These days a lot of U.S. companies are complaining that they can't compete with global trade in countries such as India where there is a low-cost labor force and environmental or other regulatory controls are more lax.
However, Europeans have higher labor costs, tighter environmental regulations and higher taxes than the U.S. Yet they successfully engage in trade all over the world. The biggest difference between Europe and the U.S. is that Europeans always had to export because their internal markets have always been too small for long-term growth. The advantage the Europeans have is they have far more exposure and interest in developing a deep appreciation for the culture and history of other countries. And this has helped them in business.
It is people who make or break business deals, not necessarily the product or the price. International business deals fail not so much because of external factors--such as economics or politics--but because of a lack of understanding between the two sides about cultural differences. As a result, it's no longer enough to have a hot new product that will save time, or a novel idea that could revolutionize an industry. You also need to understand the cultural values, behavior styles, negotiating techniques and business practices of the country where you are doing business.
A cultural trait that often creates problems for Americans overseas is the value we place on time management. In the U.S., time equals money. However, most non-U.S. managers do not work under the same time pressures we do. Therefore, they can make Americans feel pressured to compromise. Many U.S. firms simply don't have the patience to reach a satisfactory international deal. Non-U.S. companies are particularly clever at using this cultural distinction to their advantage. The concept that time is money is alien to most Indians.
Another potential pitfall to international negotiations is different communication styles. For example, in the U.S. we like direct "yes" or "no" answers. In many countries, if one asks a negotiator for a "yes" or "no" answer, they will often say "yes," simply because saying "no" in their culture is impolite. But that "yes" may not really mean "yes." Often a "yes" means only "I understand." It is the manner in which the "yes" is stated that implies whether the answer is actually "yes" or "no." In India, the word "no" has harsh implications.
Evasive refusals are more common and are considered more polite. For example, to avoid a particular commitment, one might respond with an "I'll try"--this is a more gentle, acceptable form of refusal. In other words, one has to read between the lines to interpret what has been said.
One of the most effective lessons I learned in terms of negotiating protective terms and conditions is the importance of first establishing a personal relationship with the other party and engendering a sense of trust in me as a person and as a goodwill ambassador for any company I might represent. I have found that despite whatever protections may be in a contract, the success of the deal depends on the personal relationships, and the trust and sense of comfort that each party has with the other. For example, a great amount of hospitality is associated with doing business in India. Tea and small talk are preludes to most business discussions.
Multicultural awareness is a vital component of any global strategy. You may know your particular industry inside and out, yet when you step off the plane in a foreign country, industry expertise is not enough. If you do not have the knowledge of foreign business practices, negotiation techniques and social customs, the odds of your successfully concluding a business/legal transaction are against you. Approaching international trade first as a student of culture and tradition and second as a company representative will go a long way in achieving your international trade objectives.
Roger Marks is the former general counsel and secretary of H2O Plus. He also served as the president of the company's international divisions.