The Importance of Cultural Awareness in International Trade

As a trainer for many years, the author habitually opened training seminars for new and aspiring exporters by challenging delegates to identify the main differences between trading on the domestic market and trading with overseas markets. Naturally, issues such as currency, language, distance, trade policy, time zones and standards would be at the forefront of responses but culture was rarely mentioned during initial comments – that is, until relatively recently. It was noticeable that when ‘culture’ was introduced as an important feature it was generally considered as such a ‘soft’ concept that it hardly warranted mention. Fortunately, times have changed. Importers and exporters are now far more aware that matters that can be framed as ‘cultural’ can, and probably will, have a significant impact on their buying and selling operations. Indeed, across the many disciplines in which international trade practitioners and stakeholders become involved, many would consider ‘culture’ as being one of the most interesting and challenging aspects of their profession.

Liong extensively defined culture in 2005 as “values, beliefs, norms and behavioural patterns of a national group”. Consequently, if we are trading with ‘national groups’ we need to be aware of any cultural considerations which are likely to impact on our operations. Cultural issues range from the obvious to the contentious. An example of the former would be the protocol of gift giving and taking during an overseas sales trip whilst an example of the latter would be any suggestion of corrupt practices being a matter of national culture.

The whole question of ‘gifts’ is a good example. This can be a minefield, as many export sales representatives are likely to be aware – should a gift be proffered? would it be construed as a bribe? What should the gift be? What is a reasonable value? All these questions have to be considered and the answers will depend on the culture of the country concerned, potentially together with any possible contraventions of the UK Bribery Act!  Many readers will empathise with such embarrassing situations as having to decline a gift due to company policy or receiving a gift from a supplier or customer and having nothing with which to reciprocate. Declining a gift in the Middle East or Japan, for example, would be considered a very discourteous act. On the other hand, offering a high value gift in the Middle East would, by tradition, require the receiver to reciprocate with a gift of similar value. It is all down to culture!

On a broader, and more fundamental, note, culture may well dictate if an exporter’s product is likely to succeed in different markets. This sounds obvious but often does not feature significantly enough in development, production and marketing planning.  National culture may well dictate the suitability of features such as quality, colour, level of technology, ingredients and materials whilst over-riding issues such as usual purchase quantity, frequency of purchase and income / expenditure allocation will impact on likely sales volumes.  The reality is that larger exporters and multi-nationals are aware of such issues – consider the confectionery producers, chocolate bars that we are used to in the UK are likely to have different ingredients, different packaging and even different names in overseas markets to suit the culture and tastes of those markets. This can be more of a challenge for smaller scale traders, diversity can be costly but can also be the key to opening up and sustaining new markets.     

Culture can also relate to attitude and business norms and can thus impact upon ‘harder’ issues, such as payment agreements and insurance requirements. A frequent, typical, exchange would be - Exporter “We would ask you to open a Letter of Credit for this order” - Buyer “Oh no, we do not usually do business this way”. Or perhaps “we never insure our cargoes” as is quite often heard in trades with the Middle East. Both of these examples can be attributed to ‘business culture’.

Dean Foster, in his book “The Global Etiquette Guide to the Middle East and Africa” states “Working abroad is different. The food is different. People dress differently. People behave and even think differently. So why shouldn’t the way they do business in different cultures also be different? In many ways, it is, and you need to know before you go. Especially true if your competition knows the cultural rules, and you don’t. In the new ‘global world’, crossing borders is easy; crossing cultures is hard”. Included in Foster’s Top Ten Tips for doing business in the Region is the subject of ‘Buqra’, or ‘tomorrow’, and advises that visitors should remove their watch and put it in their pocket when attending meetings in the Middle East until trust and the overall relationship has been firmly established. Once established, schedules are likely to be adhered to but this can take time. Patience is everything, exporters to the Middle East must prove that they are interested in the “long haul”, they will then be treated seriously. – this is a good example of regional culture!  

The whole issue of visits / meetings culture is worthy of a long article in itself – what to wear, how to address people, how to hand over and receive business cards, overall level of formality and how to negotiate – these are just some examples of cultural considerations that need to be observed to facilitate success and reduce the possibility of embarrassment.

For exporters and importers considering embarking on plans for the new year involving new countries of sale and supply, best advice must be to include cultural research in the overall preparation programme. After all, it is a key catalyst to success.

Article written by Jon Walden, an Associate of Strong & Herd LLP. 

A selection of Strong & Herd training courses:

Trading with the USA: Defence Export/Imports

Export Licensing Controls

How to Complete Customs Entries: CHIEF Data Entry (Full Day)

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