Cultural factors key to international business

Scene: A three-hour dinner in Germany, Poland or France with potential business associates, during which only politics, religion and family are discussed.

Success or waste of time?

Probably the former.

“The fundamental difference between American businessmen and Europeans, is that Americans believe that product and service is king or queen, and method is fungible,” said Windham Loopesko, CEO and founder of W.E. Loopesko & Associates, an international business development firm.

He was keynote speaker during the latest Office of International Affairs seminar.

“But Europeans believe the person is much more important than the product,” Loopesko said.

Eventually, in business, when they come to a “bump in the road,” a European wants to know if the American will be able to work toward a solution. Hence, it is next-to-impossible to do international business without meeting face-to-face. And, no, the Internet has not changed that, he said.

“Sitting down and breaking bread together is critical,” Loopesko said. “You’re absolutely doing business when you talk about family, politics and religion, as much when you talk about a product or contract. Meals are a part of getting to know a proposed business colleague, seeing how he/she reacts to different situations, and probing his/her knowledge of the world. The foreigner uses the entire process to determine if the American businessman is on the same wave length.”

So, it helps to develop topics of conversation.

Because foreign business people are generally very familiar with the American political and economic scene, Americans should expect and be ready to answer “sophisticated questions” about current American events.

And Europeans draw a distinct line between work life and private life.

“When a European invites you into his home, that’s a sign that he wants to take the relationship to another level. Just as moving from Mr. Loopesko to Windham is fraught with meaning,” Loopesko said. “English is the only major European language that doesn’t have formal and informal (pronouns). We don’t think we need it.”

Titles are important and should be used when addressing a foreigner, and hierarchy will greatly influence how a foreigner behaves toward a new colleague.

In “low context cultures,” such as the United States, Holland or Scandinavia, “what you see is what you get.” Information necessary to a business deal is likely to be presented and visible.

But in “high context cultures, a knowledge of business and cultural background is much more important, and real decision-making is likely to occur behind the scenes, with meetings and negotiations being more formal ‘set pieces’ to present or ratify decisions already made,” Loopesko said.

Examples of high context cultures include China, and the Latin countries of Europe: France, Spain and Italy.

Europeans also detest insincerity and will not do business with people whom they cannot trust. But the “ugly American is yesterday’s news, and in most areas where Americans go to do business, America’s ‘stock’ has never been higher,” he said.

However, some common sense will go a long way toward establishing business relationships.

“Errors of ignorance are easy to forgive, but a foreigner who suspects that an American’s behavior does not represent his or her true attitudes will in most cases simply not do business with him/her,” Loopesko.

And, in case, if you hadn’t already figured this out: Do not expect to build a relationship in a single meeting.

“The relationship must be nurtured and developed over a period of time. Two elements are essential: the frequency and quality of the contact, and the passage of time,” Loopesko said.

And, of course, it behooves anyone attempting to develop international business relationships to research the culture.

Time, punctuality and etiquette vary widely among countries, and learning a few words of the local language is an excellent “icebreaker.”

Loopesko’s tips for making international negotiations successful: “Be patient; be observant; and follow up every negotiation in writing, so that misunderstandings will surface early and differences in assumptions can be recognized and dealt with,” he said. “Have the contract reviewed by a local national, preferably someone who shares your agenda (a local lawyer) or who has no direct stake in the transaction. Make sure that the English language version of the contract is binding, or that a local native-language speaker has reviewed it and briefed the negotiator on its contents. And try to avoid on-the-spot decisions – always have the final version ‘approved by the home office.’ Even if the negotiator is the decision maker, this practice provides a useful time for reflection.”

Above all, banish fear and remember that Europeans will forgive much in the way of American faux pas if they know you are sincere.

Loopesko learned this, years ago, during dinner with his sister’s in-laws and their family in France.

He was 20-something and seated next to a “staid aunt in her 50s,” who was describing an upcoming trip to the south of France. Loopesko tried to say in French that he “envied” her. Instead, horror of all horrors, he said he “wanted” her.

The anecdote was (gasp!) whispered from person to person around the table – but, his gaffe actually “accelerated his acceptance into the family” because he was trying so hard to learn. And they were trying so hard not to laugh.

Rebecca Tonn covers banking and finance for the Colorado Springs Business Journal.