Know your market
Wednesday, February 20, 2008/
Is your behaviour towards your prospective importer, the way you dress or the way you speak putting your export negotiation in jeopardy without you knowing it?
Know your market
One of the most important and often overlooked aspects of exporting, especially for new exporters, is taking the time to research not only your potential importer but the culture of the country of the importer.
This research takes time and involves more than looking at the statistics on the Austrade website or travelling to the destination on holidays a couple of times. You need to develop relationships with the people to gain an understanding of how they do business, what their attitude to contracts are, what their customs are.
I had a client once who had successfully negotiated an export contract with a company in China. He travelled to China for the contract signing, bringing with him gifts and hope for a long and strong relationship.
However, upon arrival to his hotel, he discovered that his Visa card was not working and the prospective importer had to foot the hotel bill. Of course, he would have paid them back, but this small glitch was enough of a cultural faux pas to cause the deal to go sour.
In China, relationships and cultural tradition are not just part of the commercial process, but the actual keys to success.
The concept of relationships, or “guanxi” in Chinese, runs deep in the national culture, where family, friendship and trust form integral components of business networking. China is a very networking and relationship-driven place, and it’s very important to understand who you’re doing business with. Westerners often view language as being the greatest barrier to conducting negotiations and business. But language is just the medium.
Respect, saving face and guanxi, refers to the concept of drawing on connections in order to secure business and personal relations.
In Australia we tend to be rather trusting of our business partners and we assume the law is there to back us up if anything goes wrong. So we’re generally quite happy to get into business relationships fairly quickly and be quite trusting.
In China, you need to know your potential partners and have good relationships with them. The combinations of guanxi and tradition are important in China.
Negotiating in China involves getting to know each other socially. As a result, business and social interactions are etiquette-bound and intertwined. There is a lot of entertainment involved such as banquets, karaoke bars and sightseeing that is part and parcel of, and sometimes before, the negotiations. Legal contracts are a recent occurrence for Chinese people, as they base everything on trust.
Researching these cultural sensitivities before going to China is vital for individuals who wish to enter the Chinese market. If we are not aware of what we are dealing with, then we will come undone. China can prove to be an unfamiliar environment. The rule of law is different and businesses can lose of a lot of money if they are not understanding towards China’s cultural diversity, especially in the different provinces.
It is important for Westerners to understand the basic cultural sensitivities, such as handing over business cards with two hands with the writing facing the person who is receiving it for their convenience.
There are also taboos, such as avoiding gifts such as clocks, black or white wrapping paper and the number four, all of which have connotations of death.
However, most Chinese generally do not expect Australians and other Westerners to act and think like them, as long as they show broad respect.
Key points to cultural issues in China:
- Relationships are paramount.
- In business culture, bright colours are considered inappropriate.
- Chinese are minimalist in their body language.
- Have a permanent or regular presence in the country if possible.
- Understand and adapt in the local cultural context.
- Carefully select and brief expatriate or foreign staff.
- DO NOT rely solely on written contracts.
To avoid a faux pas like my client above, I would recommend that you hook up with a consultant or person who has done business in the country you are exporting to. Austrade has great programs that will link you with an export adviser, and other firms also offer export-ready programs, with many people who have first hand experience in the countries you may be interested in.
Lynda Slavinskis is an outgoing, intuitive and commercially savvy lawyer. She has worked in-house at Sussan Corporation and Tattersall’s and now assists small and medium businesses with import, export, leases, franchising, employment and general business advice as principal solicitor of Lynda Slavinskis Lawyers & Consultants. Lynda is on the Victorian Government’s Small Business Advisory Council.
To read more Lynda Slavinkskis blogs, click here.
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