Category Archives: CQ

How Is The “New India” Shaping Up?

The New York Times recently ran an article on The Ideas Shaping a New India that got my attention. Given that so much of our supply chain, especially in services, is now dependent on India, and that India is poised to become the 3rd largest producer of GDP by mid-century, it’s important that we have a good handle on where it’ s going — especially since it’s now been twenty years since India began to open its doors to the world and loosen the economic controls on its own citizens. As a global trading partner, India is grown up — and now it has to make some adult decisions (and stop simultaneously exhibiting the bravado of needing nobody and the hunger for recognition from those it claims not to need).

So what has, and will continue to, turn the new India new? According to the author of the article, who has spent years traveling in, and reporting on, the country, these are the five prevalent ideas that are going to influence the shaping of India this decade.

  • Class is a Situation
    In early India, class was not circumstance, but identity. It was who you are from the moment you are born until the end of time. But today’s generation sees class as a transient situation that can change. Take Infosys for example. This global Indian juggernaut that has adopted the mantra of “no caste, no creed, only merit” and is changing the game for a new generation.
  • A Bed is For Two
    In traditional India, the focus was on the family unit and not the individual — every Indian was part of a clan (and the clan came first in the economy of guilt and sacrifice that has traditionally held Indian families together). In comparison, today’s generation often looks upon family as a support network but identify themselves as individuals first, family members second. Some even see family as a hindrance to achieving their dreams. Today’s generation, for better or worse, believes that the best approach is for you to take care of you and me of me.
  • English is Passé
    While Indians are still passionate about learning English, as they want to be part of the global marketplace, they no longer want to be English. They have their own traditions and manners that date back to thousands of years before the earliest English customs, and they are quite happy with them. (The oldest recorded town in Britian, Colchester, is a mere 1934 years old. In comparison, India has the oldest city in the world, Varanasi, which is over 5,000 years old.)
  • Plastic is Better Than Gold
    Traditionally, the Indian economy revolved around gold, which represented solidity and security in a culture that feared the future and sought insurance against it. Today’s generation, which associates more with credit and debit cards, is building a culture where to swipe a plastic card, rather than stash gold, is a psychological bet on the future instead of a hedge against it.
  • Modernity is Best Served Traditional
    India is a model of forward movement in which the past retains the upper hand and the future stands on the defensive that assumes,against all odds, that the traditional and the modern are ultimately compatible.

In other words, as India matures, it is going to try and blend the individualistic forward-looking Western culture with its family-focussed backward-deference Eastern culture to create a new, modern, culture that will, hopefully, embrace the best of both worlds and allow it to easily do business with the West and the East. If they succeed, we may again see a time where the bulk of global trade passes through India. (Though, hopefully, this time it won’t be through a single trading company. As much as Sanjiv Mehta might like to see the East India Company rise to glory again, I don’t think any single company should ever have the trade monopoly that the East India Company had in the 1700’s.)

Cultural Intelligence X: Thailand

This series is edited by Dick Locke, SI’s resident expert on International Trade, author of Global Supply Management — A Guide to International Procurement (which was the definitive guide for almost a decade), and President of the Global Procurement Group which regularly gives seminars on International Trade and working with International Cultures.

As highlighted in last year’s post on Overcoming Cultural Differences in International Trade with Thailand, Thailand is is fiercely independent, astutely diplomatic, and a very distinct trading partner to deal with as over 95% of its population declare themselves as Buddhist, with the majority belonging to the Theravada school of Buddhism. As a result, in negotiations, which you cannot rush, you should be prepared to avoid direct confrontations at all costs.

With respect to Locke‘s seven key cultural differences (first outlined as six in his classic text on Global Supply Management), power distance is high as they believe that authority and power are natural to the human condition and that hierarchy is good for you. Time is not just polychronic, but cyclical. As a result, there is no rush to seize an opportunity as it will come around again. And while many social researchers indicate that the buyer has a high rank, this isn’t really the case as buyers and sellers don’t have a status in the Thai belief system, only people. As a result, both senior negotiators will be equal, and there will be a desire to work together to create harmony, which is very important. Saving the face of others is very important, individualism is low, and uncertainty avoidance is high. Furthermore, with security before risk-taking and a belief that easy work for sufficient pay is better than hard work for high pay, there is a large reluctance to initiate change.

With respect to verbal communication, they are indirect, even though personal questions may be asked so they may understand where to place you in their hierarchy, as this is essential for them to “harmonize” with you. You must speak lowly and calmly and avoid confrontation at all costs.

With respect to non-verbal communication, your facial expressions and body position are more important than your words. You should keep your emotions in check, avoid waving your hands or making other large gestures when you talk, keep your hands out of your pockets, and never lay your arm over the back of a chair someone is sitting in. Personal space is very important to the Thai, so don’t stand too close, and you should avoid touching them. While limited touching between the same sex is okay between friends and colleagues (but never between strangers), touching the opposite sex is taboo. Finally, eye contact is common, as they want to put you at ease.

Meetings should be well planned in advance, but don’t expect them to get down to business until at least the fourth day, as they want to get to know you first. Negotiations will be slow, as decisions must pass through many levels, but they will progress if you are patient. Meals are also a part of the business culture, and cutlery is more common (although sticky rice may be eaten with the right hand), and the host always pays the bill. And while the Chinese might like it if you play fight for the bill, you should never offer to pick up or split the bill in Thailand.

Finally, greetings follow the wai.

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Cultural Intelligence IX: Mexico

This series is edited by Dick Locke, SI’s resident expert on International Trade, author of Global Supply Management — A Guide to International Procurement (which was the definitive guide for almost a decade), and President of the Global Procurement Group which regularly gives seminars on International Trade and working with International Cultures.

As highlighted in last year’s post on Overcoming Cultural Differences in International Trade with Mexico, while Mexico is part of North America, there are significant differences in doing business in Mexico when compared to Canada or the United States. For example, as appropriately summed up in Richard D. Lewis’ When Cultures Collide, while the Mexican gives freely to his guest, conducting business and obtaining many social services incur a cost which is normally obviated in U.S. and Northern European societies. Mexican civil servants, officials, and police are paid very little and usually seek to augment their meager salaries by accepting what Americans call bribes to facilitate the granting of permits and other services.

With respect to Locke‘s seven key cultural differences (first outlined as six in his classic text on Global Supply Management), power distance is very high with severe power distances between those at the top and those at the bottom. While the modern factory may work on the clock, Mexico is an authoritarian polychronic culture and punctuality is nowhere to be found on their list of priorities. You’ll have a higher rank than the seller if your money “talks” with respect, as long as you don’t bring a lot of uncertainty to the table (as they don’t like too much uncertainty, though some is okay). While harmony doesn’t have the importance it has in other countries, honor, obedience to authority, and group loyalty is very important. On the other hand, due to their exceptionally high emphasis on personal dignity, they need to save face at all costs. Despite their rankings on Hofstede’s individualism scale, they are actually quite individualistic and very personal.

With respect to verbal communication, Mexicans are generally very direct, but like Korea, “no” can be indirect. The volume is usually moderate as their style is toned down, warm, and gracious, but as in India, you can get louder if you are passionate about what you are saying.

With respect to non-verbal communication, facial expressions are common, as they are a passionate people, gestures are normal (but, as always, avoid the US ‘OK’ sign), touching is common (and they commonly hug and backslap each other) and essential between friends and colleagues, and body position is relaxed (just don’t put your hands on your hips or in your pockets). They tend to stand close, make eye contact (and if they don’t, it’s a sign of respect), and show their emotions.

Meetings are generally social, and business is often discussed over lunch. However, business lunches are not power-business sessions. Ideas, concepts and possibilities are discussed, not specifics. The only exception is if the detail has been pre-negotiated and agreed to beforehand, in which case it’s time to seal the deal over a meal. Negotiations are slow, involve lots of haggling, but only after they get to know you. It’s important to always keep your hands visible at a meal.

It’s also important to remember that while it is perfectly acceptable to discuss business over lunch, it is not acceptable to discuss business over dinner (except in very exceptional circumstances, and only if initiated by the host). Mexican people make friendships first (business comes later), and they often do this over dinner.

Finally, people from the United States need to remember the historic “difficulties” between Mexico and the United States. What US Marines call ‘The halls of Montezuma’ is a national monument to the revered Ninos Heroes. Every Mexican schoolchild learns that these six young cadets committed suicide rather than surrender to the invading US military. And the last time the US military invaded Mexico they were chasing Pancho Villa. He went on to become President of Mexico and there’s a street named after him in nearly every Mexican city.

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Cultural Intelligence VIII: Korea

This series is edited by Dick Locke, SI’s resident expert on International Trade, author of Global Supply Management — A Guide to International Procurement (which was the definitive guide for almost a decade), and President of the Global Procurement Group which regularly gives seminars on International Trade and working with International Cultures.

As highlighted in last year’s post on Overcoming Cultural Differences in International Trade with Korea, while the Republic of Korea has a lot of similarities with the Asian countries that surround it, it also has a lot of differences. Having built the third largest Asian economy in less than half a century, starting with low-cost high-quality export production and then a move into high-tech high-value-add in the 90s, Koreans tend to move at a rapid pace. Also, as (recent) history has taught them that compromise leads to defeat and second place spells disaster, they are extremely competitive. They are always looking for an advantage, quick profits, and a quick sale … which is generally more important to them than the development of solid, long-term, business relationships.

With respect to Locke‘s seven key cultural differences (first outlined as six in his classic text on Global Supply Management), power distance is moderately high as they have a vertical society that observes strict protocol, time is very monochronic and punctuality is expected, and your rank as a buyer is moderate. However, while they are quite high on uncertainty avoidance, unlike many Asian countries, they are willing to experiment and take risks if the reward is there. They are strongly influenced by hahn, which describes the build-up of pent-up energies, unrequited yearnings, and general frustrations, so while harmony is important, so is competition. However, kibun (hurting someone’s pride), is a very sensitive issue, and face is more important to them than it is to the Japanese. They are quite individualistic for an Asian country, though not as individualistic as North Americans, and very personal.

With respect to verbal communication, they are the most direct of the Asian countries, except where “no” is concerned, which must always be delivered indirectly or as a “maybe”. You should keep your volume moderate and avoid being boisterous (with the only exception being you are at a club and drunk, but then you must apologize for it immediately the next day).

With respect to non-verbal communication, as with the Japanese, body language conveys respect and you should learn when, and how, to bow. You need to avoid large gestures, bold facial expressions, and maintain a harmony in your emotions. While you need to be close enough to exchange business cards or pour drinks, you must not get too close and you must avoid touching them. With the exception of the handshake, physical contact is inappropriate unless the individuals are peers of the same sex or family. However, unlike some other Asian countries, eye contact is important and indicates sincerity and attentiveness.

Meetings are structured, and its important to provide information, including information on all attendees, in advance. Be sure to avoid writing anyone’s name in red (including your own). While negotiations can take place at the table, deliberations will be made in a group before a decision is made. As with other cultures, meals are common, with the etiquette similar. The major difference being that you should finish everything on your plate, but even if you are still hungry, you must refuse the first offer of seconds. Most Korean businessmen tend to believe that they will get to know a business partner, colleague, or customer better over a few drinks (which should be held with the right hand) and invitations after business hours will be common. Lean what gunbae means.

Finally, modesty is very important. If you are complemented, you should indicate that you are not worthy of such praise.

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Cultural Intelligence VII: Japan

This series is edited by Dick Locke, SI’s resident expert on International Trade, author of Global Supply Management — A Guide to International Procurement (which was the definitive guide for almost a decade), and President of the Global Procurement Group which regularly gives seminars on International Trade and working with International Cultures.

As highlighted in last year’s post on Overcoming Cultural Differences in International Trade with Japan, the Japanese are very different than anyone else. They were historically isolated, crowded by geography, and their language is pretty much its own language group, despite the fact that they have three writing systems (kanji, hiragana, and katakana). Furthermore, the beginning of Tokogawa rule in 1603 marked the beginning of 250 years of almost complete isolation, until 1853 when Commodore Matthew Perry arrived.

With respect to Locke‘s seven key cultural differences (first outlined as six in his classic text on Global Supply Management), power distance is present, as there is a defined hierarchy and no decision can be made without approval from the top, but the power distance is not as great as one might think, as an approval will normally not be granted until a consensus decision has been reached at the lower levels and pushed up. Time is fluid. They are punctual to a tee (monochronic) but will never commit to a decision date (polychronic). The buyer always outranks the seller, but negotiations will continue only so long as their rules on social and business conduct are followed. Harmony is a fundamental foundation of their web society and face must always be maintained. Despite the appearances put on by the younger generation in the big cities (like Tokyo and Osaka), individuality is actually quite low and privacy is highly valued. Finally, uncertainty is to be avoided at all costs.

With respect to verbal communication, they are very indirect, even though, like the Chinese, they will ask you very blunt personal questions in order to determine how to best maintain harmony with you. Communications and negotiations should remain calm and soft, and you should never raise your voice.

With respect to non-verbal communication, your body language conveys your respect, and you should learn how to bow, stand, and even sit (suwari and seiza) appropriately. Despite the large number of gestures used in Japan (which you will not understand for quite some time), your gestures, facial expressions (as smiling and frowning have multiple meanings), and emotions should be reserved and your body position should mirror those around you. You should maintain as much distance as can be afforded, and reduce eye contact which is seen as disrespectful, especially to someone who is seen as your senior. Don’t touch in public, and especially don’t touch someone of the opposite sex. (Or, as indicated in Part II, you might end up with a new girlfriend or boyfriend.)

You should take notes in meetings (as it shows seriousness). It may take several meetings before you get down to business, as they will want to get to know you first. With respect to negotiations, your best offer is expected up front, and concessions are rare. Business is often discussed over meals, but you must wait for them to initiate. At a meal, do not empty your glass or plate as it is a signal to refill it, but do empty your rice bowl, as leaving a small amount is a signal that you want a refill.

Finally, the business card carries a pre-eminent importance in Japan, which has an elaborate custom around giving and receiving, and you should carry no less than a hundred for every week you plan to be in the country (with an English side and a Japanese side).

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