Yes, you must respect local mores - but not at your own expense, says Theo Paphitis:
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Now they made the contact, they thought they had a business plan that would work in Vietnam, but if they had read the signals I am positive they would have realised a long time before they actually got to Vietnam that there was a problem here. But they used the notion, they used the notion that when you go to a foreign country you’ve got to respect their culture, their ethos and the way they do business. And that’s fair, but not at the cost of your culture, your ethos and the way that you do business that held you in good stead over many, many years. They throw out the baby with the bathwater, and you're in trouble. You're now playing away from home with other people’s rules. Well, if you don’t know the rules and you're away from home, you're likely to get your butt kicked big time.
Colin Gray agrees - you don't want respect to overwhelm your business:
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I don’t think that you, you can over-respect the culture quite frankly, because it determines so much of what goes on; what you can't do is slavishly follow it and try and make yourself part of that culture too much in what you're doing. But you’ve got to respect it because that’s actually what determines the people’s attitudes towards you and your product, the way you do business, so on, so forth. And it is true that things to do with trust, you know, things to do with, are meant to be for saving face, to how much you tell people the truth if it’s an unpleasant truth, things like that are very, very important.
But they're important not only in the Vietnam situation but also in Brazil I noted as well there’s a whole lot of elements to do with the culture and all that sort of stuff with the cosmetics that they were getting out there. That depended a lot on people’s perceptions how, that must be quite weird to them, you know, that someone could come from England and tell the sort of multicultural multihue Brazilians what they should do about cosmetics, yet those girls actually did have a lot to offer I think, and I think what they didn’t have, they weren’t kind of logged in to the culture there very much.
But not so much the cosmetics culture but the business culture, and they were demanding percentages, or offering percentages to the local people who in the end of the day are your sensors, your feelers, your doers, your communicators on the ground, so you have to offer them quite a large cut of the action. You do anyway. Anywhere, even with more formal business situations when people go in and seek out agents in foreign lands, which is always a good way to do business, they’ve still got to make sure that those people receive a proper remuneration otherwise, they don’t work for nothing.
So they got that wrong, they got that business, but apparently when they went back they realised that, and so to recover the possibility of doing something out there they had to immediately change their tune and, well, that’s cultural as well, it’s embedded there, and different ways of, different cultures we often we refer to some practices as corruption sometimes, and I'm sure in many cases they are, many forms of corruption. But sometimes they're not. I mean the idea of offering somebody a payment for doing something is deeply embedded in many cultures. Token payment sometimes, for services, recognising, and a way of recognising is to give them a bit of money, it’s almost like a gift in a way.
Well we don’t have that culture here. Maybe in restaurants we do, we tip, but I mean that’s, you know, and taxis, but that’s about the extent of it. But in some other cultures it’s actually pervasive and goes all over, and also it’s how you show that you're a person of worth and some influence. If you're able to give little gratuities to people here or little payments there, you must be a person of some wealth and of some influence. It’s a way of fitting into the culture, which therefore means you have respect, and when you have respect, trust comes from respect, so all these things are quite complex really.
But they're absolutely enormously, as I say, indispensable when you come to doing business abroad, and not just in the third world, doing business across Europe, you would, and going to America, the same sort of issues arise, but maybe not in such a form.
Trading in new markets? Where do you start? You could investigate The Open University Business School course Working Across Cultures.
Theo's Adventure Capitalists
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Originally published: Friday, 15th January 2010
Last updated on: Saturday, 1st May 2010
- Body text - Copyright: The Open University
- Video 1 - Copyrighted: Tiger Aspect
- Video 2 - Copyrighted: The Open University
- Audio 1 - Copyrighted: Tiger Aspect
- Audio 2 - Copyrighted: The Open University
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