Cultural Differences in Business

CHINA

Public relations firm Weber Shandwick Worldwide gives a list of ten
challenges to doing business in China. In summary they are:

* Customer loyalty/retention—there is a constant influx of new brands,
increasing competition
* Cultural sensitivities—westerners do not usually have extensive
knowledge of local cultural and governmental customs
* Discrepancy between government policies and economic growth—recent
economic growth is rapid and the government is not adapting policies
at the same rate.
*Intellectual property—China has an extensive counterfeit industry,
making protecting assets difficult
* Innovation/creativity—Historically the Chinese people have not been
encouraged, or even allowed, to think for themselves or think “outside
the box”
* Employee loyalty/commitment—employees switch jobs frequently to “get ahead”
* Building networks and alliances—“Guanxi” (relations) are the key to
doing business in China. Building trust takes a long time.
* Lack of talented managers and appreciation of “brain power”—many
managers have not been afforded the opportunity to study
internationally or gain international experience
* Flexibility and adaptability to change—company structure has gone
from state to private, and domestic to internationally so rapidly that
it has been difficult to adapt sufficiently
* Wide geographical, cultural, and personal income disparities—China
is such a large country with varied markets that universal marketing
is a near impossibility


JAPAN

Besides the obvious challenges from a language standpoint, there are
many subtleties of Japanese culture that permeate their business
style.

DO:
* Bow slightly when introduced or leaving a meeting.
* Study a person’s name card/business card carefully, and ask a
gentle, thoughtful question.
* Follow up with a thank you fax, email, or letter.
* Be introduced through a trusted customer, client, employer, etc.
* Provide a dinner meeting at some point.

DON’T:
* Be late.
* Toss business cards across a table or write on them.
* Press too hard for a commitment or be too aggressive when closing a deal.
* Chew gum during a meeting (probably a no-no here, too!).

Business differences in Japan are also addressed in the subsequent
lecture slide. Some of the highlights are:

* Decisions tend to take longer, along a prescribed step-by-step process.
* More consensus is typically sought in Japan because of the high
number of people and business entities involved in transactions.
* Patience is very important.
* There is stronger loyalty, so companies do not change business
partners or vendors/suppliers very often.
* Business in Japan is often organized in large conglomerates with
many “family companies,” so it can be difficult to become a “qualified
vendor.” The process can take one year or more.
* If you do not have an established presence in Japan it is easy to be
passed over as a new business partner.
* Contracts can take up to a year to be negotiated.
* Payment terms tend to be longer.

* Japan is group-oriented with emphasis on harmony (“Wa”).
* Consensus matters a lot.
* According to a Japanese proverb: "The nail that sticks up gets
pounded down". Don’t stick out.
* "Honne and Tate Mae." The former is one’s true feelings and the
latter refers to a façade. In other words, people often hide their
true emotions in order to save face.

INDIA

India has become a major player in international business, especially
with recent discussion of outsourcing and offshore business ventures.

* India is a versatile and diverse country. Do your research.
* Don’t judge India based on tourists’ impressions.
* Communicate carefully, as a premium is placed on this.
* Never squirm.
* Never shake hands, touch, or sit close or next to a woman.
* Keep a respectable distance between a man and a woman, especially in public.
* Indians often want to know everything at the first meeting. Don’t be offended.
* A foreigner’s value may be equated with the money that can be
obtained from him or her.
* The more you want something, behave as if you don’t care if you don’t get it.


BRAZIL

Brazil is often listed as one of the world’s leading emerging markets.
It is a country rich in culture, demanding that businesses obtain a
greater understanding to forge successful relationships. There is a
nice fact sheet available from Window on the World, Inc. Some of the
highlights include:

* The People: warm and friendly, lively, free-spirited
* Meeting and Greeting: take time to greet and say good-bye to each person present
* Body Language: physical contact is part of simple communication; do not shy away
* Corporate Culture: don’t get right to business; face-to-face contact
is the most important; facts are not always accurate initially as
Brazilians expect a certain amount of “hype” during negotiations
* Dining and Entertainment: always dine in a prestigious restaurant;
allow plenty of time for meals (2 hours or more)
* Dress: Brazilian women dress “sexy” for all occasions; foreign women
wanting to blend in should avoid looking too formal or “stiff”; men
should wear a dark business suit, white shirt, and a tie
* Gifts: they are not important in establishing business
relationships, so people do not expect them at first; an expensive
gift may be viewed as a bribe.

MEXICO

With its proximity to the United States, and its impact on immigration
and local business, Mexico is an important country to understand when
considering the global economy from the U.S. perspective.

* Women should initiate handshakes with men.
* Mexican men may exchange a type of bear hug, called an “abrazo.”
* Handshakes at the end of a meeting usually affirm what was discussed
or agreed to.
* Conversations occur at a much closer physical distance than in the
U.S. Moving away to maintain “personal space” is considered
unfriendly.
* Eye contact should be infrequent.
* Men should avoid putting their hands in their pockets in public.
* Putting your hands on your hips signifies a challenge.

China Market - McKinsey research

The Middle Kingdom’s middle class
A social revolution will soon transform China, and multinationals that do business there can’t afford to ignore it. So far, they have mostly focused on the country’s tiny minority of urban-affluent consumers. But as more Chinese migrate to the cities for higher-paying work, they are steadily climbing the income ladder. By 2011, McKinsey research suggests, China should have a lower middle class of 290 million people; by 2025, the upper middle class will be 520 million strong, with staggering disposable wealth. For many multinationals, this is the market of the future.


Multinational companies should remember that as incomes rise, spending patterns change: food and other necessities account for a smaller proportion of household budgets, discretionary expenses such as recreation for a larger one. Meanwhile, however, tomorrow’s middle-class consumers are today’s relatively poor urban workers. By serving them now, a company can gain the experience needed to stay in the game as their incomes and tastes evolve. For more on the country's changing consumer segments, read “The value of China’s emerging middle class” (2006 Special Edition: Serving the new Chinese consumer).