Going Global An Introduction to the Cultural Aspects of International Trade

1. Going GlobalAn Introduction to the CulturalAspects of International Trade

2. Your Presenters • Ray Joyce, CITP • The Joyce Group • Hydrotesters Inc. • Associate Professor University of Calgary • Scott Ferris, CITP • FITT • Professor Algonquin College • Economic Development Professional

3. About FITT FITT (Forum for International Trade Training) is a not-for-profit organization devoted to helping individuals and businesses acquire the practical skills they need to compete in the global marketplace. As an organization, FITT: • develops international business programs • sets competency standards in international trade • designs the certification and accreditation programs for the Certified International Trade Professional (CITP) designation • works with economic development professionals to help you help your clients FITT truly is the professional path to global markets.

4. Workshop objectives At the end of this workshop, you will: • recognize how cultural dimensions of different countries influence international trade • understand the complexities that cultural differences can create and the vital role that building personal relationships plays in international trade • know the personal characteristics that businesspeople must develop to be successful in international trade • be aware of websites that focus on the cultural aspects of international trade • appreciate why you should—and how you can—prepare yourself and the men and women of your company to travel abroad on business safely

5. Culture Defined Perhaps no area of international trade is less understood than culture. And yet, culture is a key influence on consumer behaviour. Serious cultural mistakes can negatively affect a relationship. So can a simple cultural blunder.

6. So what is culture, exactly? Culture is a system that members of a group share and use to cope with one another and with their world. This system consists of: • attitudes • beliefs • values • aesthetics • language • material traditions • social institutions

7. The components of culture up close Attitudes: a learned tendency that causes one to respond in a consistent way to a given object or entity Beliefs: an organized pattern of knowledge that one holds to be true about the world Value: an enduring belief or feeling you have that a certain type of conduct is personally or socially preferable to a different type of conduct

8. More components of culture up close Aesthetics: what people accept as beautiful or pleasing to the senses, including music, art, literature, dress, colours and architecture Language: the ways in which people convey meaning and understand messages, including spoken and written words, body gestures, body position and eye contact Material traditions: the way in which a society organizes its economic activity Social institutions: the ways in which people in a particular society relate to one another, as determined by family relationships, social stratification, class, education, religion and age

9. The influence of culture on consumers

10. The characteristics of culture Culture has five notable characteristics. It is: • comprehensive • learned rather than innate • expressed within boundaries of acceptable behaviour • beyond an individual’s conscious awareness • dynamic and can change quickly

11. Observe behaviour to identify cultural tenets Cultural norms can indicate deep-seated social tenets. So be mindful of: • standards for personal space • personal greetings and introductions • living standards and spending priorities • approaches to design and standards of beauty • concepts of right and wrong, and guilt and shame • meal-time patterns, and dietary taboos and restrictions • friendship patterns and the role of family and other relationships • respect for personal characteristics such as decisiveness and honour • the etiquette of gift giving and customs for entertaining business associates • religious practices, prohibitions, holidays, forms of observance, and sacred objects, animals, places and people

12. But… ...be aware that culture is inherently vague. Differences and variations exist across regions, and people from one culture often violate the norms of another without knowing—or even having been informed—they have done so.

13. Be sensitive to the spheres of influence Some cultural influences penetrate more deeply than others, and many are vitally important to exporters, including: • legal norms and requirements • expected professional conduct • generally accepted industry practices and processes • cross-border cultural modifiers such as language, religion and geographical location

14. High-context communication cultures Fundamental characteristics • less is more • shared aspects of culture equip people with the knowledge and awareness necessary to fill in any gaps in meaning Conducting business • relations are built on trust and take a long time to develop • focus is on personal, face-to-face communication, and often centres around an authority figure • identities of individuals are determined by the groups to which they belong—family, class, occupation Learning • decision-makers in business welcome advice and rely on many sources of information

15. Low-context communication cultures Fundamental characteristics • rule-oriented • attention is paid more to the literal meanings of words than the context that surrounds them Conducting business • speed and efficiency are valued • relationships tend to be task oriented • business processes are decentralized, with responsibility spread throughout organizations Learning • emphasis is on following explicit directions and explanations to gain knowledge as quickly and efficiently as possible

16. Tips to avoid cultural missteps Don’t… …view your culture as superior to that of others …use the standards of your culture to evaluate the advantages and disadvantages of other cultures …make overgeneralizations about countries and their cultures

17. Notice the universals Account for differences in consumer behaviour across countries with GeertHofstede’s five dimensions: • Small vs. large power distance • Individualism vs. collectivism • Masculinity vs. femininity • Weak vs. strong uncertainty avoidance • Long-term orientation vs. short-term orientation

18. Relationship Building in an International Context How much of a relationship is required? Low Context High Context

19. Hofstede’s dimensions in action Culture-based segmentation

20. Understanding who you are is the first step in beginning to understand who others are. What is your cultural baggage?

21. The Art of Negotiation Across Cultures • We negotiate constantly in one form or another throughout our lives • Negotiation should not be a matter of winning all you can at the expense of others • Win-win negotiations are preferable • Negotiating in a multicultural environment is more challenging than in a domestic environment

22. Four stages of international negotiation International trade negotiations are cyclical process that consist of four stages: • Establishing the Relationship • Exchanging Information • Persuasion • Concession and Agreement

23. The 12 variables that influence negotiations

24. Bridge the culture gap The greater the cultural differences between you and your negotiating partner, the greater the barriers to communication. Fortunately, you can overcome these barriers by: • learning about the other person’s culture • leaving your cultural assumptions at home • using elements of Canadian culture to achieve desired ends • bringing in a third party to act as an interpreter for both sides

25. Developing Cultural Intelligence You must become a sophisticated communicator, adept at receiving and conveying ideas and information to anyone and from anyone anywhere in the world.

26. Issues & Pitfalls: Body Language • It is an important part of the communication process, particularly where language barriers exist • It is important to understand the mannerisms common to your foreign market • Recognizing that a large part of communication is non-verbal in order to: • understand how our message will be received in a different cultural environment • avoid misunderstanding because of body language messages • avoid feeling uncomfortable because of cultural differences such as silence in conversations or lack of personal space

27. Issues & Pitfalls: Gender • The culturally appropriate manner in which men and women relate with each other differs around the world • An issue for foreign businesspeople, particularly women seeking to compete in certain environments

28. Issues & Pitfalls: Gift Giving • Challenge is to know the gift-giving customs of your target market • Giving the wrong gift at the wrong time can have serious consequences • Different protocols for presenting and receiving gifts

29. Issues & Pitfalls: Humour & Time Humour • As a general rule, humour does not transfer well between cultures • To appreciate humour, listeners need an understanding of the culture from which a joke originates Time • Time and its use are seen differently around the world • Canadians view time as inflexible - meetings must start on time or we get frustrated • Other cultures treat time more flexibly

30. Issues & Pitfalls: History & Business Card Etiquette History • History often influences a culture’s perceptions • Even within culturally similar regions, cultural events will be viewed differently by different people • Research the target market’s history, but avoid discussing sensitive issues Business Card Etiquette • Business card handling is a ritual in some countries

31. Communication: Role of Words • In different cultures words play different roles • In Canada / US we say what we mean • In other countries, “no” is rarely used - to avoid embarrassment • “We’ll see” or “perhaps” may mean “no” • Silence or the absence of words can have different meanings

32. Written communication in two or more languages presents special challenges: use of slang / idioms ineffective translations interpretation of written contracts Back-translation is a useful tool to ensure message is received as intended Effective translation is always critical, particularly in contractual agreements Communication: Written

33. Communication: Written Original Document in English Translated into Spanish BACK TRANSLATION PROCESS Original Meaning Verified or Adjusted Translated Back into English

34. Cultural Differences & International Marketing • Cross-cultural marketing involves learning how to adapt marketing strategies and communications to cultural differences • Knowing cultural differences is fundamental for market research, strategy development, planning and implementation • Local guidance essential to avoid costly marketing blunders

35. Cultural Differences & International Marketing Issues: • the desired meaning of a product name does not always survive translation • solutions include “nonsense names” and multiple names for multiple markets • marketing materials will differ from market to market, depending on education, gender and so on • packaging and marketing materials will differ to satisfy different aesthetic tastes • education profiles will determine level and quality of professional / support services in target market

36. Cultural Differences & International Marketing • Issues: • Design: product modifications may be required to meet regional needs • Colour: colours used in packaging / marketing materials must be appropriate to target market • Music: maintain cultural sensitivity when using music to deliver marketing messages

37. Avoid cultural missteps with these six tips • Keep your assumptions in check. • Think as an individual and interact with others as individuals. • Put yourself in another person’s position and try to see their point of view. • Embrace the cultural differences you experience, and always think before you act. • Get advice and involve others in situations you do not understand or find uncomfortable. • Never attack or blame another person’s culture if you believe that person’s actions or behaviour is wrong or misguided.

38. Recognize the signs of culture shock Culture shock is the difficulty people encounter adjusting to cultures that differ markedly from their own. Common signs of culture shock are: • feelings of anxiety • feelings of isolation • feelings of helplessness • belief that one’s own cultural beliefs and values are being openly challenged

39. Build your culture competence

40. Prepare Yourself and Your Workers to Travel Overseas Preparing your personnel to travel and work abroad—even for short periods of time—is an essential element of understanding and dealing with the cultural aspects of international trade. http://blog.valerie-antoinette.com/2012/03/14/duty-of-care-an-employers-moral-social-and-legal-responsibility/

41. You are liable under federal and provincial law • Federal legislation—contains stiff penalties for employers who fail to take reasonable steps to prevent bodily harm to their employees arising from their work. • Provincial legislation—protects workers against workplace violence, including violence that takes place abroad. Duty to care is the backbone of all federal and provincial laws that govern occupational health and safety.

42. Create a crisis-management plan Put in place airtight plans to deal with crises related to workers travelling and working overseas that fit your company’s: • size • needs • resources

43. Put together a crisis-management team Assign a structured team of people to: • understand the problems that overseas travellers can encounter • respond to simulated crises to put any plans and processes into action • ensure crisis-management planning is reflected in the development of higher-level company policies • link your crisis-management plan to Government of Canada responders such as the men and women of the Consular Affairs Bureau of Foreign Affairs and International Trade Canada • explore the option of hiring private security professionals to plan and prepare for worker-safety incidents and provide group or online training

44. Relationship Building in an International Context Costs • Conducting international business is more expensive than operating domestically • High-context cultures can be more expensive at first • Business relationship arrangements, if long term, can be more cost-effective than they first appear

45. Relationship Building in an International Context Ethics • Many activities that Canadians consider corrupt and unethical occur on a regular basis throughout the world • Even if an activity is illegal in a foreign destination, laws may not be enforced or may be enforced unfairly • If you engage in an activity that is perfectly legal in the foreign market but considered unethical by the majority of your consumers, it could adversely affect your business

46. Intercultural Effectiveness: Competencies • Concept of culture • Modesty and respect • Target market and its culture • Adaptation skills • Intercultural communication • Relationship building • Personal commitment

47. Intercultural Effectiveness:Relationship Building • Successful relationships are developed over time and need to be continually strengthened • Relationship building is closely associated with knowledge of the foreign market and effective communication • Success or failure of a venture is linked to ability to foster good relationships

48. Intercultural Effectiveness:Personal Commitment • International business practitioners must develop and maintain realistic expectations of what they wish to accomplish • Obtaining all of the competencies required to be successful in international markets takes a great deal of personal commitment

49. Keep learning Websites that will help you understand culture and KNOW BEFORE YOU GO! • http://geert-hofstede.com/countries.html • www.executiveplanet.com • www.ediplomat.com • http://www.getcustoms.com/

50. Thank you and we wish you much success Ray Joyce, CITP ray@fitt.ca Scott Ferris, CITP scott@fitt.ca FITT – www.fitt.ca 1-800-561-3488