One of the biggest reasons for failure of a company to successfully penetrate a new country's market or to effectively find reliable and trustworthy suppliers from a foreign company is the breakdown in cultural understanding between the two companies. It is an often an overlooked aspect when the excitement of talking to new partners gains traction at the top management level.

Recently we had a meeting between our expat members looking at the key areas where foreign companies entering new countries need support. One of the surprising common themes was about cultural understanding between two companies and how they deal with the differences effectively at middle and lower levels of their organisations.

An Example of Failure

One example raised was where a European company's owner (a family-owned company for generations, which is very common in Europe) met the CEO of a local company in South East Asia. The owner and the CEO very similar characters and visions within their own organisations and the sparks of doing business together grew quickly. After forming a license agreement, it didn't take long before the relationship between the companies deteriorated and ended within a few years with no business ever growing from the relationship. Why ? In this case basically dealing with a different culture, people beyond the owner/CEO found it hard to understand the motivations and reasons for how business was done differently in Europe and in SE Asia. Not understanding the cultural way of doing business and speaking together, the middle management and technical levels did not trust their counterparts and so withheld and frustrated the cooporation and communications, ultimately leading to failure.

This is a common story with many different reasons for the endings. Putting aside mistrust and misunderstanding of different cultures, a famous Chinese saying is they talk "like a chicken and duck talking together". They talk a lot, but not communicate the message.

Understand What is Meant, Not What is Said

The first step to inter-cultural cooperation is understanding locally how people speak (not language, but communicate meaning) and generally do business. By understanding the motivations and reasons for the actions of your partners, it becomes much easier to adapt and support a business relationship that will last. And as the understandings grow, then the trust also grows. And when you have trust between each other, then the cooperation can weather the inevitable challenges between the companies that will come from time to time.

By understanding what each other means when communicating, then the real discussions of business can begin and you will find that the opportunity to work together has a much higher chance of success.

In future articles, we will summarise some ideas on how we have seen the leaders get their management and technical staff working successfully with other cultures.

 

Starred Blogs

Cultural Bridging

One of the biggest reasons for failure of a company to successfully penetrate a new country's market or to effectively find reliable and trustworthy suppliers from a foreign company is the breakdown in cultural understanding between the two companies. It is an often an overlooked aspect when the excitement of talking to new partners gains traction at the top management level.

Expats - Are you looking for a job ?

Are you an expat living in South East Asia ? Or do you want to move here ? Are you looking for part-time or contract work ? Or are you retired and looking to help the next generation of engineers and managers ? Then send today to us your resume, contact details and a brief description of what you would like to do !

JV and License Agreements

Having a working relationship between companies from different countries and cultures is always a challenge. Do you set up a joint venture or create a license agreement ? Here are some guidelines from our expats that have had experience in this field.