Blunders abroad - advise for American businesses ventures overseas

Blunders Abroad

Americans are often accused of insensitivity toward other cultures. And yet when I talk with American business people, I am often struck by how many are genuinely concerned about "doing the right thing" and bridging cultural gaps when they travel overseas.

During my nearly 14 years advising clients on trade matters, I have collected a number of amusing anecdotes--and some that are not so amusing--that illustrate many of the most common mistakes made by Americans trying to do business in other countries. The value of these anecdotes, all of them true, is that they offer helpful pointers to business people exploring foreign markets.

One of my favorite stories concerns an American who went to Malaysia to close a substantial contract. There, in a splashy ceremony, he was introduced to someone he thought was named "Roger." Throughout the negotiations, he called the man "Rog," not realizing that his potential client was a "rajah," which is a title of nobility, not a person's name. This well-meaning American did not know that, in Malaysia, while many of the states are controlled by sultans, one state is headed by rajahs.

While this type of incident can happen to almost anyone and might make for a good laugh afterward, it's far from funny at the time. It may insult your hosts, embarrass you, and cost you the business you're trying to get. In short, mistakes like this should be avoided. One way to prevent or at least minimize the chances of such mistakes is to learn all you can about your potential clients before you meet them.

Learning about your clients also means doing market research. Many Americans think that the research they did at home will work abroad or that no market research is needed. Some corporate executives believe they can just "wing it" and make a sale because they have a superior product. Overconfident and underprepared in their international ventures, they "invade" foreign lands, attempting to do something approaching a marketing study of 12 countries in six weeks. Later, after their recommendations have flopped, they say they "can't understand what happened. The same approach worked when we started our operations in Los Angeles."

Consider the case of a large U.S. softdrink firm, which had set up large bottling and distribution facilities in Indonesia, hoping to get a substantial market share in that country of 176 million people. But the drink did not sell. The company came up with unrealistic sales projections based primarily on demographic data that omitted the fact that most Indonesians at that time had little disposable income. Further study revealed that the actual market for this carbonated American soft drink consisted mainly of tourists and expatriates in the country's major cities, and that most Indonesians preferred non-carbonated, coconut-based drinks.

Similarly, a well-known franchised health club learned that what sells in New York may not sell abroad. When the company decided to open a facility in Singapore, it spent considerable sums equipping and decorating the club. Yet the club did not attract many members, and it ended up serving a relatively small expatriate community. The company miscalculated by assuming that residents of Singapore would join an American-style health club. To succeed, the franchise should have catered instead to the residents' preference for Western competitive sports, Chinese calisthenics, and traditional forms of Asian exercise.

The experiences of the soft-drink company and the health-club franchise teach an important lesson about exporting. If you want to succeed at selling overseas, you should take the time to research carefully the foreign markets that interest you, bearing in mind that each has its own characteristics.

You can learn a lot about a foreign market without leaving the U.S. For example, you can contact the Office of International Trade Administration at the U.S. Department of Commerce. There, you may want to speak to those who specialize in the countries and industries that pertain to your products or services and your exporting interests. You also can turn to various international organizations and foreign government agencies for information. Another option is to obtain advice from consulting services.

Since it is important that you combine this knowledge of the foreign market with awareness of the culture and history of the countries you are about to visit, check your local library for books on those countries and for international publications such as The Financial Times of London, The Economist, and The Far East Economic Review.

To enrich your understanding of other cultures, you may also want to enroll in cross-cultural workshops sponsored by universities and various international organizations.

Such cultural training can help curb inadvertent insulting behavior, which can cost a firm dearly when it is trying to win a contract. And such incidents can happen even when you think that you have covered all your bases, as an oil company discovered when it was about to sign a contract with a Middle Eastern nation. An hour before the signing ceremony was to begin, the American executive and the responsible government official met for tea. Relaxing, the American propped his feet on a table, with his soles facing his Arab host. At once, the official became angry and left the room--to the surprise and dismay of the American. The U.S. executive did not know that exposing the sole of one's shoe to an Arab is a grave insult. It took another year of negotiations to get the contract signed.

Another cultural misunderstanding that can breed mistakes in doing business overseas is the impulsiveness that many American firms display when they decide to go international. Some clients have told me, for example, that they often hear of efforts that go sour when a U.S. firm sends a manager overseas for a week with instructions to talk with a few people and pick someone to represent the company. Later, the foreign representative turns out to be unreliable, and the U.S. company is stuck with a bad partner.

To avoid such experiences, you should check your potential foreign partners as thoroughly as you would check one in the U.S. Investigate references and credit records, and verify that the representatives indeed have the contracts, staff, and contacts they claim to possess.

In addition, many American executives not only proceed impulsively but also expect quick results when they deal with overseas customers. Many U.S. executives lack patience when they travel to another country, arriving with the presumption that the whole world does business in the hurried American manner, and failing to realize that the concept of time and the pace of business often differ overseas.

European and Asian firms stress long-term orientation in their trading relations, for example, while many American firms focus on short-term gains. Adjusting to these differences in cultures and business practices is particularly important if you want to develop long-term relationships with your overseas customers.

Failure to recognize such differences can lead to disappointment, as a team of American businessmen discovered in Beijing. They arrived expecting to close a deal quickly. While they were relaxing in the hotel lounge on their first evening in town, they shared their enthusiasm with an acquaintance of mine, ignoring his advice that they not be in a rush for results. As each day passed, my acquaintance saw their exuberance diminish more and more. By the fourth day, the Americans were morose because they thought nothing was happening. Though my acquaintance had concluded that the Chinese were negotiating at their normal pace, the Americans gave up and went home the next day, totally discouraged.

Another example cropped up in the tale of the three U.S. executives who flew to Japan to sell tractors to Japanese buyers. The Americans--none of whom had ever been to Japan before--thought that their presentation had gone well. The Japanese, however, expressed no reactions after they heard the price of the tractors. As their silence became disquieting, the senior American executive lowered the price of the tractors. The Japanese kept quiet. Ultimately, the Americans lowered their prices far more than they had ever planned. They did not know that the Japanese executives had fallen silent not to signal rejection of the proposal but simply to think it over.

When you do business overseas, be prepared for differences in communication. Silence has various meanings in various parts of the world, and it is not necessarily a negative sign. You also should consider that not all foreign businessmen use the telephone in the same way it is used in the U.S. In some countries, dealings by phone are not considered equal to conversations face-to-face. And bear in mind that language barriers may come between you and your customer, even if your potential client speaks English as a second or third language or you speak your guest's language.

And don't forget Murphy's Law--as fully in force overseas as it is in the U.S., and probably with a few more amendments! Expect surprises--expect that anything that can go wrong will go wrong. Remember what happened to a certain American executive who went to a small Caribbean country, expecting to close a sale in no time.

When the executive entered the prime minister's conference room, he began his presentation by saying, "Honorable Mr. Tollis and esteemed members of the cabinet."

"Won't you please start again?" the prime minister said. Bewildered, the American businessman obliged.

"Perhaps you should start over," said the prime minister, visibly annoyed this time.

One of the cabinet ministers sitting nearby took pity on the American and whispered into his ear: "Mr. Tollis was deposed six months ago. You are now addressing the Honorable Mr. Herbert."

So prepare for the unexpected, do your homework, take nothing for granted, be courteous, keep your sense of humor, be patient, be thorough--and you may do just fine.

COPYRIGHT 1989 U.S. Chamber of Commerce
COPYRIGHT 2004 Gale Group