One important issue that affects performance in global markets is cultural difference, explains Dr. Ashraf Mahate, Head of Export Market Intelligence at Dubai Exports, and Vice Chair of the Economic Policy Committee, Dubai Economic Department.
Culture is defined as a comprehensive system of behaviour patterns that tend to be learnt, as opposed to being inherited. These patterns differentiate members of a particular society from another. The behaviour patterns can include a range of aspects such as customs, religion, language, material artefacts, to those of a psychological nature like attitudes and feelings.
Due to the integrated nature of culture it is not always easy to understand all its various aspects. Of course, one would not expect a business owner or manager to be a master of all the cultures across the globe. Nevertheless, it is important to be aware of the key cultural aspects of a country that a company has selected as a potential export market.
Globalisation and an increased level of tourism have opened once closed countries, thereby making people more aware of different cultures. At the same time the Internet and media have tended to reduce cultural differences. Even though differences have been reduced they, nevertheless, exist and as a general rule exporters should respect the culture and traditions of the country with which they wish to do business. The golden rule of business etiquette is to be open-minded, non-judgmental and flexible. While travelling abroad, exporters should keep the following points in mind:
Language
All business issues, especially financial ones, are very much affected by language. At the basic level business negotiations include the price, delivery dates, shipping methods and method of payment. These can be misunderstood if one of the parties involved is not fluent in the other party's language. Even if both parties speak a common language, misunderstanding can take place based on the general understanding of certain words. For example, English is spoken in the UK, USA, Australia, Canada, South Africa and New Zealand, among other countries. However, in each country there are small differences in usage or the interpretation of words. For instance, the Spanish word "maEana" from a literal context actually means "tomorrow" however in general business usage it tends to imply "not today." In other cultures one tends not to use certain words in order to avoid embarrassment. For example, in many Asian countries one would not say "no" directly as it is considered to be rude. In these circumstances the exporter will need to be able to correctly interpret if a yes means maybe or even no. Therefore, in many cases it's important to know and understand the nuances of a culture so as to correctly interpret the meaning.
Punctuality
Being punctual shows respect for a business associate's time and commitment. Even when it is culturally acceptable to be late, the exporter should always be on time for appointments.
Addressing individuals
Different countries have different practices for addressing people. In some countries, using first names is acceptable immediately, in others, this would be seen as highly improper and interpreted as rude or insulting. An exporter should never use first names unless invited to do so. The correct pronunciation of the names of each business contact should also be practised beforehand in order to avoid embarrassment for both parties. Special rules about addressing women should always be adhered to.
Dress codes
Dress codes vary from country to country, in some it is formal and in others, informal or casual. Special note of dress conventions for women should be taken into consideration. Sometimes formal discussions are followed by informal dinners or get-togethers. Here again, customs differ on how to dress for those occasions.
Greetings
Different forms of greetings are used in different places. Shaking hands may be acceptable in one country but frowned upon in another, whereas bowing may be the formal greeting in some countries. Exporters should be sure that they know the right manner or practice for greeting women.
Conversation
Some societies are serious by nature and are not in the habit of cracking jokes or narrating anecdotes during business discussions, while others would consider conversations dry and uninteresting otherwise. It is also a good idea to be well informed about sensitive topics which need to be avoided (political situation, recent scandals and so on), and of topics to which it would be polite to refer (World Cup victory, national celebration and so on).
Socialising
In some cultures, businesspeople frequently invite clients to their homes and extend hospitality, while others keep the personal side of their lives away from all business transactions. It is important to be aware of the accepted practice to avoid accusations of attempted bribery.
If invited to a social affair, exporters should accept the invitation as a sign of respect. Many countries consider after-hours events a way of getting to know more about the exporter's background. An exporter can contact embassies, or High Commissions for any country-specific information required on business etiquette.
Giving gifts
Many countries practice this custom; the exporter must know whether a gift is expected or not, and to whom the gift should be offered (for example the host, the wife of the host, the family, the business contact, or the company head). A gift to a government official may appear to be a bribe, therefore it is important to make sure the gift is appropriate and will be well-received before giving it.
Negotiating styles
Some countries habitually enjoy negotiating and like to haggle over the terms of any transaction. Others prefer a firm and precise proposal which they can seriously evaluate and respond to. This is an important consideration, when preparing for a visit.
Business card
An exporter should always carry business cards with information printed in the native language on the reverse side. In some countries, business cards are treated quite reverently, as a declaration of the status of that person. It is important not to bend, write on or put away the business card while in the company of the presenter of the card.
Dr Ashraf Mahate, Head of Export Market Intelligence at Dubai Exports (formerly known as the Dubai Export Development Corporation), an agency of the Dubai Economic Department; and Vice Chair of the Economic Policy Committee, Dubai Economic Department
Religion
In a number of countries business and religion are interrelated both in terms of holidays as well as the legal and commercial contracts. Religion also affects the manner in which business is carried out as well as the products that can be sold.
Corruption
Generally speaking, corruption is defined as any form of financial or non-financial inducement offered by one person to another. The most common example of corruption is bribery, which in some countries tends to be the normal order of activities while in others it is a punishable offence. There are two aspects to corruption -- first, the company has to decide if it wishes to operate or export to a country with a high level of corruption. The level of corruption can be determined from the Corruption Perceptions Index produced by Transparency International. Second, if the company decides to operate, then it needs to know how to conduct business in such an environment. Of primary importance here are the likely costs of making such "grease payments" as well as ensuring such payments can be made legally.
Government involvement and legal framework
The culture of a country also impacts on the involvement of the government in the corporate sector. It also determines the level of protection provided to foreign companies through its legal system. For example, in some countries the law is based on code law while in others it is common law. Similarly, the development of law differs whereby in some countries the laws are well established whilst in others they are being created almost daily.
Women in business
Discrimination based on gender is, for the most part, no longer openly made when conducting business negotiations. Businesses around the world have lowered barriers to women who now occupy senior management positions. However, in some cultures, history, tradition and social norms may still deny women true equality in the international business world. Business practices based on gender differences may be more pronounced in the case of SMEs who usually conduct business on a personal level. It is important to note that the treatment of women who are residents of a particular country does not necessarily indicate how foreign business women will be treated.
About
Dr. Ashraf Mahate is the Head of Export Market Intelligence at Dubai Exports (formerly known as the Dubai Export Development Corporation), which is an agency of the Dubai Economic Department. Dr. Mahate is also the Vice Chair of the Economic Policy Committee with the Dubai Economic Department. He has written a number of journal articles, chapters in books and edited books in the areas of economics, finance and banking. He has also presented papers at major international conferences. Dr. Mahate has provided extensive consultancy services to various organisations in the areas of banking, economics and finance. He has been a director of a number of companies including a venture capital company and a private equity fund.
Dr. Mahate received his doctorate from Cass City University Business School in London (UK) which was ranked by the Financial Times newspaper as the 12th best university in the world for finance. He read Economics at University College London, followed by a Masters in International Economics and Banking at the University of Wales in Cardiff. Dr. Mahate is a professional educator and received his training at the Institute of Education (University of London). He is a member of the Chartered Institute of Managers (UK) and a Member of the Institute of Commercial Management (UK). He is also a member of the Association of Certified Anti-Money Laundering Specialists (ACAMS).
EDC is grateful to International Trade Centre for allowing it to use material from its Trade Secrets: The Export Answer Book for Small and Medium Sized Exporters, September 2006.
For more information on Dubai Exports please visit www.dubai.ae/en.portal
2011 CPI Financial. All rights reserved.
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