10 Key Steps to Successful Global Market Entry – Step 3: Know the Local Business Culture

February 24, 2017
Keith Warburton

TGG helps businesses to analyse, select and enter global markets. We have years of experience working in multiple international markets across a wide range of sectors. This series of posts is meant as a high-level guide to help people through the complex world of international trade. We have selected 10 areas to focus on which we feel are crucial for success.

Step Three: Know the Local Business Culture

It’s an uncomfortable fact but they just do things differently in other countries – but more importantly they think differently about business. Many of your firmly held beliefs about how business should be conducted, what constitutes an agreement and even when ‘yes’ means ‘yes’ may have to be abandoned when you start to work in overseas markets.

To navigate a culturally complex business world, you need to develop high levels of cultural fluency; you need the ability to be able to operate smoothly across a number of geographies – each of which may have extremely different opinions about what ‘good’ looks like in terms of relationship-building, approach to meetings, business ethics and communication. Without the requisite levels of cultural fluency, you are very likely to alienate people without knowing it and miss important opportunities when they arise. (You are also, by the way, much more likely to be taken in by charlatans and time-wasters.)

Becoming culturally fluent is a three-level process:

  • Develop awareness – you need to intellectually convince yourself that cultural differences are real and that, left unattended, can have a negative impact on the profitable development of your business. Cultural fluency is a ‘need to have’, not a ‘nice to have’.
  • Develop specific knowledge – it is not enough to just have awareness that cultural difference can have a major impact when working cross-border; you also need to know how it will impact. This is where country-specific knowledge becomes essential. When you are dealing with Saudi Arabia you need a different set of knowledge to when are working in China. (For some specific country information please visit our website www.worldbusinessculture.com.)
  • Know how to apply awareness and knowledge – once you are aware of the profound impact that cultural difference can have on international trade and have acquired some specific country knowledge, you then need to work out how to apply all of that to the differing situations you may find yourself in. This takes serious strategic thinking and should form part of your business planning at all stages – just like you look in-depth at the cash-flow implications of any overseas projects, also look at the cultural issues you are likely to encounter. (To see how our training initiatives can help with this process please visit www.globalbusinessculture.com.)

One word of caution at this point –it is vital to know what you need to learn about the culture you will encounter in another country, it is also important to have an idea of what you don’t need to know. A lot of books and training courses tend to focus on the irrelevant and superficial differences you are likely to encounter. You will never lose a deal in Japan if you fail to hand over your business card correctly and a Thai business partner will not frogmarch you to the door if you inadvertently point your feet at them. These types of issues are just not important. What is important is to understand your own cultural business mindset, the cultural business mindset of your counterparty and where there are differences between those two ways of seeing the world. The space between those two points is where the dissonances will be found.

One final point that is worth making is that the vast majority of the world (from a population perspective at least) place the development of good quality human relationships before business considerations – or putting it another way, they will only begin to consider business issues once a human relationship has been formed. Almost all of the emerging markets operate in this fashion and cultural fluency is the quickest way to help you develop those all important relationships

The next of step in or 10 step guide will look at developing cultural fluency.