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Business Diplomacy: Cross-Cultural Negotiations

Nov 3, 2020 | 11m

Gain Actionable Insights Into:

  • How to make sure that “no” means “no”
  • Using stereotypes the right way
  • Why it’s sometimes not what you know, but who you know

Cultural Awareness is Good Business

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.

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Tarun Malkani

Former COO, India

Rio Tinto Diamonds



Expanding into New Markets