Mastering Cultural Differences for Global Business Success

All credit management responsibilities stem from one essential skill—the ability to form strong relationships. Business relationships have many layers, all of which credit managers must master. In global trade, credit professionals should try to understand the cultural differences of their customers overseas to ensure a successful relationship.

From each region’s business style to etiquette—all components are important to consider when working with customers from a different background. The first and foremost step you must take is doing your due diligence on the customer’s country. For example, some countries won’t use a handshake to formally greet others but instead they may bow when meeting for the first time. It can come off as offensive to others if you are not aware of the basic formalities of another country.

“Kissing on the cheek in Latin America can be off-putting to Americans when they do that, but it is very common in Latin countries,” said Darrell Horton, ICCE, director of revenue and credit at AGS LLC (Las Vegas, NV). “It’s crucial to know what to expect when you walk into another country and learn when and if to give those formalities back. Knowing someone that has experienced a country’s culture and is willing to explain it to you is beneficial as well.”

In Latin American countries, businesses have a hierarchical structure, with decisions made from a top-down approach. Developing trust and gaining respect in the business environment depends on building and maintaining good relationships. This often includes lots of socializing and meetings. “Our Latin American counterparts love facetime or face-to-face interaction,” added Horton. “Having intense business meetings over dinner and drinks is very common. By the time we are winding down for the day in the U.S., they’re just getting started. In some Latin countries, they’ll start their days later around 11 a.m. and work until maybe 9 or 10 p.m. so setting a meeting for 8 a.m. may not make them so happy.”

Understanding culture is important from a formality and business standpoint. Countries in the Middle East, such as Kuwait, run business from a more family-oriented perspective. “It’s a corporate structure, but the hierarchy is still there,” explained Ezzat Annous, CICP, senior SME relationship manager at BLOM BANK (Lebanon). “There are also names that translate differently in English. For example, some people do not have last names, as their last name will be their father’s first name. So, when you enter the meeting, you won’t call someone Mr. and then their last name. In Lebanon, you must respect the last names and their significance for the client-facing approach.”

From an economic perspective, sanctions have had an impact on customer payments in Lebanon. Within recent years, the economic meltdown in Lebanon led to having five currency rates, like Argentina. “You need to address these types of issues early on for a client who is not familiar with having several currency rates,” Annous said. “It was difficult for us to work with those who were not familiar. The whole banking system in Lebanon has been on its knees regarding sanctions and scrutiny has gotten tighter over the past four to five years which impacts ability to pay.”

Language proficiency is another key concept when working alongside counterparts from different regions. Although translators can help, language and communication have an impact on the efficiency of your negotiation skills. “Language is an example of visible aspect of culture,” said Anni Lautaoja, CICP, credit risk analyst at UPM-Kymmene Corporation (Helsinki, Finland). “Another important aspect in my culture is punctuality. But it is acknowledged that in certain cultures, there might be different norms around timeliness and enforcing punctuality can even be perceived as inconsiderate. To accommodate these cultural differences, I have scheduled longer meeting times to allow participants to join according to their business customs.”

As you experience more cultural differences in business, remember that all relationships are built over time—so implementing strong communication and respecting different customs and cultures are vital to business success. It is imperative to do your research on the countries you intend to conduct business with for seamless interactions and to get paid.

Here are examples of cultural facts to be aware of when doing business in five popular countries for trade, according to the World Trade REF:

China

Business deals in China tend to move more slowly than Westerners may be accustomed to. Formal introductions from an inside contact are usually required to even begin a working relationship; due to the political makeup of the People’s Republic of China, bureaucracy typically delays most business transactions.

For a Chinese businessperson, saying “no” could result in losing face or causing embarrassment to their employer and family. Chinese people typically send intermediaries to give bad news, as they want to soften the blow to preserve the relationship, and do not want to risk losing face.

Direct eye contact is generally favored in a business setting, but it is a show of respect to lower one’s head for an elder. Visitors should never pat, slap or put arms around a Chinese contact. Body posture should remain formal, yet calm and relaxed, to display a sense of self-control and attentiveness.

Italy

In Italy, appearance is everything. The way you dress, your manners and even the look of your presentation materials contribute to your image and can make a huge difference in your ability to forge relationships and secure business deals.

Italian business communities tend to be very closely knit, and Italians prefer to do business with people they know and trust, with whom they have a long history. The initial meeting or round of meetings will be more about getting to know you than making any serious business decisions. Be prepared to wait and never communicate a sense of urgency, as this is usually taken as a sign of weakness, which can damage your credibility.

Never suggest Italians from Northern, Central and Southern Italy are the same. Each of these regions has a distinct cuisine and culture. To Italians, there is a large difference between regions, and many Italians have passionate opinions about which region is preferable. As a foreigner, it’s best to avoid this conversation altogether.

Mexico

In Mexico, most are very class-conscious. This affects Mexican business culture, as foreign visitors will be judged on their own social and economic statuses, which Mexicans will gauge by the visitor’s choice of hotel, mode of transportation and appearance.

Family and friends are the most important things to most Mexicans, as they are at the center of the social structure. This value is also found in the business culture, and Mexicans must know a person before doing business with him or her.

Physical contact in the Mexican workplace occurs frequently, and the personal space between others is closer than many visitors may be used to. Arriving thirty minutes after the stated time for an appointment is considered on time for locals, but visitors should always arrive at the stated time.

Germany

German businesspeople operate in a structured, orderly fashion that places high value on professionalism and rigid separation between business and personal life. German businesspeople are detail-oriented, technically prepared and straightforward communicators.

Germans like to get straight down to business with little small talk. They don’t need a personal relationship to do business, and they are mostly interested in your credentials and how long your business has been operating.

Wait and follow your German counterpart’s example before asking about or discussing personal subjects like personal income, marital status, or political and religious opinions. In the meantime, Germans’ home regions, food, art or sports teams are great topics that may appeal to your counterpart’s sense of national loyalty.

India

The most common greeting in India involves pressing two hands together at chest level similarly to a Christian prayer position along with a slight bow of the head and the word namaste, which roughly translates as I bow to you.

Don’t expect your Indian counterparts to move quickly into negotiations. Instead, expect several rounds of meetings, as well as opportunities for after-work socializing as your counterparts get to know you.

As meetings begin, Indians will often ask personal questions about your family and life at home; inquiring about someone’s family is seen as a friendly gesture in India.

Consider joining FCIB to have unlimited members only access to the World Trade Ref, which also features information on travel security and restrictions in place for the specific country.