Many of us in the west have probably attended classes in how to do business in other countries and have therefore devoutly placed two hands together to present our business cards to our hosts during a trip to Shanghai. But I wonder if those outside the west ever attend such classes.
Is it because we do not appear to have rituals that makes the west so easy to do business with or our immense tolerance of rigidities in other cultures? I think not, because we have our business rituals too. In fact, when compared with China, everything in the west seems to be at variance – as if we grew up on a different planet.
Take, for instance, Gaunxi – the complex networking and hospitality that needs to take place before any serious business to business commercial activity can take place in China. Try asking potential customers to lunch in Boston and inviting them to drink alcohol or to come into your offices on a Sunday to drink expensive teas and the response would generally be a flat “no thanks”. All of which may well be felt as a rejection by a Chinese executive and even a “loss of face”. Then, if a meeting does go ahead, try explaining that the demure 35-year old lady sitting at the table is the top company executive present, not the 55 year old man sitting to her right who is two levels of seniority levels below her.
Such confusions can be very expensive for the Chinese company concerned. Some time ago a Chinese health drinks manufacturer decided to break into the US market by purchasing some expensive real estate in New York for their regional head office. They then spent a small fortune hosting receptions and other events for government officials and politicians believing it would “oil the wheels” for their market entry – only to find that it made no difference whatsoever and that their marketing budget had been wrongly spent.
US companies too have made fundamental mistakes when setting up operations elsewhere. It is less common now, but early investors in Europe often believed they could import their native “hire and fire at will” approach only to find that employment protection laws were so tight in the European Union that they were constantly ending up in labour courts and employment tribunals.
Multinational enterprises have therefore learnt – often the hard way – that doing business across borders can be a tricky, expensive and frustrating business. Globalisation is a favourite word used by detractors of mega corporations, but few critics really appreciate how much trouble is taken to localize globalized businesses and be sensitive to different cultures.