Business Diplomacy: Cross-Cultural Negotiations

Would you present, as a business gift, a bottle of vintage wine to a Muslim business partner? Even before taking your seat on the negotiating table or speaking a single word, you’d have committed a large unforced error. In business, where impressions count for a lot, you can’t afford to be culturally insensitive.

​

Recently, an article in the Harvard Business Review dug deep to identify the base components making up future-ready skill sets for the business world. It reiterated the importance of good communications ability but also introduced three new qualities necessary to succeed in the fast-paced, modern era.

​

Beyond change management on a personal and organisational level, beyond learning how to learn, the Harvard Business Review found that cultural sensitivity was the most important aspect in preparing skill sets to come. With the world becoming smaller and increasingly interconnected, the ability to work across cultures has never been more emphasised. 

​

Logically speaking, cultural sensitivity is also indispensable in cross-cultural negotiation, and turning a blind eye to its importance is to willingly forgo advantages in securing business opportunities. Conversely, when you take the time to research and understand the cultural background of the other party, negotiations will be smoother and less awkward, and it’ll be easier to get them on the same page.

​

Don’t Get Lost in Translation

The work of taking cultural differences into consideration is far-reaching and extensive – even the language of the culture in question can present new variables to contend with. For instance, when I do business in Japan, I’m reliant on my local Japanese colleagues as I don’t speak the language.

​

If your local counterparts understand and share your goals, they will aim to deliver a message that aligns with what you’re trying to express. If you don’t have any local liaisons to work with, or if you’re going there for the first time, it’s worth spending some time to sit down with your interpreter and work with them to convey your messages in a culturally appropriate manner.

​

To ensure that your intentions and messages cross the language barrier intact, it’s necessary to develop a strong relationship with your local interpreter or translator. Suppose “no” doesn’t actually mean a hard “no” in the target language, and comes across as more of a “maybe we’ll look into it”. In these situations, having your interpreter use a literal translation may be contrary to the position you’re trying to express – that’s why it’s important to properly communicate your intentions to your interpreter, and through them.

​

People are the sum of their upbringing, cultural and societal influences. In a business negotiation context, understanding these influences can help you anticipate their behaviour and expectations to a certain extent. 

​

If you’re doing business in the United States, which has a very individualistic society, you can expect the other party to have more leverage and delegated power when negotiating with you. Conversely, in more consensus-based societies like China and Japan, the other party may lack authority or power to complete the deal without oversight, and they may need to secure buy-in from the company owners or founders. I have often found that one needs to convince two people to finalise a deal in the US, but around 20 people at minimum to achieve the same outcome in Japan.

​

In some cultures, where you sit at the negotiating table can even signal your position in the company hierarchy to the other party. In Japan, whoever sits at the head of the table is understood to be the big boss of the company, but this person is not expected to contribute substantially to the conversation taking place. The big boss’s role in the negotiation is mainly symbolic – they are there to display their business’s commitment to the deal and to reflect the importance of the customer. Each big boss is flanked by his or her deputy, who is the company’s chief negotiator and responsible for driving the agenda.

​

Depending on the cultural context, it’s important to understand your role in the negotiation and how you should behave. When I travelled to Japan for business, the local office had me positioned at the head of the table. I was very keen to make the deal happen and initially jumped into the conversation, taking an active role. It was only after that I learnt the hard way what my role was – to stay silent and support the local team with my presence as the company’s regional representative, emphasising our commitment to doing business overseas.

Customs and Stereotypes

When navigating cultural differences, one thing to never forget is to show respect to the other person when doing it. This is the foundation of cross-cultural negotiations, and comes before everything else, whether it’s about the subtleties of language or observing their workplace customs. 

​

In China, after wrapping up contract negotiations, you’d typically go out for a meal and some drinks with your client. The idea of showing respect appears even in something as simple as offering a celebratory toast. When both parties clink their beer mugs or wine glasses together, you want to have your mug or glass below the other party’s, in order to show deference and respect to them. It’s the small things like this that matter, indicating to them that you’re respectful of their position and their culture. It also shows that despite your different cultural background, you’ve put aside time and effort to research and understand their culture. 

​

Cultivating these relationships pay off, especially in cultures where cold calling is just not a thing. In places like China and Japan, potential business leads aren’t likely to meet with you if you haven’t been endorsed by someone they know personally. Even when they accept your offer to meet and talk business, they’re only initially doing so to ‘show face’ to the friend who’s recommending you to them. The Chinese concept of ‘face’, or mianzi, has to do with the maintenance of one’s reputation, dignity and social acceptance. Showing ‘face’, in this context, then refers to respecting their friend’s endorsement by agreeing to meet with you.

​

“Stereotypes exist because there's always some truth to stereotypes. Not always, but often.” – Maz Jobrani, Iranian-American comedian and actor

​

While often over-simplified and reductive, there is some worth to analysing cultural stereotypes as part of studying other cultures. When doing so, it’s always advisable to avoid over-generalising and maintain a healthy dose of scepticism – cultural stereotypes are best used as an introduction to a more nuanced understanding of their culture, followed with research and study. 

​

Cultural differences can also be seen not just from one country to another, but even within the same country. Many people mistakenly perceive Chinese culture as monolithic, since China’s common language is Mandarin. Yet if you go to Shanghai for business, what you’ll find is a distinct Shanghainese culture, with their business people renowned for being some of the smartest and most ruthless negotiators in China. If you’re dealing with someone from Shenzhen or Beijing, you should expect to adjust your expectations in accordance with their cultural background and outlook. I would say the same of India as well. The late Singaporean prime minister, Lee Kuan Yew, had this to say of India:

​

“India is not a real country. Instead, it is 32 separate nations that happen to be arrayed along the British rail line.”

​

Underlying this bold statement is his understanding that India does not have a single shared culture, but a diverse multitude of sub-cultures and identities. From my personal experience negotiating with fellow Indians, someone from Chennai might be more soft-spoken and willing to listen, while someone from Delhi might boast a fair bit and be a big talker, denying you a chance to get a word in edgewise. 

​

It is worth remembering that just as you have stereotypes about businesspeople from other cultures, they also have some stereotypes about yours. Through experience, I learnt that when I, an Indian, worked in Japan for an American company, I was perceived by the locals as someone who was not powerful. However, people from Japanese companies also accepted me as someone who was reasonable, and less threatening than an American; consequently, they were willing to be more open with me. 

​

As an aside, I would also note that the typical Singaporean businessman in China is seen as naïve and easily taken advantage of, while the Chinese regard Indian businessmen as equals in negotiating ability. Regardless of whether the other party holds positive or negative cultural stereotypes of you, with the right finesse, it’s possible to turn their preconceptions in your favour on the negotiating table.

After taking cultural background, customs and influences into consideration, more precise research is still needed – regardless of what country the other negotiator is from, one should always seek to understand them on an individual level. If they have a LinkedIn profile, even better. This applies not just cross-culturally, but in any business situation where negotiation is involved.

​

It’s also a good idea to research your competitors in the country you plan to do business in, to determine how easy or difficult it is to break into the market there. If your business plans in the country are long-term ones, you should definitely start doing groundwork and establish work relationships with the locals.

​

If you have the benefit of working alongside counterparts in overseas offices, seize the opportunity to talk to them and learn from their first-hand experience doing business in that country. Alternatively, you may want to invest in the services of specialist companies that offer cross-cultural training. By taking the extra step to understand the history of other cultures, you can also find new insights that can be incorporated into your overall approach towards negotiating.

​

In Japan, lots of potential business development will be closed off to you if you’re a complete unknown. However, if you’ve travelled frequently enough for business there (for example, three to four times a year) and Japanese business partners have witnessed your commitment, they’re likely to open up and be more forgiving. Even if you make one small mistake, you won’t be blacklisted from their markets.

​

Even after extensive preparation, there are still some things that you can’t prepare for. The only way forward is through experience – with the benefit of research, avoid committing major cultural taboos, and take the inevitable minor issues in stride. Get used to saying “sorry, I didn’t know”, because mistakes are bound to happen when engaging in new and unfamiliar experiences. 

On Approaching Some Cultural Differences

Good English does not guarantee good communication. While this phrase sounds counter-intuitive, once you think about it, cultural differences apply here, as with so many other situations. It’s worth remembering that a common language does not supersede cultural variations between different countries. If one person is an American and the other party is an Indian who speaks good English, both people still come from completely different cultural backgrounds. One would likewise never approach Taiwanese or Singaporean businessmen with the same playbook for Chinese businessmen just because they all speak Mandarin.

​

When handling remote correspondence with personnel or business prospects from other countries, remember that people from different cultures approach the issue of punctuality differently. Nonetheless, one thing should always be constant – your deliverables should always be timely. 

​

Countries like Switzerland, Germany and Japan emphasise the importance of being on time and people there will form impressions about you and your company based on that – you need to make sure that they don’t walk away with a negative impression if you want to do business. Even beyond these countries, the concept of respecting the other person’s time by being punctual has become a universal business norm. 

​

The concept of small talk also varies between cultures. If you’re doing business in Brazil, you can expect 20-minute conversations that hardly touch on the business topic at hand, while Germans aim to keep introductions short and simple before going into the agenda. As with other aspects of cross-cultural negotiation, prior research will help you to manage your expectations regarding the flow of meetings.

​

In India and China, you should be prepared to undergo several rounds of negotiation, with the expectation on you to offer concessions every round. Initially, you may find yourself dealing with someone in a role similar to yours, before you get to speak with the business’s VP or the owner’s second-in-command. This person will often negotiate and speak on behalf of the owner and aim to wrest more concessions from your side. Finally, when you find yourself speaking to the boss, he or she will also seek even more concessions. With this progression in mind, your overall negotiating strategy should aim high and gradually arrive at a more feasible outcome.

​

Sometimes you should also prepare for a marathon, not a sprint. In Western cultures like the US and Germany, clients are upfront about their requirements and expectations. If you have the best pitch that aligns with their goals, you’ll get the business, and it’ll take a relatively short period of time from start to end. In China, India and Japan, it may take a few months to arrive at the same basic information regarding their needs and wants. Winning over new business prospects can require an extended campaign of subtle, steady relationship-building, involving not just key decision-makers but every stakeholder with a role in the bidding process.

​

Rarely, you might have to expect not just the unexpected, but the unscrupulous. In China, after I had signed the contract with the other party, we went for a meal to commemorate the occasion. After the meal, he actually tried to wrangle further concessions from my side, bringing up a new, better offer from a competitor. A signed contract may not be worth what you think it is; it would be advisable to anticipate such unexpected situations and devise backup plans for them.

​

In 1984, during a state visit to China, US President Ronald Reagan pointed out to Chinese President Li Xiannian:

​

“Two hundred years seems like the blink of an eye to Chinese civilisation; yet, for Americans, this spans almost the entire history of our Republic…There are differences between us, yes, differences that should be neither glossed over nor dented — denied, I should say. Yet we, the people of China and the United States, share a sincere desire for peace and prosperity, and we understand that by working together, emphasising our areas of agreement, everyone will benefit.”

​

Just as in diplomacy, conducting successful business overseas will require acknowledgement of cultural differences. In a world that’s smaller than ever, it’s impossible to overlook these differences, but it’s very possible and very important to bridge the gap through knowledge, effort and commitment. 

1 Adapt and Be Flexible

You can’t have a cookie-cutter approach to the world. Every culture, country and person will require a different approach.

​

2 Do Your Homework

Research, read up and know your history. Beyond that, augment your cross-cultural knowledge by talking to the locals or consulting your local colleagues. Before any meeting, spend a lot of time with your interpreter to ensure that you’re both on the same page.

​

3 Expect the Unexpected

Be mentally prepared to handle unforeseen situations. While you should always be vigilant and avoid making significant cultural taboos, a smile and an apology will go a long way to get back on track when you encounter inevitable, minor awkwardness.