shouldn’t do so without a great deal of preparation and research. When you enter into business discussions with people from other countries, you might conclude that their customs are not only weird and surprising but even antithetical to your own values.
It is important to remember, however, that even if you try to see the world in an objective and non-judgemental way, we all still have underlying biases of which we might not even be aware. The values that might be central to one culture could be viewed in a negative light in others. This is not just a hypothetical situation, but reality on the ground.
In Chinese culture, the harmony of a group is valued over the happiness of an individual. It is also much more hierarchical than the Western cultures. Accordingly, in Chinese companies you are unlikely to see informal conversations between managers and junior staff, whereas, in Sweden or Norway, where social equality within company hierarchies is much more revered, they are commonplace.
For people on both sides, visiting a country with a very different culture could prove extremely stressful and, without prior preparation about what to expect, the negotiations process will be much more difficult. Cultural knowledge is not just about knowing which topics of conversation you should avoid. Even the way we interpret the behaviour of our foreign business partners depends on the patterns we’ve absorbed through our own culture.
Realising that your perspective might not be the only valid one is a good first step, but knowing more about cultural differences will help you avoid making a faux pas when meeting important business partners or preparing materials for your marketing campaigns.
Punctuality & Order
One of the most common reasons why business negotiations might be doomed right from the start is the differing definition of the term “punctuality.” You might think that to be on time means by and large the same, regardless of the participants’ cultural background, but this is actually not the case.
In countries like Germany and the Nordic countries, the United States or Japan, where punctuality is important, being late for a meeting could have severe repercussions. Failure to adhere to the plan previously agreed could be interpreted as a sign of unreliability, which is something that would make it harder for you to convince the other side that doing business with your company would be worthwhile. If you come from one of these countries, this might feel like a completely natural reaction.
However, in some countries in the African or South American continents, or some Middle Eastern countries, you are likely to find that people there don’t adhere as closely to schedules and timetables. Time is a more flexible concept, and turning up a few minutes late is not a big deal.
At the same time, business partners from this latter group of countries are more likely than those in the previous group to touch upon subjects during a meeting that aren’t closely related to the primary goal of the meeting. Because of that, for Japanese or American businesspeople visiting Arab or African countries it might be frustrating to see their counterparts’ conversation veering off in another direction. However, attempts to rush the other side would be seen as rude and could have disastrous effects.
We have previously mentioned that even the way people address each other could lead to issues in intercultural communication. Imagine that your company, with a majority of workers from Western European countries for example, wants to open an office in Tokyo or Beijing. There are certainly technical reasons why this process would be challenging, but the way employees interact with their managers and each other could also lead to serious problems. Why?
In the great majority of Japanese companies, it is essential for seniority as well as age to be respected when it comes to the way conversations are conducted. Junior employees wouldn’t address their superiors or those whose social status is above their own in an informal manner, whereas in American or European companies it is commonplace for younger and less experienced workers to talk to their managers without observing any particular formality.
To return to the previous example: if employees in your company that spans Western and Eastern markets come from different cultures and visit each others’ offices, you might find that the latter react negatively when their subordinates from the West aren’t sufficiently deferential to them. It’s important to explain to your employees in this instance that these different attitudes are not a sign of ill will, but simply of cultural differences. Mutual understanding of this between both parties will make for a better business relationship over time.
Relationship-based or Transaction-based?
If you enter a foreign market, there is also another reason why you might experience a culture shock. If you run a British, Australian or American company, then the primary objective of your meeting with foreign partners is most likely to be achieving a specific goal – signing a contract, or reaching an agreement.
If your business partners come from Latin America, Africa, or some parts of Asia and the Middle East, then naturally they want to achieve these goals as well. However, they will pay much more attention to the way the negotiations are conducted, whereas in the USA, New Zealand, Australia, or Scandinavia, personal relationships in business don’t matter as much. For example, Swedish businesspeople may be more likely than Colombians to sign an agreement despite the other side being perceived as rude if they are still eager to conclude an agreement that is going to be beneficial to both sides.
Business partners from cultures that are relationship-focused rather than transaction-focused might also feel insulted if the representative of the other side entering into the business talks is not senior enough in the company’s hierarchy. Consequently, if a Western company wants to sign an important agreement with Chinese organisations, they should send a high-ranking official, or the other side might be unwilling to agree to the terms presented.
One Language One Culture?
When we think of cultural differences, we instinctively turn our attention to countries that are far away, or at least that use languages other than our own. However, although this is broadly true when it comes to the difference between cultures, native speakers of the same language who live in different countries may still experience difficulties due to cultural differences.
Similar phrases can have a different meaning in American and British English which could lead to confusion, though this is unlikely to be particularly consequential. However, Brits and Americans differ a fair bit when it comes to the subject of subtlety and exaggeration. Brits are generally characterised as being more self-effacing in business talks as well as when describing products, services or even accomplishments. Americans are less subtle in this regard, and exaggerations are not viewed in such a negative light in their culture as they can be in Britain.
These cultural differences suggest that Americans should try not to brag as much when they speak with their British business partners, as they could be perceived as self-absorbed and dishonest. On the other hand, if you are from the UK and enter into business talks with your American colleagues, you should bear in mind that their boastfulness is at least partially attributable to cultural differences, and is not a character defect! Classic British restraint could also be viewed as a mark of secrecy by American business partners, so British partners may want to consider being more open when it comes to reporting on successes – or failures for that matter.
Business partners from the United Kingdom also often use non-verbal cues instead of straightforward statements, whilst Americans would rather do the opposite. People from different cultures might therefore have some difficulty differentiating between when such cues and statements are sarcastic and when they are seriously meant. However, although some of these issues could make communication more difficult, they probably won’t have such a dramatic effect as the other cultural differences discussed above.
Regardless of the sector your company is in, expanding your business internationally is an excellent opportunity to reach more customers and sell more products. However, although going global could help you significantly increase your company’s revenue, you are likely to encounter some unusual challenges along the way when it comes to language and cultural cues.
You are probably aware that cultural differences could make it harder for you to sell certain products in various regions, as they might be illegal or frowned upon due to religious or cultural norms. But even with this awareness, you may still encounter problems during the negotiation process with potential business partners in foreign countries. Problems could arise right from the start, especially if the two sides come from cultures with different attitudes towards punctuality.
You might also discover during talks that your business partner is not as keen on focusing solely on matters related to the main goal of the meeting.
If you come from a culture that perceives business talks as having primarily a transactional function, you might get quickly frustrated by such behaviour, which could then make further negotiations much more difficult.
However, after reading this article you should now be aware that our behaviour, as well as the way we interpret the world, largely depends on our own culture, and that its effect on us can be much more far-reaching than we realise.
When both cultural sides of a potential business partnership make sure that they research and understand the other’s culture as best they can before entering talks, the outcome is far more likely to be a success for all involved.