In Focus:  Business Relationships

Remember how Mom always told us to be careful with strangers?  When it comes to doing business, it appears people around the world are heeding her advice –albeit to a varying degree.

Obviously, we’re talking about business relationships here. Humans universally prefer to deal with people they know and trust. Business interactions are generally more predictable, effective, and dependable with trusted partners than with strangers. Nevertheless, members of different cultures seem to be drawing vastly different conclusions from these findings. Analyzing the overall role relationships play in their business practices, we can identify four different groups of cultures:

Business relationships are moderately important.  Members of cultures belonging to this group, which includes Americans, Australians, Austrians, Canadians, Germans, and others, usually do not view strong relationships a necessary precondition for business interactions. Being task-oriented, they tend to focus on near-term financial or strategic benefits rather than long-term relationship aspects. Though they expect to get to know the other party better while doing business together, they do not need to trust someone in order to make a deal with him or her. Many in this group are reluctant to invest significant time and effort into relationship building, in particular during the early stages of business engagements. In addition, business ties exist mostly at the corporate level: if a new company representative is introduced into an existing relationship, that person is usually soon accepted as a valid business partner.

Business relationships are important.  These cultures tend to value trust between business partners more highly. While they may also engage in deal making without first getting to know their counterparts, members of this group will strive to learn much more about them over the course of the exchange. Once initial interactions have been successful and trust has been established, a sense of loyalty may develop.  Relationships still mostly exist at the corporate level with this group, but individual employees usually also aim to strengthen personal ties. These characteristics apply to many European cultures, among them Finland, France, Hungary, Northern Italy, Poland, Switzerland, the United Kingdom, and others.

Business relationships are very important.  People in this group of cultures, which includes Indians, Hong Kong Chinese, Koreans, Mexicans, Pakistanis, Russians, Saudi Arabs, Southern Italians, and Spaniards, as well as most Latin Americans, highly value lasting and trusting business relationships. They prefer to do business with those they know and like, and may spend significant time building and strengthening relationships. They mostly focus on longer-term engagements and repeat business. When members of this group engage in business interactions without first spending time to get to know their counterparts, this likely indicates that they are seeking quick gains and are not interested in longer-term business with the other party. The concept of corporate relationships does not mean much to this group.  Since business is viewed as personal, individuals expect to spend considerable time and effort to develop close ties with their immediate counterparts even when their companies have a long history of doing business together.

Business relationships are critically important.  Members of cultures belonging to this group, among them Asian countries such as China, Indonesia, Japan, Malaysia, the Philippines, and also Brazil, or Egypt, and others, prefer to build deep and lasting relationships with prospective partners before entering into any serious business engagements. They may expect to develop such relationships into true friendships as the business partnership continues. With people in this group, it is vital to spend considerable time and effort building strong relationships through- out the business exchange.  They tend to pay little attention to contracts, since most of them believe that the strength of business relationships matters much more than ‘a piece of paper’ does. Keeping in touch with them on a regular basis ensures that commitments will be kept and opens doors for additional business. Since they mostly focus on long-term engagements and repeat business, decision makers may agree with unfavorable initial deals, expecting their new partners to make up for this down the road. They do not pay much attention to corporate-level connections, since few of them believe that business relationships can be successful without strong personal ties.

These characterizations provide clues as to what to expect and where to focus your energy when conducting business with people from other countries. However, be careful not to take them at face value. They apply only to business areas that are not critically dependent on personal relationships. In some industries, such as banking, financial services, or legal counseling, the nature of business interactions makes strong trust between the parties involved vitally important no matter what their cultural background.  Regardless of cultural background and type of business, though, spending time and effort to build closer relationships in international interactions is always conducive to business and therefore strongly recommended.

(The above is an excerpt from an in-depth article available on our web page)
  Read the full article

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Traveler's Guide to Asian Customs&Manners


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Comprehensive Canadian government website with valuable information and useful links for almost 200 countries around the world.

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different seas,
different fish

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Workshops On Feb 13-15 in Richardson, TX:
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Lothar Katz is the founder of Leadership Crossroads.  He has a wealth of experience in achieving productive coopera-tion across cultures and driving business success on a global scale.
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Global Business Practices:
Ten Tips For Doing Business in Indonesia

  • Know that Indonesia extends over three different time zones (while all of China is within one and the same time zone).
  • Negotiations may take substantial time. Spend significant efforts to build relationships upfront.
  • Saving face, ie, talking and behaving in ways that won't embarrass others, is crucial in everything you do.
  • However, Indonesian hierarchies can be extremely formal and managers tend to be very authoritarian. Never go around the chain of command.
  • Punctuality is crucial with people who outrank you. However, be prepared for them to keep you waiting.
  • Negative replies are very impolite.  Instead, say "maybe",
    "we will consider it", or something similar.
  • If someone sucks air through the teeth, this indicates a serious problem.
  • Be prepared that people in this country may ask you very personal questions.
  • Never show anger publicly.
  • Always use your right hand to greet others or to hand them things. The left hand is considered dirty by Muslims, who represent almost 90 percent of Indonesia's population.

Our newsletter is a bimonthly publication about all aspects of International and Cross-Cultural Business Management.  Past issues can be found in our  newsletter archive.

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