While there’s a lot of profit to be made in properly conducted international purchasing, there’s also a lot of risk, especially when you are starting out. One of the biggest risks is that of cultural differences. If you don’t understand the culture you’re dealing with, and they don’t understand you, assuming you even get to an agreement, it’s a disaster waiting to happen.
Fortunately, of all the risks, this is the easiest to mitigate … all it takes is a little understanding, patience, and, first and foremost, a little education. Furthermore, most of your issues will probably revolve around the following eight key cultural differences outlined in Dick Locke‘s classic text on Global Supply Management.
Basically, the key to purchasing success ultimately boils down to understanding the key differences between your culture and that of your potential supplier, which include:
- power distance
a measure of the inequality of power and influence within a society; it determines how well “displays of power” will go over
- uncertainty avoidance
a measure of how uncomfortable a society is with uncertainty, it determines how receptive a supplier will be to a proposal that is too uncertain or too rigid and how the supplier will react to sudden surprises
a measure of the balance between the needs and wants of the individual and the needs and wants of society, it determines how much of the negotiation will be between individuals and how much will be between groups
- polychronic vs monochronic time
monochronic cultures, which view time as something to be “spent” or “wasted”, are schedule-driven while polychronic cultures are interaction driven; while monochronic cultures will usually adhere to the schedule no matter what, polychronic cultures will finish one interaction before moving on to the next, even if it means being three hours late
this relates to the importance of personal relationships in the business setting; personal countries will require a good relationship before they do business with you; highly personal countries will often use relationships as a substitute for a legal contract
- buyer/seller rank
cultures with social ranks, castes, etc. may view you as someone in power or someone without power, someone inside or someone outside, or someone unknown and act accordingly
- importance of harmony
in Asia, harmony is often the ultimate goal and the push will be towards compromise; confrontational approaches will not yield success
- importance of face
in many countries, “face” is important and individuals will go to great lengths to avoid being “embarrassed” in front of their peers; this can lead to misunderstandings as they might say they understand when they don’t, agree when they don’t, etc.
When you understand these differences, you are on the road to success. Of course, these cultural perspectives are different for every country, but to get you started on your path to global cultural understanding, I’m going to discuss China, Germany, India, Japan, Korea, Mexico, and Thailand at a high level in this series of posts. These discussions will, of course, be general and not specific and, as Dick Locke points out in his classic text, while it is too easy to stereotype a country, individuals in each country will vary from the stereotype. You might also run into people who are trained to act like you … while in your presence. You need to take time to get to know the people you will be dealing with because their behavior may be nothing like the usual behavior of the country in which they reside. (This is especially true in countries like China where the contrast between life in big, modern cities and life in out-out-outlying rural areas is literally night-and-day.) These posts, which will be partially based on materials used by Dick Locke in his Global Procurement Group seminars, will be edited by Dick Locke himself.
Finally, if you’re serious about doing international business in a new country, I strongly recommend you do your homework first. You could start with Dick’s course on the Basics of Smart International Procurement (which is offered through Next Level Purchasing and counts towards the SPSM2 certification or ISM Continuing Education Hours) and his seminar on International Purchasing and then bring in an expert (from the Global Procurement Group, for example).