Thomas Friedman (2005) metaphorically dubbed our new global economy as a
flattening world, a term describing a new playing field for commerce, one in which
competitors have an equal opportunity to succeed. Aided by technology and the
Internet, economic global interdependence is no longer a notion of the future, but
clearly an everyday reality. This recent enthusiasm about “going global” has
emboldened many companies to expand beyond their domestic borders lured by the
apparent ease of conducting business internationally. Many are finding that it’s easier
said than done. Whether your market entry is piggybacking, distribution channeling,
franchising, licensing, joint venture, or acquisition, are you ready for global expansion?
For many years, marketers have appreciated the value of the four Ps of
Marketing: Product, Price, Place, and Promotion, a concept that has resiliently sustained the test of time. We contend that when trading globally, it’s best to put another “P”
first: People. Because of the significance of cultural biases, language distinctions, and
regional etiquettes, we propose that your market entry adopt the “4 Rs” of global
expansion: Relationship, Relationship, Relationship, and Relationship! Gone are the
days when you could manage international operations from home, today’s ultra-
competitive environment requires the hiring of competent local staff.
To develop a competitive edge, companies must wisely select partners deeply
rooted in the region with extensive knowledge of the culture. This partner often called
“fixer” can be the difference between success and failure, or getting your first sale 6
months down the road as opposed to 18-24 months later. International business
developers should not surrender to the belief that they can replicate the success they
enjoyed at home without a great deal of changes in their methods and approaches.
Having a partner knowledgeable about the region or better yet local presence is critical
for your success abroad. Such relationships will fast track introductions to customers.
Going global requires relationships and a long-term commitment to the region.
Understanding your target nation’s business culture is vital to conducting business
successfully. Being respectful of cultures, rites, and behaviors will go a long way in
gaining acceptance by the locals. In many countries, there is tremendous emphasis on
relationship building – business people will want to know you on a personal basis, your
family, and your values, before engaging in business negotiations. This often means
interacting frequently and on a personal basis with your stakeholders in the region. In
Japan, this translates into an exchange of corporate gifts1 (not so expensive that they
constitute a bribe) and drinking sake when the time is appropriate. Business the Brazilian way is based on individuals knowing and trusting each other. The conduct has
to be interactive, face-to-face, and with a personal touch. Don’t be in a hurry, don’t
expect people to be on time for meetings, and be prepared to hug complete strangers.
When conducting business in China, one must be mindful of the complexity
related to the cultural influences based on hierarchical, communal, and political factors.
Authority and hierarchy is respected unconditionally to avoid losing face, a major insult
all over Asia and particularly in China. More than anywhere else, relationships are
crucial in China and more important than business itself. Respect and dignity, a light
handshake, and a lowering of the eyes are important ritual. Respect begins with an
undivided focus on what people say along with the all-important ritual of studying the
business card very closely when presented to you. Do not put the card in your pocket!
Do not rush people in China, be patient in meetings, and show respect and dignity at
all times – this will make you an “honorable” person a key qualifier for relationship
building.
If you’re a manager with a process-type profile wishing to conduct business
internationally, surround yourself with colleagues with a great deal of “people” skills, you’ll need them! Put people first - forget analytics and processes for now. Don’t go at
it alone. It’s about relationships, stupid!
Note: The Foreign Corrupt Practices Act (FCPA) of 1977: The FCPA applies to any person who has a certain degree of connection to the United States and
engages in foreign corrupt practices. The Act also applies to any act by U.S. businesses, foreign corporations trading securities in the United States,
American nationals, citizens, and residents acting in furtherance of a foreign corrupt practice whether or not they are physically present in the United
States. In the case of foreign natural and legal persons, the Act covers their actions if they are in the United States at the time of the corrupt conduct.
Further, the Act governs not only payments to foreign officials, candidates, and parties, but any other recipient if part of the bribe is ultimately
attributable to a foreign official, candidate, or party. These payments are not restricted to just monetary forms and may include anything of value.
Copyright Ron Aubé 2013
