Why Culture is Important in International Business

Denise HummelGuest Author:
Denise L. Hummel – Universal Consensus

Editor’s Note:  We are especially pleased to welcome our first Guest Author, Denise Hummel, who contributed the piece that follows on the importance of culture in international business

Doing business on a global basis requires a good understanding of different cultures.  What works in your country might not work well in another, and could even be interpreted as an insult!  And in your role as an international human resources professional, it’s important to raise the awareness of cultural issues within your organization to ensure effectiveness.

Consider the following basic questions:

When George Bush gave Chinese Premier Li Peng a gift of cowboy boots embroidered with the American and Chinese flags, was it an appropriate gift?

  1. Yes, a thoughtful sentiment and a keepsake appropriate to the occasion
  2. No, a significant miss on the part of administration protocol experts
  3. Yes, a good choice, if only he had known the Premier’s correct shoe size

Answer: 2. 

Unfortunately, in China, the soles of the feet are considered to be the lowliest part of the body and gifts of footwear, no less embossed with the nations’ respective flag, was a significant miss on the part of administration protocol experts.

When formalizing a deal in the Middle East, it is imperative to

  1. Determine that the contract is iron clad with strict attention to jurisdictional issues of international law to secure a just outcome should there be conflict
  2. Solidify the interpersonal trust relationship as this rapport is critical both during the deal and if conflict develops
  3. Retain legal counsel in the country in which the business undertakings will primarily take place and ensure that this attorney has a golfing relationship with most members of the judiciary.

Answer: 2.

When doing business in the Middle East, the surest indicator of a successful business relationship has very little to do with the content of the contract or the extent to which the language will hold up in court.  Court systems in many of these countries move slowly with inconsistent results, and your business counterparts in many Middle Eastern countries do not put their faith in the legal system to determine the outcome of a conflict.  Absolutely essential to the success of the deal is the interpersonal rapport and relationship established during the negotiation stage and at every point thereafter.  Failure to understand and cultivate this aspect of the deal increases the risk of failure to a critical degree.

In sending an email to a Japanese colleague with whom may wish to collaborate on a potential business deal, you would be most successful if you

  1. Begin the email by addressing the individual warmly and openly, by his first name, immediately closing the cultural gap
  2. Always use Mr. , Miss or Mrs. followed by the last name of the individual, followed by an embracing and forthright interaction
  3. Use the last name, followed by the term “sama” to address your email, followed by clear text set forth with the utmost formality.

Answer: 3.

The risk of email is that it lacks certain social contextual cues such as body language, eye contact and intonation and can therefore create misunderstandings.  There is also no way to see the demeanor or reaction of your counterpart and adjust your communication strategy to compensate for a misunderstanding once it is created.   When in doubt, it is always safer to err on the side of greater formality and deference.  The Japanese have become accustomed to making allowances for informal communication from other countries, but you will proceed with more credibility if you make a sincere effort to adapt to their customs.  The use of the term “san” and, for those in a position of high authority, “sama” is honorific.  Use the last name, followed by the honorific term, followed by extreme clarity and formality in the text, with as few assumptions for context as possible.

Summary

The cultural nuances that affect international business obviously go far beyond the ability to greet your international colleague or choose the correct gift.  Issues related to the culture’s time orientation, whether it is an individualist or collectivist society, space orientation, and power distance, not to mention conflict assumptions and non-verbal communication all affect understanding your colleague across the table, as well as your chances of being understood. 

Preparation by a trained expert related to these issues not only assures that unnecessary blunders will be avoided, it brings to each of us a personal knowledge that deepens our understanding of others, thereby promoting acceptance, understanding, and on the level of international relations, peace and prosperity.

More About Denise:

12 Responses to Why Culture is Important in International Business

  1. Miguel Duarte Ferreira

    Congratulations! Great article. Liked in particular the Japanese example. Any suggestions on South Korea? I am finding particularly difficult to communicate via telephone or e-mail…

  2. denisehummel

    Miguel, is the problem primarily a language gap or is there some other issue that is creating the difficulty? Denise

  3. denisehummel

    Simone, I agree with you. Often professionals, HR included, does not become aware or “tuned-in” to the importance of cross-cultural training until they are faced with an issue that has in some way created embarrassment or lost opportunity. Typically this could be a breach of etiquette or protocol for that country, but sometimes it means losing an important deal because of underlying cultural issues that were not considered at the negotiation table. The best way to expand awareness is to keep doing what you’re doing in the education arena and encourage clients to get assistance by hiring professionals to take on the training of their staff either in the form of general cross-cultural awareness, or in training with specific regard to the two (or more) cultures in question. When you have a moment, you may want to look at my site under “services” and the sub-button for “global training” and “consulting” and you’ll see the myriad of trainings offered. Let me know if you’d like further discussion. Denise

  4. Miguel Duarte Ferreira

    Denise,
    I imagine that it is language but I sense that I am missing ‘small’ details that make all the difference in the success rate of my contacts, like, what is the best approach via telephone? Or e-mail? Is the Japanese case identical to South Korea?

  5. denisehummel

    Miguel, this demonstrates that you have very acute insight to cross-cultural issues. The big picture (overall understanding of the culture, sub-culture, region, language, religion, politics) is important, but you are RIGHT ON that it is the small details that can make or break a deal. With the South Koreans, for example, sometimes the key players to a negotiation are not even in the room, sometimes they are nodding in such a way that a Westerner interprets as, “yes,” which actually means something totally different. Yes, there are elements to the Japanese culture that are similar to the South Korean culture, but I think most Asian businessman/women would agree that the regions are substantially different, not only by country, but by sectors of the country as well. Regarding email, there are also issues of familiarity vs. formality that are different from culture to culture and that can cause minor offense that then impacts the discussion. If you have time, give me a typical (or even one isolated) example of what you’re talking about.

  6. Miguel Duarte Ferreira

    Denise, thank you for your feedback. One typical example relates to telephone interviews I need to conduct with SK KOL’s. Knowing how and when best to approach them, how to communicate via e-mail, or making a first impression over the phone, all is relevant just to reach the goal to secure the availability for the interview…and I am assuming I have a direct contact because if I do not have it is even harder…unfortunetely I do not speak Corean…

  7. denisehummel

    Miguel, let’s try to talk in person via SKYPE. The first problem (the obvious one) is that you have two parties who are both not speaking their mother tongue (I assume your common language is English). This creates a whole other layer of complexity, but I think to get to this further, we should try to speak …Denise

  8. Pingback: WHY CULTURE IS IMPORTANT IN INTERNATIONAL BUSINESS « Denise Hummel’s Universal Consensus Blog

  9. i found your article quite informative and useful.that was a good piece of work.

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  12. Before we almost do business in local Vietnam, so it is nothing about that. But when we open to all area market and got invest from USA, German company, it is different. We have to train to know well about character of culture of many country.