On Globalization

Cultural differences are very important and are often underestimated by the typical American. We all read the subtleties in human behavior and make assessments that affect our future interactions. Just think of the discussions you have among your team members after an interview for a new contract, “Did you see Mr. Big raise his left eyebrow when you uncovered the yellow version of the concept drawing?” “Yeah, but during the break did you hear Ms. Moneybags say that she hated yellow?” There are many subtleties of other cultures that we misinterpret or miss altogether. This puts us at a serious disadvantage when working overseas. At Geocomp, we have learned that we must have as part of our team an employee who understands the local culture and is committed to our business values and our success. Using a local representative or hiring a local person who isn’t immersed in our corporate culture does not work for us.

In many places, people understand enough English to do everyday work. But it is a very different matter to negotiate the subtle points of an agreement and reach a “meeting of the minds” with non-native English speakers. Some cultures are real sticklers for every detail in a document and unable to exercise judgment. We had a client withhold payment because the purchase order indicated a component that was no longer required by the current version of the product. It seemed impossible to get them to understand that they were getting a newer and better version of the product that exceeded all functional requirements even without that listed component. We have learned that our employee, acting as mediator, must have a good command of both languages, both written and spoken, and he or she must be involved in all significant communications.

Obviously, business practices vary so much from country to country. In some countries one simply cannot operate without conforming to local practices involving bribes or grease money. You have to decide how to deal with issues like this in advance. Our company policy is that we don’t do business in a country where we have to pay a bribe. In Japan in the 1980s, I was amazed to learn that each contractor, supplier, and engineer must send a trusted employee to collect payments on Thursday morning for the previous week’s work. This is another area where having an employee who understands local business practices can be invaluable.

Getting paid has become much easier as financial institutions have globalized. It used to cost us three hundred dollars and take several days to set up a letter of credit, which we had to do through one of the few banks with international transfer capability. Today, we do the arrangements online and receive payments electronically through our local bank. In some countries, you don’t get paid on invoices for as long as eighteen months. You need to know payment practices in advance. Some cultures consider it part of good business to deny you part of your payment. I hasten to add, though, that we have similar payment problems with some clients here in the United States. The difference is that we have some legal recourse to help us collect here. As a practical matter, we don’t consider legal recourse to be available to us on any overseas transaction. It’s too expensive for the size of our typical transactions.

Working overseas, we start with a disadvantage: we are the unknown, the outsider, the strange ones. We have to overcome these natural inclinations and build trust, and we have to do it at a great distance with language and cultural barriers. Building trust is one of the biggest obstacles we have faced in our overseas work.

It is a human trait to desire closeness in our interactions with other people. In China, “to become a friend” is key to a long-term business relationship. Developing this closeness requires a genuine personal commitment and lots of personal time. These are not attributes of the typical fast-paced U.S. business person.

Despite the strong forces moving our economy to a global one, many countries and companies operate on a nationalistic basis. They want to sell goods to the United States and send their companies here to design and build things, but they don’t want us working in their countries. When I worked in Holland as a consultant to the Rijkswaterstaat, their permanent staff and the Dutch contractors could not accept the idea of having foreign consultants on a major flood protection project. In their minds, they were the world’s best at marine works and they didn’t need any help. After three years the international consultants were still not welcomed into the design working group and we were terminated. I had a similar experience in Japan where I worked for almost twenty years. My team developed a new approach to strengthening reclaimed land against earthquake shaking that eventually became a part of the Japanese government standards. We saved our client over one hundred million dollars to upgrade their facilities. But when the Harvard-trained company president was replaced, we were terminated. When the next upgrade project came around, we were told that we had the best team without a doubt but that the work had to go to a Japanese firm.