Company Formation Market Entry

Step Three: Know the Local Business Culture

It’s an uncomfortable fact, but they just do things differently in other countries – but more importantly, they think differently about business. Many of your firmly held beliefs, about how business should be conducted, what constitutes an agreement, and even when ‘yes’ means ‘yes’, may have to be abandoned for overseas market entry.

To navigate a culturally complex business world, you need to develop high levels of cultural fluency; you need the ability to be able to operate smoothly across a number of geographies – each of which may have extremely different opinions about what ‘good’ looks like in terms of relationship-building, approach to meetings, business ethics and communication. Without the requisite levels of cultural fluency, you are very likely to alienate people without knowing it and miss important opportunities when they arise. (You are also, by the way, much more likely to be taken in by charlatans and time-wasters.)

Becoming culturally fluent is a three-level process:

  • Develop awareness – You need to intellectually convince yourself that cultural differences are real and, when left unattended, can have a negative impact on the profitable development of your business. Cultural fluency is a ‘need to have’, not a ‘nice to have’.
  • Develop specific knowledge – It is not enough to just have awareness that cultural difference can have a major impact when working cross-border. You also need to know how it will impact. This is where country-specific knowledge becomes essential. When dealing with Saudi Arabia, you need a different set of knowledge than when you’re working in China. (For some specific country information please visit our website
  • Know how to apply awareness and knowledge – Once you are aware of the profound impact that cultural difference can have on international trade and have acquired some specific country knowledge, you then need to work out how to apply all of that to the differing situations you may find yourself in. This takes serious strategic thinking and should form part of your business planning at all stages – just as you look in-depth at the cash-flow implications of any overseas projects, also look at the cultural issues you are likely to encounter. (To see how our training initiatives can help with this process please visit

One word of caution at this point

It is vital to know what you need to learn about the culture you will encounter in another country. It is also important to have an idea of what you don’t need to know. A lot of books and training courses tend to focus on the irrelevant, superficial differences you’re likely to encounter. You will never lose a deal in Japan if you fail to hand over your business card correctly. A Thai business partner will not frogmarch you to the door if you inadvertently point your feet at them. These types of issues are just not important. What is important is to understand your own cultural business mindset, the cultural business mindset of your counterparty, and where there are differences between those two ways of seeing the world. The space between those two points is where the dissonances will be found.

A final point worth making

The vast majority of the world (from a population perspective at least) place the development of good-quality human relationships before business considerations. Or, putting it another way, they will only begin to consider business issues once a human relationship has been formed. Almost all of the emerging markets operate in this fashion, and cultural fluency is the quickest way to help you develop those all-important relationships.

The next step in our 10-step guide will look at developing cultural fluency.

About the Author