8 Trade: deal or relationship

You don’t go to a Turk, ask for the price and say ‘OK’. You go to a Turk, ask for the price, and then you say, ‘But why?’

Uğur Salman

This instrument compares the degree to which we interact with others in just a commercial or business-only fashion, or to build a relationship. In our interviews with international managers, 85 per cent of the comments were in the context of ‘willingness to engage with others’. As Trompenaars and Hampden-Turner (1997) suggest: ‘This is not a “waste of time” because such preferences reveal character and form friendships...’ which is what is most important in relationship-oriented societies.

Culture crash

One manager talking about his time in the Middle East explained, ‘Abdullah said to me, “Brian, I can make this happen for you. I have connections; I can pull strings and know who to ask...”’

Culture tip

As a functional Brit, Brian immediately thought, ‘I don’t like this. It is underhand, nepotism. I feel uncomfortable.’ However, he was to learn that it is the life-blood of business in the Middle East, where relationships matter above everything else.

Doing business with a culture more relationship-oriented than our own can feel time consuming. In such cultures, everything is connected to everything. Your prospective business partner may want to know about your family, your connections, the kinds of food you enjoy and even what you read. Business is done socially and at a much slower pace. People prefer plenty of time to build trust before getting down to business.

Obligations of mutual debt are very strong in such societies and are necessary to make things happen. Such obligations have no boundaries. The English phrase ‘you scratch my back and I’ll scratch yours’ describes this exactly. Mutual-debt societies exist in different forms all over the world. The Japanese nemawashi system and the Chinese guanxi relationships are forms of the mutual-debt society. However, in the Philippines, the debt or obligation is never absolved; it lasts a lifetime. Their term utang na loob means ‘sense of being indebted’.

Culture crash

Towards the end of a very pleasant lunch in Paris, Jean Gautier draws his British colleague, Peter Smith, aside and mentions that his teenage son is about to attend a summer school in Surrey in a few months’ time. Peter asks a few polite questions and leaves it at that. Two months later, Jean telephones to say his son is on his way and that he would appreciate it if Peter would see that his son is settling in.

Peter is annoyed, thinking ‘What’s this got to do with me?’ However, one Saturday afternoon he takes his own teenage son to visit the young French lad. The boys find they have a passion for rugby in common and agree to keep in touch through Facebook.

Months later, Peter finds that his new reward and recognition initiative for Europe has been completely snubbed by the French. Françoise, the head of HR, has become implacable and won’t even return Peter’s calls. One day, to his utter amazement, he receives a call from Françoise asking if they could discuss his plans to see how they could adjust them to suit French working practices. When he remarks to a colleague how astounded he was that Françoise had eventually ‘seen sense’, he learns that Jean Gautier had had ‘a quiet word with her’. The time spent with the two teenagers had paid off.

Culture tip

Some societies, like the French, assume there are no boundaries in the business context. That ‘little request’ may well be for a personal or social favour to a business colleague, thus making business and social spheres overlap or mingle. France is a unique culture where people will only share things with you if you are part of the group. In France there is a network system; they call it les réseaux – réseaux meaning networks.

Culture crash

Mark, working in China said, ‘Asking for something is very problematic – even if it is “objective” knowledge – when you don’t understand something and ask. The facts are that you don’t know the person, you don’t have a relationship with him, you don’t have a relationship with the person you’re asking. This is seen as an invasion. You need to understand if you have to ask for something.’

Culture tip

Mark explained, ‘You don’t get what you want in those kinds of cultures until you’ve done something to justify it happening – even if you are just asking the time!’

In deal-oriented cultures, emotions and relationships are suspect. It is often better not to do business with family or friends, if you are in a position of power, in case you are thought to be abusing your position to favour your relatives. ‘Favours’ and that ‘little request’ which spill over into the business context are seen as totally inappropriate in the work environment.

Cultural insight

The down-to-business pragmatism of US managers who tend to focus on the bottom line and rely heavily on facts for their business decisions can be misinterpreted by their Mexican counterparts as coldness. ‘Mexicans are more informal, less inclined to work with statistics, are more relaxed and “ingenious”’, according to Maria Lopez-Bravo. They prefer to know the roots and history of the person they are talking to, and only when a sense of trust develops can the Mexican feel comfortable and ready to do business. Americans view people at work as just colleagues, not as friends. And organizations do not encourage social chat at work. That is not the way a Mexican likes to work.

‘The Arab process of building relationships prior to transacting business is very time consuming. However, once a relationship has been established, verbal contracts are absolute and an individual’s word is his or her bond and failure to meet verbally agreed obligations will certainly lead to a termination of a business relationship.’

Culture crash

It was Lilja Lappalainen’s first visit to South Korea. She was to recruit agents for one of Europe’s largest telecom companies and was looking forward to returning to Finland, having recruited a handful of influential people who would make their products fly off the shelves in the Far East. Instead of falling at her feet and rushing to be associated with such a well-known brand, the Koreans seemed to turn every business conversation round to her and pry into her personal life. Back in Helsinki Lilja was dismayed to find that the company had received complaints about her behaviour. She had recruited no agents.

Culture tip

The Finns, like many deal-oriented people, believe that a sound commercial approach to business – one that includes facts, evidence and logic – would be sufficient to persuade any potential Korean candidate to sign up to be an agent. After all, to do business with this prestigious Finnish brand was surely a wise decision. Finnish people are also very private; they are not used to divulging their private lives and would view being questioned about them as a great invasion of privacy.

Contrastingly, the prospective agents needed to expand the business ‘life space’ of the Finn and wanted to learn about the person with whom they would be dealing – about her background and character. It’s all well and good being associated with a famous firm, but in real life it’s the relationship with the individual that makes or breaks a deal. The Koreans felt that there was no serious intention of doing business with them as there wasn’t any real commitment to getting to know each other and building a relationship.

Both sides had misunderstood the intentions and motives of the other. It was only through our training and intervention that a chasm of misunderstanding was prevented. The deal did not fall through.

Culture crash

Japanese representatives arrived and were shown into the board room of a British-based utilities provider. The CEO, the director for global sales and Darryl, the sales director for Asia-Pac, greeted them warmly. The Brits had prepared well, produced a good-looking brochure on the company, a fact-filled report about how their products and services would fit in the Japanese market and gave a professional PowerPoint presentation. The Japanese, on the other hand, seemed spectacularly unprepared and had to be interrogated to release information about their company.

On being invited to go to Japan to meet with the President of the Japanese business, the CEO replied: ‘I’ll send my Asia-Pac director, Darryl. Make sure you set up a meeting the next time you are over in the Far East.’ ‘My president was looking forward to meeting you personally,’ was the disappointed reply.

Culture tip

The Japanese do their homework on a company and its background before any initial contact is made, so the presentation the Brits made was redundant: the Japanese already knew about it. The visitors were there not to negotiate or make decisions, but to determine whether developing the relationship was viable. After that, representatives at the highest level from each business would begin making personal contact before discussing any details. The CEO’s lack of interest in travelling to Japan would have undermined any chance of the two companies striking a deal. It is important to understand that an invitation to socialize in Japan should not be put off.

Cultural competence check

To work – or not to work – with strangers.

Relationship-based cultures are cautious about doing business with people they do not know and prefer to have a warm lead, so contact is often indirect. Deal-based cultures are comfortable with doing business with strangers and will often contact them directly, as they are open to do business from the outset.

Study the points below. Put them into two groups: deal or relationship.

1.   Maintenance of harmony important, do not like conflict and confrontation.

2.   Expect direct, frank, straight-talking communication.

3.   Prefer indirect and even vague communication.

4.   Rely on close relationships rather than contracts to resolve disagreements.

5.   Clarity of understanding important when communicating.

6.   Contact potential customers or business partners directly.

7.   Get down to business at meetings after a few minutes of general conversation.

8.   Rely on written agreements rather than personal relationships.

9.   Reluctant to do business with strangers.

10.   Have time-bound meetings that start and finish relatively on time.

‘How do you contribute to decision-making effectively to those people who are of a culture different from yours? There are big differences out there in how you would present information, and how they would present information to you.’

Answers

Deal = 2, 5, 6, 7, 8, 10; Relationship = 1, 3, 4, 9