Mark Hehlis president of Hehl & Associates (www.hehlassociates.com), a business improvement organization that provides cost reduction, quality improvement, sourcing, and training services to companies with international operations and/or suppliers. In the following interview, based on his extensive experience working in China, India, Malaysia, Thailand, Taiwan, Korea, Japan, the Philippines, Mexico, Ecuador, Brazil, and The Dominican Republic, Mark shares his insights on the importance of cultural awareness when doing business overseas.
Q: What’s the first thing people need to know about doing business in other countries?
Conducting business on a global basis requires a good understanding of different cultures. What works in your country might not work well in another and might even be interpreted as an insult. Fast communication between people and places has boosted many companies to expand in other countries. Yet, cultural differentiations are the most sustainable features companies need to take under consideration when planning for setting up abroad. A firm needs to become progressively more aware of foreign cultures when aiming for a successful future in an international business environment. Attitudes towards work and material possessions, entrepreneurship, willingness to accept risk, politics, religion, customs, and the role of women vary in different regions. How we react to and work with these differences are our challenges.
Q: What’s a good example of a cultural blunder that damaged a professional relationship?
Recently I was assisting a start-up international corporation with its operations in Asia. Their Asian division (not China) was buying kits performing final assembly in their country. I noticed many instances of miscommunication due to lack of cultural aptitude. They handled their Chinese counterparts as if they were part of their own culture and made no attempt to learn and apply Chinese culture. I needed to spend most of my time on the ground in China, constantly resolving conflicts between my client and the prime Chinese supplier. Most of these issues could have been avoided with the application of some cultural savvy. When the world recession hit in 2008, material prices dropped significantly. The main supplier was asked to lower its prices because material was the major cost component. The supplier refused. The owner told me “unofficially” that she was not willing to lower her prices because of the difficulty in doing business with my client. The root cause of this “difficulty” was mostly cultural.
A major problem was the manner in which these Asians communicated with the Chinese. There were many instances where direction was given to either my clients’ personnel in China or a Chinese supplier, and actions did not occur as expected due to some misunderstanding. They responded by using the term “I told you very clearly.” Just because some verbiage is clear to the sender does not mean that it is clear to the receiver (especially one who is not using their native language). There was a failure to realize that the Chinese did not possess the same level of English proficiency as these other Asians and that one must confirm understanding and resultant actions by a follow-up phone call. My client paid a higher price and has an unmotivated supplier due to their lack of cultural sensitivity and application.
Q: In the U.S. there seems to be a real need for speed—is this a cultural issue in other countries?
In America we think in terms of whatever it takes to close the deal fast and we tend to push hard. When you are involved globally, you have to get to know how everyday cultures work, from sitting down to dinner to learning taboos. Things move slower overseas.
North Americans communicate directly, which is not the norm in other parts of the world. Learn to read between the lines or find someone who can.
Another rather unique characteristic is our reliance on contracts and the legal system. There are more lawyers in the U.S. than anywhere else in the world. Just because it is in the contract does not mean that it will be accomplished (however, a contract is still needed and is recommended). In most low-cost regions personal relationships are more valued, so work hard on this one! North Americans tend to be individualistic, straightforward, and direct. They have no problem in challenging authority. “Time is money” is something that most North Americans believe—this is not the same in other parts of the world.
Q: Are there still sensitive cultural issues in China, now that so many North American companies have operations there?
Personal dignity (“Manzi,” or “saving face”) is important to the Chinese. Be careful not to say or do anything that will result in losing face. Unlike westerners, the Chinese respect and will not challenge authority. A “yes” answer can mean just that they know that you are speaking and nothing more. It may not necessarily infer understanding, agreement, or that action will take place. You may not hear them say “no.”
The Chinese may seem unfriendly when being introduced. They are taught not to show excessive emotion. Use both hands when presenting business cards and be sure the writing faces the person to whom you are presenting your card. Cards should also be received with both hands. Do not write on it or immediately put the card in a pocket or bag—this is considered rude.
Do not be surprised when asked personal questions regarding age, marital status, children, family, income, job, etc. This is done to seek common ground.
On the other hand, the Chinese will be uncomfortable with American familiarity, particularly early in a relationship. The arm around the shoulder or pat on the back with “just call me Bob” approach should be avoided. Humility is the norm, so avoid bragging or boasting.
Other Western gestures that are taboo in China include:
- Pointing the index finger—use the open hand instead
- Using the index finger to call someone—use the hand with fingers motioning downward as in waving
- Finger snapping
- Showing the soles of shoes
- Whistling is considered rude
Q: More companies are also doing business in India—what are some important cultural behaviors to remember when working there?
Indian society is influenced by the “caste system” and individuals usually accept their relative position. The upper caste expects to be catered to. It is expected that individuals arrive on time; however, sometimes a double standard exists if your associate arrive late.
There is a strong family orientation in India, so inquiring about family is important.
For conducting business, relationships (sometimes more than facts) and developing trust are important—do not rely on the contract alone. Head-shaking from side to side indicates agreement and it is not a negative gesture. Decisions are made slowly, so be patient. One reason for this is the mindset that “the boss knows best”: thus hierarchy can get in the way sometimes. Also, indirect communication is the norm, so learn to read between the lines. Also always accept refreshments to avoid offending your host.
Q: Which offshore destination would you say is the best-aligned with the North American culture?
The Phillipines. Filipinos are a warm and friendly people and a genuine pleasure to work with. They are eager to learn, flexible, positive, and handle a crisis well. American English, by law, is used as the teaching medium in the public school system. Thus, there are no communication issues.
Maintaining “face” and upholding an individual’s reputation is a vital component of Philippine culture. In the Philippines the expression of anger or negativity, or experiencing public embarrassment, results in a “loss of face” and as such has negative consequences.
The Philippine style of communication is indirect and takes into consideration the perception of the recipient. In order to save face and remain courteous, Filipinos rarely give a direct answer of “no” and will avoid disagreement, rejection, and confrontational behavior, especially when a superior is involved. The word “yes” is often used to disguise more negative responses and avoid causing embarrassment or offense.
The pace of doing business in the Philippines is slow and the decision-making process tends to be detailed and protracted. They tend to be non-aggressive, laid-back, and show up late for appointments. Filipinos like to joke and laugh a lot. Polite and respectful, they are eager to please those in authority.
Q: There are several emerging countries in Latin America that are becoming offshore hotspots for manufacturing, such as Brazil. What are the major cultural considerations there?
First, be aware there are 20 different countries with distinct cultures in Latin America. Avoid placing them in one category. Most speak Spanish, except in Brazil where the national language is Brazilian Portuguese. There are some country-to-country differences in the Spanish language in Latin America. Some words that are offensive in one country are acceptable in others. Ensure that your translations are properly done.
In all Latin countries, the attitude toward time is less rigid than among North Americans. Delays should not be a surprise. Do not arrive on time for a social event; arrive at least 30 minutes late. Latinos will usually stand closer together during conversations, so be prepared for that plus casual touching and, of course, the “abrazo,” or embrace, among good friends.
Latinos are very warm and friendly people and enjoy social conversation before getting down to business. Avoid using a business associate’s first name until you’re invited to do so. Such an invitation usually won’t take long, as Latinos are generally warm and friendly. In the meantime, use the more formal “Mr.” or even better “Señor.” If your associate has a title, use it.
Wait until your host takes his seat before sitting down at the table. Always stand when a woman joins or leaves the table, and don’t eat until everyone is served. Here’s a surprisingly different thing to remember: keep your hands on the table, not in your lap, when dining with Latin Americans.
Negotiations may appear difficult and it’s wise to get everything in writing. Ensure you are meeting with the decision-makers; otherwise your contract or bid approval may take much longer than anticipated as it will have to make its way up the corporate hierarchy. In all Latin American countries, it is expected that any business discussion will be preceded by social conversation. You must take the time to build a friendly relationship first if you hope for any success in negotiating a business deal. Avoid a hard-sell approach.
Q: Do you have any parting cultural advice for companies doing business overseas?
Understanding and applying culture improves communication, establishes rapport, and builds positive relationships (relationships are more important in low-cost regions than in the West).
Always show respect, remain open-minded, and avoid stereotyping. Advance research relative to the culture, its history, and some language basics will pay dividends when you get there. Take to time to stop, look, listen, and enjoy the enriching experience. Understand and apply this new way of communication with your counterparts in other lands. The best solution is to invest in cross-cultural training for all the stakeholders involved in dealing with foreign cultures—this makes everything go more smoothly and maximizes productivity.