Picture these scenarios that involve culture in international business:
Scenario 1: New Importing Business
You’re thinking about importing slippers from China and selling them in the U.S. You’ve seen various types online through Alibaba and other sites and are trying to decide whether you should buy them without actually seeing, touching and examining them up close. One friend advises you to try and get some samples and use those to make a decision. Another friend tells you it would be worth it to go to China to meet the various suppliers, negotiate deals while there, and talk about possible custom orders.
Scenario 2: Taking Production Off-Shore
Your company is looking for ways to cut costs in manufacturing and is considering off-shore production. You need to look at various countries and make sure you understand their legal, political and technology structures, and the locals’ attitudes toward your country might also make a difference. Having an off-shore manufacturing site means you will have to hire locals and understand recruiting and hiring laws. You will also have to consider a host of issues including benefits packages, proper permits, site location, and researching tax advantages and exporting issues. Lastly, you will have to analyze whether the locals will have the skills and training necessary or if they will have to be trained to be successful in the role.
Scenario 3: Expanding Your Market
Your firm is looking at expanding markets. Your home market is saturated and there’s increasing competition from others. The CEO gave the order to start looking at foreign markets and come up with some recommendations a few months ago. As head of the team, you’ve narrowed your choices to several European countries. Now it’s time for you to visit the places, talk to potential clients, and see how your competitors are marketing and distributing their products. It is also imperative to talk to importers and determine the best distribution network—should you go with an established distributor or hire your own sales force?
Where is the culture in all that?
Each of these situations is focused on a very specific business reason for going international. Is international business just business?
Anyone who has been involved in these situations knows that “culture is international business.” There is no way to operate successfully in a foreign environment, whether building a product or selling one, mainly importing a product or acting in some other capacity with foreign suppliers—without understanding something about the culture. A countries culture is what dictates how they operate, what they think is fair, the degree to which money is important vs. the relationship, who is protected, and who takes the risks in foreign transactions.
Without understanding the culture, it will never be possible to answer the “whys” about the local laws, practices, perspectives, and behaviors. The keys to your success in international business is taking the time to invest in what you need to know and manage in your new relationships with equanimity when you’re the fish out of water in a local country.
The three above scenarios are all about culture, something you can learn more about and build with if you have the right training. Our IES and GCI Inventory give you that training so you can see success when you do business internationally – learn more about it today.