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September 30, 2017

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Learning how culture affects doing business locally

PROFESSIONALS err when thinking that, in today’s shrinking world, cultural differences are no longer significant. It’s a common mistake to assume that people think alike just because they dress alike.

It’s also a mistake to assume that people think alike just because they are similar in their word choices in a business setting. Even in today’s global world, there are wide cultural differences, and these differences influence how people do business.

Culture impacts many things, including the pace of business, business protocol (how to physically and verbally meet and interact), decision-making and negotiating, managing employees and projects, risk management, and marketing, sales and distribution.

There are still many people who think that business is just about making money. They assume that issues like culture don’t really matter. These issues do matter. And in many ways.

Even though people focus on the bottom line, they do business with people they like, trust and understand. Culture determines all of these key issues.

The influence of cultural factors on business is extensive. Culture impacts how employees are best managed based on their values and priorities. It also impacts the functional areas of marketing, sales and distribution.

It can affect a company’s analysis and decisions on how best to enter a new market. Do they prefer a partner (tending toward uncertainty avoidance) so they do not have to worry about local practices or government relations? Or are they willing to set up a wholly owned unit to recoup the best financial prospects?

When you’re dealing with people from another culture, you may find that their business practices, communication and management styles are different from those to which you are accustomed. Understanding the culture of the people with whom you are dealing is important to successful business interactions and to accomplishing business objectives.

For example, you’ll need to understand how people communicate, how culture affects how people view time and deadlines, how likely they are to ask questions or highlight problems, how people respond to management and authority, how people perceive verbal and physical communications and how people make decisions.

You need to deal with preconceived notions and strive to learn about the culture of your counterpart. Often the greatest challenge is learning not to apply your own value system when judging people from other cultures.

It is important to remember that there are no right or wrong ways to deal with other people — just different ways. Concepts like time and ethics are viewed differently from place to place, and the smart professional will seek to understand the rationale underlying another culture’s concepts.

For younger and smaller companies, there’s no room for errors or delays — both of which may result from cultural misunderstandings and miscommunications. These miscues can and often do impact the bottom line.

In reality, understanding cultural differences is important whether you’re selling to ethnic markets in your own home country or selling to new markets in different countries. Culture also impacts you if you’re sourcing from different countries, because culture impacts communications.

Your understanding of culture will affect your ability to enter a local market, develop and maintain business relationships, negotiate successful deals, conduct sales, conduct marketing and advertising campaigns and engage in manufacturing and distribution.

Too often, people send the wrong signals or receive the wrong messages. As a result, people get tangled in the cultural web. In fact, there are numerous instances in which deals would have been successfully completed if finalizing them had been based on business issues alone, but cultural miscommunications interfered. Just as you would conduct a technical or market analysis, you should also conduct a cultural analysis.

It’s critical to understand the history and politics of any country or region in which you work or with which you intend to deal.

It is important to remember that each person considers his or her “sphere” or “world” the most important and that this attitude forms the basis of his or her individual perspective. We often forget that cultures are shaped by decades and centuries of experience and that ignoring cultural differences places us at a disadvantage.

Editor’s note:

Australian Dahvida Falanitule, an established international business consultant, moved to Shanghai in December 1999. He welcomes your feedback and any culture-related questions. You can reach him at


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