How Global Businesses are Effected by Cultural Differences
Medium-sized companies know that cultural differences can be a major challenge for the export business. So what should be considered in order to recognize them — and to survive?
Selling and delivering goods to domestic customers is part of everyday life for medium-sized companies. However, when a foreign company places an order, things get more complicated. That is why planning a foreign business is the be-all and end-all. It is not just questions of financing and transport that need to be clarified before a successful international business. The possible cultural differences to a foreign business partner must also be considered.
The most obvious and yet often underestimated difference is of course the language. Of course, English is now the standard language in many companies. However, when it comes to a sales contract, correct terms and precise wording are important in order to prevent misunderstandings. This can hardly be done with pure school English.
Another pitfall:
The weekly rhythm of other cultures. In many Muslim countries, the weekend often begins on Friday. It is the most important time of prayer for Muslims. So Friday has a similar status for them as Sunday is for Christians. In case of doubt, Global suppliers only have four days a week for deliveries or arrangements with the customer. And generally the time factor: In the Middle East in particular, specific appointments should be understood as a rough guide. Irritating for the “punctual business owners” — but quite normal for Arab business people and neither disrespectful nor personal. In contrast, the famous European virtues are in great demand among Asian companies. Europeans in particular are expected to be punctual and reliable, but also a serious, discreet appearance. In the Asian region, this also includes neat clothing.
Depending on the cultural region, it is also important to check any religious background. For example, business with Indonesian companies is often done with partners of Muslim faith. Ordering pork or alcohol for everyone at lunch is an absolute no-go.
Just as important: Muslim women should not shake hands without being asked. In addition to the religious aspects, other customs also play a major role. Malaysian business partners expect regular contact in the form of face-to-face meetings. Sending an e-mail now and then is not enough for them, especially for larger engagements. It should also be noted that Malaysians do not have a culture of argument. Conflicts and, above all, blame are to be absolutely avoided,
But before there are any personal appointments and further planning, it makes sense, as a supplier, to first clarify the risk of a business. Above all, this includes evaluating the “payment behavior” of a region. Example: Mexico. According to the foreign trade agency this is the country with the worst payment behavior among the major economies on the American continent. One reason for this is the high cost of transition loans in the Latin American country. The incentive for Mexican companies is therefore high to finance themselves through the supplier.
Similar difficulties threaten business relationships with Indonesia: Southeast Asia is currently one of the boom regions, and Indonesia has recently shown steadily increasing growth every year. Non-governmental companies from the region hardly get any loans, and if they do, then only at horrendous interest rates of up to 13 percent or more if the loans are small. Background: the Asian crisis at the end of the 1990s, in the course of which the Indonesian rupiah was devalued and Indonesia went bankrupt. Entering into debt is still not seen there today — companies finance themselves primarily from their cash flow. The result: If the upswing in the region slows down, global companies’ imports of capital goods are often the first to break down.
Especially at the beginning of a business relationship, there are many stumbling blocks in the area of cultural differences. These can cause difficulties, especially for small and medium-sized companies. The first step can be to contact the international financing institutions. Because the cooperative banks are close to the middle class. They are also well networked around the world through their diverse partner institutes. That is why they can optimally support companies on their way abroad — from the start to distant destinations.
