Chapter # 3 : Practicalities, Culture in the Int’l Business
Five keys to be successful in international business
- Thorough preparations
- Well tested products
- The importance of relationships
This is a sample from the book Export & Import, Winning in the marketplace.
Look at the examples below and identify which ones you think might be similar to your situation.
You are the foreigner
We tend to bring our domestic mindset for doing business and attempt to apply it to a foreign market. Remember that you are the foreigner and it is you who has to adapt.
Say you operate a firm in Spain. A company from Indonesia calls and wants your company to distribute its outdoor furniture products. They tell you: “This is the way we sell outdoor furniture in Indonesia; here is the pricelist and the sales materials we use. You should sell our products in the same way.”
What would your reaction be? You probably wouldn’t appreciate their approach. In the same way, a distributor in your new export market won’t appreciate being told they have to sell in the same way as you do in your domestic market. The local market determines your activities, prices and ways of doing business, no matter where the market is.
Get to know your new market
The best way to learn about a country is to spend time there. By doing that, you will get a ‘feel’ for the customs, become familiar with the culture and get your mind ready to do business. (See also article: The Mental Market Research when exporting.)
Many years ago when I was conducting a workshop in Sweden to recruit, select and activate representatives, one of the clients was unhappy with the help he got from a consultant he hired to select a distributor for the Spanish market. I asked him how many times he had visited the Spanish market to collect information before setting up a profile for the distributor he wanted. He said he had never been to Spain. My answer to him was this: “So how would the consultant be able to find the right distributor for you without knowing what you were looking for?”
Get to know and understand different customs
Values, customs and rules vary considerably, depending on what country you are in. Differences range from how you should greet a client to how to entertain them. For instance, it may be considered impolite to use the word “no”, although that is what you mean. It can be practical etiquette like titles such as President, mister, doctor or professor, when you can use the first or last names of people you meet or whether you shake hands or not.
Before you make your first visit, learn about the local culture. Do your research using this book, go online or visit the library. There are plenty of good books on business culture; some of them even describe each country. Invest in one of those. Network and ask for advice from business people who are knowledgeable about local customs. You will be treated better and will gain credibility if the foreign company sees that you have taken the time to gain insight into their unique ways of doing business.
When you understand how to do business locally in a new market, you will be successful The Asian way of conducting business is completely different from the North American way. An Asian business person first wants to get to know you and build up a relationship. You have to be “eye to eye” with your Asian partners to understand their message. Then they will be prepared to get to know and have confidence in your company. They will also want to analyze and test your product for a long time. The North American way is to quickly present an offer, focus on the potential profits and close the deal.
As you can see, these are two completely different approaches to doing business. For an exporter, the demand is for two completely different approaches.
To establish effective business relations, you have to establish mutual trust. The day you understand how to do business the “local way”, you will truly understand what adjustments have to be made by you and your company. The day you can apply that understanding in different foreign markets, you will be on the road to success.
If you and your foreign partners (e.g., distributors, dealers, representatives, etc.) are not compatible, the odds are 100:1 that they will not be happy with your products and services either. If the relationship is not a good one, it will be difficult to do business and may even create new problems. Be positive and remember that your representative has to believe that you are sincere and interested.
You can sell anything if you understand the customer
Keep the channels of communication open
It’s not enough to visit a country once and then think that you understand their culture and way of doing business. Conditions are constantly changing – you must keep updated. Make sure to maintain ongoing communications with your market contacts. Be ready to answer their questions. Share ideas and proposals for new activities and products. Ask about how things are going, what assistance or changes they need. Listen and understand, give your support and be prepared to adapt. Make sure you benefit from this unique situation.
“Good listeners generally make more sales than good talkers.” B.C. Holwick.
Learn the language and the underlying meaning of what is said
Having English as your mother tongue may hinder learning other languages. Being able to make yourself understood in several languages enhances your qualifications and helps your transition into new countries. You will be able to greet people you meet, order food in the local language and ask for directions. Knowing other languages also shows your foreign representative that you have a genuine interest in understanding their market. Encourage your staff to learn more languages. An answer like, “This fax will have to wait until the export manager is back because I don’t understand what it says”, is not acceptable.
Staff in your export department must have strong oral and written English language skills too. If possible, you should hire individuals with proficiency in other languages. Your company should be prepared to assist staff to develop the necessary foreign language skills they will need to work with representatives from overseas markets.
Most failures result from clashes of culture or values, lack of communication or misunderstandings. Just because someone doesn’t ‘look you in the eye’ does not mean they are not trustworthy. Their actions could be the result of cultural or social training. Many times you think you have understood, but you later find out there was some type of miscommunication. You have to learn to go beyond the words so that you know what the person you are speaking with really means. Check for the tone of voice, body language and other visual clues.
When I was in charge of marketing complete sawmills, our Nordic customers could plan their investments two to three years in advance and accept delivery times of six to nine months.
The North American market was completely different. When the price of lumber reached a certain level, the customer’s board of directors decided to put a new sawmill into production within six months. A couple of days after the board meeting, the company requested quotes. It took them less than one month to decide on the purchase. After placing the order they expected the sawmill to be in full production in another two to three months so that they could capitalize on higher lumber prices. To make sales forecasts in such an environment can be very difficult.
Show that you are prepared to commit yourself
Establishing a partnership in a new market requires a long-term commitment.
It’s easy to say that you will provide support to a distributor. But arriving on a Sunday afternoon and announcing that you have to leave on Tuesday for another meeting is not a sign of commitment. You must be prepared to stay for meetings as long as necessary to ensure your new partners are satisfied. Bring sales training materials, offer to train their staff in your factory, provide staff to work closely with them on their schedule, add extra inventory to your warehouse and inform them that you are ready to deliver when sales increase.
In countries where people pay attention to hierarchy and titles, it will be expected that your company will send someone from senior management, at least for the initial meetings. When your president or CEO cannot attend follow-up meetings, arrange for a telephone conference or produce a DVD in which he or she speaks directly to management and staff at the new company. If you send a junior manager or someone without high company status, your company may be seen as not having a strong commitment to the new partnership.
You have to demonstrate that you are making a long term investment and intend to be an energetic partner. Make sure you are well prepared for your first visit. Bring promotional material that is specific to their needs and in their language. Invest in repeat visits and make joint customer calls. These steps, along with helping to create advertisements and exhibitions, will help establish a solid base for a productive working relationship.
The real work begins when everybody agrees
We are often too quickly relieved when we have signed up a representative, believing that this has ‘locked up’ their activities concerning that market. The reality is that once you have agreed to work together, the actual work starts. Why? Up to this point, you have only convinced the foreign company to sell your products. Now you need to help the company secure the initial sales orders that will get your marketing program off the ground. Your job is to motivate your foreign representative. This is what differentiates a successful exporter from one who fails.
Educate the distributor and your own personnel
One of your first priorities should be to educate your foreign distributor. After all, you selected them because they were well qualified. But that’s not enough. You still have to transfer important knowledge about your product and sales techniques and providing customer service policies as well as about competing products. Explain how you normally market your products and how they were successfully introduced to other markets. Work with them to develop a proposal for what tasks have to be done based on local market demands.
Your export success is also much dependent on the skills and knowledge of your domestic staff. Educate them about the culture and way of doing business in the new export market. Don’t forget to prepare them for the general rules of exporting and the potential challenges they will likely encounter.
If you want active representatives, you must select the appropriate partners based on knowledge and experience. It’s your job to motivate them to work hard on your behalf. Make sure you have a plan for how to activate them once they have agreed to take on your product line. For example, convince them of the benefits of working with you (“make them hungry”), show them how they will benefit from the relationship, how you will support them and get them “up to speed” and earning money.
If you have a representative who does not perform satisfactorily, you have either chosen the wrong one or you have not activated them properly.
Here is your price list and product material. Order!
Of course, this won’t work! You have to work together to get the representative or distributor to place the first order. You have to work harder to make sure they sell what they have ordered.
You’ll be mistaken if you think that by giving your representative product information and price lists the orders will just roll in. It’s a very common, and wrong, assumption on the part of an exporter that it’s a foreign representative’s job to do everything. Rather, success in the market is a joint responsibility. The first sale is just the beginning. The joint venture is not proven until your distributor has sold out and placed another order.
Show that you can correct mistakes quickly
If you don’t do anything, you won’t make mistakes. But if you are active, someday, something will go wrong. Don’t take the “ostrich approach” and try to ignore problems, assuming that your representative will not find out. With immediate action, you can take care of your slip-ups before your representative ever sees them. So if you expect deliveries to be delayed, inform the customer at an early stage and try to minimize the difficulties caused. If you experience technical problems, be proactive and give your representative an explanation of what is being done. As you are building up a long-term relationship, it is critical that you work towards a common goal.
You will find more details about shipping and clearing customs in the Shipping chapter.
Prove your interest in the new market
Of course, you are interested in your new market. Otherwise, you would not have done the work to get there, right?
We tend to put a lot of effort into the market start-up, conducting research and making sales contacts. Sometimes after that start-up, though, the pace of activity slows down. Successful exporters need to be prepared to follow up – not just today but in the future. You have to maintain an ongoing interest in what is happening in that foreign market.
For example, there will be changes in industry and customer demands. Currency fluctuations will influence your export results. Keep up with what is happening locally. Show that you have an interest in issues that affect your new distributor and ask about the specifics of their market. When you visit or call them up or email them, be informed enough to be able to discuss current affairs, the weather, the global financial situation and even local sports teams. Ask about their families or other non-business topics. A phone call is easy and inexpensive, so call regularly. (If your phone rate is high, look into using Skype for your long-distance phone calls – a low-cost solution. www.skype.com.) That will not only show your ongoing interest in the market and your representative but it will also keep you updated about developments. Invite them to visit your factory to see your facilities and meet the staff. Another benefit is that they will better understand your business culture, production and quality control processes as well as the culture in your country.
Before selecting a market, you have to get to know the market. Make several visits to gather key information and verify that your strategy is the right one. If you are not sure, take more time. Visit a cross-section of end-users, because they will be your future customers. When you ask, they will tell you who your competition is. They can confirm whether your product is suitable and if your pricing is appropriate. They can also make suggestions about potential distributors.
Prepare your personnel
As I mentioned before, exporting has to be a team effort. Make sure you have enough personnel with the right skills and knowledge. Keep your staff in the production, order and shipping departments, finance and research and development informed about developments. Inform them about any organizational changes that will be made and clarify job responsibilities.
Let them know the time frame you have set up, provide them with information about the new export market and what you want to achieve. Then tell them what you expect from them. Share suggestions for contacts with your representatives in the new export market and tell them which staff they should keep in touch with at your company. Your reception staff should not be surprised when someone calls from Mexico with questions or orders, because they will already know it is one of your new distributors.
There will, of course, be increased workloads because you will be serving new clients and markets. These clients will have questions and requests for assistance that only your staff can deal with. You can’t just add extra work for your staff and expect them to do the job well without the proper training, customer service information and even extra resources. Staff will be called on to make decisions or resolve problems that may be more complicated than they are used to.
If you want a professional organization with a professional image, you must have professional people. Prepare your staff well in advance and you will all benefit.
“Things that are bad for business are bad for the people who work for the business.” Thomas E. Dewey
Adapt your products and materials
Each market has specific demands for types of products, product adaptation, sales and technical/promotional material. The language, technical terms and manufacturing specifications you use have to suit your export market. For example, you might have to change the height of a mobility walker if the people who will be using the device are of short stature. Depending on a country’s voltage, you may have to adapt your electric motors. Some colours are unpopular in parts of the world.
Sales and support materials have to suitable include diagrams and illustrations suitable. Users in North European markets want technical information while North Americans want more promotional text. Paper measurements/dimensions and the pre-punched holes for ring binders vary in different countries. If your customers use inches or imperial units they should not have to convert from metric measurements.
Take time to evaluate prospective distributors
Your choice of the foreign representative is critical. Take the time to locate potential distributors and evaluate them thoroughly. Once you’ve interviewed several prospects and made your selection, you’ll begin building a long-term relationship. Ask some end users for their opinion about your product/service and where and how they want to buy. That will give you a good indication of who to contact as a potential distributor.
When you’re looking for a life partner, you take the time before deciding to live together for the rest of your life. The same process also applies to select a foreign partner, whether it is a distributor, joint venture partner or other arrangements. You have to find the right partner who “fits” with your goals for the market and one where the chemistry works well between the two of you. The personal relationship is very important.
Don’t settle for someone who is just good enough. Find the best, because they can make the difference between satisfactory results and excellent results. If you select the wrong partner, it can hurt your sales and your company image.
Prepare your professional material in advance
Who are you and what is your company about? Your printed materials are tools for selling yourself and your company as potential partners. You only get one chance to make a good first impression. Before you leave home for your business trip, ensure that what has been prepared is high quality and adapted to that specific local market. This can mean the difference between signing up a new partner or returning home empty-handed.
Bring promotional materials you can leave behind
Very often, an exporter will bring along a well-prepared binder. The binder includes a presentation on the company, information about products, advertising and reference material. The material is often of such interest that the local distributor wants to keep it. However, the exporter says: “This is my personal binder, but I can prepare one for you, and send it in two weeks.” That is not a good way to start.
Make sure you have prepared multiple binders with the same content and quality as your own. You will leave these with your client.
If you can get your representative eager to sell your product (hungry) by using your binder as an appetizer, then you have the right material. Provide enough sets of binders for their staff too. Since they are hungry, you have to serve what they want immediately.
Test your products on your home market
Never export a product that has not been thoroughly tested and retested. If you are a manufacturer in Sidney, Australia and something goes wrong with a product you have shipped to a client 100 kilometers away, you can send out a technician or schedule a service call. But if your client is in Latin America, that is too far away for you to make immediate repairs.
Test your product in the new market and make adjustments
Although your product can pass tests in the domestic market, it is wise to test it in the export market where circumstances can sometimes be difficult to predict. You would be surprised what things you haven’t considered.
The mobility walker manufactured for a tall Swede would be too large for a small person from the Philippines. Door sizes in Japan are narrower than in North America, so make sure your product can fit through their doorways. Clients in Europe and North America are not very particular about the appearance of some products. Japanese customers demand high-quality finishes on products. They will not accept just painting over a welded joint; it must be a smooth surface.
Testing a product on the foreign market, with the people who are going to use it will allow you to determine if the quality is adequate and if the product is right for that market, then to make appropriate product improvements.
The Importance of Relationships
Being successful in business requires good working relationships and mutual trust that are developed over a long time. As in a marriage, there will be positive and negative experiences, however, it is important to work through your differences together and resolve them when they occur. The same applies to business. It’s not the product or service that makes for success; it is the relationships between the people in the companies.
You may have to adapt your way of doing things. Don’t just spend time with the president of a company. Spend a lot of time with the staff, service people, sub-dealers and customers (if appropriate) and get to know them. It’s your willingness to work on building up the relationship and your willingness to learn that sets the stage for information sharing and building a strong export business.
“There are more goods bought by the heart than the head.” George Henning
You have to be flexible in your approach to the new market
Entering the global marketplace makes it possible for you to expand your business, make more money and create a more stable company.
Don’t forget that you are the foreigner in the new export market, and you will have to adjust or risk you will fail. There are many examples from the past and in the recent business press about major companies that tried without success to force their domestic products and practices onto a foreign market.
If you have a great product but a bad relationship with your representative in the foreign market, your business will not work. However, even if you have a less desirable product but enjoy a good working relationship you will have a better chance to get the product accepted.
Above was a small sample of the book and that chapter. This is the end of Part One of that chapter. As this chapter has three parts, I suggest for those that have the book you also read Part Two. If not, at least read the summary of Part Two.
I hope you did pick up some new ideas from the above article
Good luck in your activities expanding on the global market
Leif Holmvall, President
Export Pro Inc.
In our book “Export & Import – Winning in the Global Marketplace”
ISBN 978-0-9681148-1-0 those topics are covered in depth. You can also buy our book for less than $10 as an e-book visit e.g. https://www.amazon.com/dp/0968114814, where you can read part of the book.
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