Cross Cultural Negotiation

Cross cultural negotiation needs to take into account the differences in culture if negotiations and hence business, is to be successful.

Some would maintain that culture is inconsequential to negotiation across different cultures, and have you believe that as long as a proposal is financially attractive it will succeed. However, this way of approaching international business is soon seen to be fundamentally flawed.

As an example let’s take a look at two negotiators dealing with the same potential client organization in the Middle East.

We will assume that both have completely identical proposals and packages.

The first one of the negotiators disregards the importance of cultural differences in the negotiation. This is an example of the mistaken belief that the proposal will speak for itself. The second negotiator understands the relevance of cultural differences and undertakes some research into how the potential client will approach the negotiation. He sets out to learn about the culture, beliefs, etiquette and approaches to conducting business in this part of the world.

When you compare these two scenarios you will see that in ninety-five percent of cases the second negotiator has created a significant advantage and will succeed where the first will fail. This is mostly because they have endeared themselves more to the client’s negotiation team and they have been able to tailor their negotiating position in a way that is most likely to create a positive outcome.

If you do get involved in cross cultural negotiation these are some of the areas that are most commonly misunderstood:

Eye Contact
In the US, UK and much of northern Europe, strong, direct eye contact for about 60% of the time conveys confidence and sincerity. Any longer and it turns into hostility or possibly lying. In South America it is also a sign of trustworthiness. However, in some cultures such as the Japanese and in many African countries, prolonged eye contact is considered rude and should be avoided.

Personal Contact
In Europe and North America, business people will usually leave a certain amount of distance between themselves when interacting. Touching only takes place between friends. Distances are dictated by the closeness of the relationship or even by rank. In South America or the Middle East, business people are much more tactile and like to get up close. In Japan or China, it is not uncommon for people to leave a gap of four feet when conversing, even more when there is a distinct age difference. Touching only takes place between close friends and family members.

Time Consciousness
Western societies are very time-driven. Time is money and punctuality is essential. In countries such as Japan or China being late for an appointment would be taken as an insult and destroy the basis of trust needed to negotiate successfully.
However, in South America, Spain, Portugal and the Middle East, being on time for a meeting does not carry the same sense of urgency and you may find yourself waiting. Do not reprimand your client or make your displeasure known if you wish to negotiate.

Upon Meeting
Most international business people meet with a handshake, whereas in Japan equals will below to each other first. In some countries the handshake is not appropriate between different genders. Consider also that some people may view a weak handshake as sign of weakness whereas others would perceive a firm handshake as aggressive. Should people be addressed formally or by some other means: always err on the side of formality if you are unsure.

Exchanging Gifts
In Japan and China exchanging gifts is an integral part of doing business whereas in the US or UK, it has connotations of possible or bribery.

All the above in one way or another will impact cross cultural negotiation and can only be learnt through studying the customs of the country you are visiting. Doing or saying the wrong thing at the wrong time, poor communication and cross cultural misunderstandings can all have disastrous consequences.

There are a further group of associated issues that need to be considered before entering into cross cultural negotiation. The status of the relationship is one of the most important.

The Business Relationship

In much of Europe and North America, business is wholly contractual in nature. Personal relationships are seen as unhealthy as they can cloud objectivity and lead to complications. This means you can negotiate with your enemies as well as your friends. In South America and much of Asia, India and Middle East business is personal. Partnerships will only be made with those they know, trust and feel comfortable with. It is therefore necessary to spend time building relationships before attempting to conduct business.

Negotiation Styles
By tailoring your behaviour and the way you approach the negotiation you will succeed in maximizing your potential for a successful cross cultural negotiation.