The Unspoken Truth about International Business

Language has been described as the mirror of culture. Language itself is multidimensional. This is true not only of the spoken word but also of the nonverbal language of international business.

Messages are conveyed not just by the words used, but also by how those words are spoken and through such nonverbal means as gestures, body position, and eye contact. These nonverbal actions and behaviors reveal hidden clues to culture.

Five key topics – time, space, body language, friendship patterns and business agreements – offer a starting point from which managers can begin to acquire the understanding necessary to do business in foreign countries.

Understanding national and cultural differences in the concept of time is critical for an international business manager. In many parts of the world, time is flexible and is not seen as a limited commodity; people come late to appointments or may not come at all.

In Mexico for instance, it is not unusual to show up at 1:45PM for a 1:00PM appointment. Although a late afternoon siesta cuts apart the business day, businesspeople will often be at their desks until 10 o’clock at night.

In Hong Kong, too, it is futile to set exact meeting times because getting from one place to another may take minutes or hours, depending on traffic.

Showing indignation or impatience at such behavior would astonish an Arab, Latin American, or Asian.

Perception of time also affects business negotiations. Asians and Europeans tend to be more interested in long-term partnerships, while Americans are eager for deals that will be profitable in the short term, meaning less than a year.

Individuals vary in their preferences for personal space. Arabs and Latin Americans like to stand close to people when they talk. If an American who may not be comfortable at such close range, backs away from an Arab, this might incorrectly be perceived as a negative reaction.

An interesting exercise is to compare and contrast the conversation styles of different nationalities. Northern Europeans are quite reserved in using their hands and maintain a good amount of personal space, whereas Southern Europeans involved their bodies to a far greater degree in making a point.

International body language, too, can befuddle international business relations.

For example, an American manager may after successful completion of negotiations, impulsively give a finger-and-thumb “okay” sign. In southern France, this would signify the deal was worthless, and in Japan, it would mean that a little bribe had been requested. The gesture would be grossly insulting to Brazilians.

Misunderstanding nonverbal cues can undermine international negotiations. While Eastern and Chinese negotiators usually lean back and make frequent eye contact while projecting negativity, Western negotiators usually avert their gaze for the same purpose.

In some countries, extended social acquaintance and the establishment of appropriate personal rapport are essential to conducting business. The feeling is that one should know one’s business partner on a personal level before transactions can occur.

Therefore, rushing straight to business will not be rewarded because deals are made on the basis of not only the best product or price, but also the entity or person deemed most trustworthy. Contract may be bound on handshakes, not lengthy and complex agreements – a fact that makes some, especially Western, businesspeople uneasy.

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Excerpt from Fundamentals of International Business, 3rdby Michael R. Czinkota, Ilkka A. Ronkainen, and Michael H. Moffett

Michael Czinkota (czinkotm@georgetown.edu) teaches international business and trade at Georgetown University’s McDonough School of Business and the University of Kent. His latest book, forthcoming in October 2018, is “In Search for the Soul of International Business”.

 

 

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The Lure of the Middle East

The Middle East region centered on countries around Western Asia usually includes the following: Bahrain, Cyprus, Egypt, Iran, Iraq, Israel, Jordan, Kuwait, Lebanon, Oman, Palestine, Qatar, Saudi Arabia, Syria, Turkey, United Arab Emirates, and Yemen. Most of these countries, especially those that border the Persian Gulf, have vast reserves of crude oil and benefit greatly from petroleum exports.

The region is a strategically, economically, politically, culturally, and religiously sensitive area that comprises about 5% of the world’s population or 371 million people. The region is also experiencing major security challenges and is adjusting to the recent oil price drop. As such, growth is expected to average 2.2 percent in 2015. This however has not deterred big brands like Apple and Netflix which are beginning to take notice of the region and have begun expanding there.

Apple is opening its first two stores – in Dubai and Abu Dhabi. The store in Dubai’s Mall of Emirates is said to be the largest to be ever built. Previously, shoppers of Apple products had to purchase their products through resellers or when on holiday abroad. The company has been growing fast in the Middle East in the past few years. Sales of iPhones were up 50% year on year in the third quarter last year and Apple’s revenue in emerging markets was up 58% in April. It is also planning to expand to Saudi Arabia.

Netflix is another company that is planning to expand in the region. Joris Evers, vice president and head of communications for Europe, Middle East, and Africa confirmed their plans as part of their global expansion by 2016. Netflix currently has 69 million subscribers in more than 50 countries worldwide – 43 million of which are in the U.S. It is aggressively stepping up its global efforts with recent international launches in Spain and Italy. The company is expected to grow by 22% by 2019, gaining 10 million new subscribers in the U.S., 10 million in Europe, and the rest in other international markets.

In April, the Starz network actually launched its Starz Play Arabia across 17 territories in the Middle East and North Africa, making the first-Starz expansion outside the U.S.

Other big brands are also looking into the region such as UK-based cosmetics company Lush which plans to open 50 stores over the next three years. Uber has also been said to invest $250 million to expand in the Middle East and North Africa, which are some of ride-sharing’s fastest growing markets.

 

Sources:

2014-15 Global Competitiveness Ranking

The Global Competitiveness Report that is published by the World Economic Forum looks at the competitive landscape of 144 economies in terms of the institutions, policies, and factors that determine the productivity and long-term growth of a country. Sectors such as a country’s infrastructure, macroeconomic environment, health, education, job market, financial development, and technological readiness are all considered.

Key Findings:

  • Switzerland and Singapore retain their position as first and second respectively. The United States moves to third from fifth place last year.
  • Those countries in Europe such as Spain, Portugal, and Greece are effectively implementing reforms and remain highly competitive. Whereas, the other half of Europe is lagging behind including France and Italy.
  • Most improved region belongs to Southeast Asia where Malaysia (20th), Thailand (31st), Indonesia (34th), Philippines and Vietnam (68th) have all progressed in their rankings. The Philippines is the most improved economy since 2010 jumping from 85 to 52.
  • Emerging market economies such as Brazil (from 57 to 56) and India (from 60 to 71) lost their competitiveness. But Russia (from 64 to 53) and China (from 29 to 28) climbed in global rankings.
  • Most Latin American economies need to address their productivity challenges in order to keep the momentum of their growth in the past years.
  • Due to geopolitical instability in the Middle East and North Africa, the region depicts a mixed picture. United Arab Emirates takes the lead in 12th place. Sub-Saharan Africa continues to pose impressive growth rates of 5 percent.

Global Rank2Are the rankings useful to you? Any surprises? Tell us what you think.

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