The Challenges Of Negotiating Internationally

by drjim on June 10, 2011

Negotiating Is Done Differently Depending On Where You Are

Negotiating Is Done Differently Depending On Where You Are

Got a great email from reader Nadir Benouali the other evening. Nadir has a fantastic set of negotiating experiences and was willing to share them. Nadir is a US citizen of Algerian origin, and speaks Arabic, Spanish, and French. The last 20 years have been spent negotiating business around the world which provided exposure to all of the differences that the world has to offer.

Americans Negotiating In Different Countries

All too often American negotiators are aware of all of their shortcomings: lack of language knowledge, cultural issues, etc. Nadir points out that being an American is an advantage. Bring a photocopy of Hollywood (Marilyn Monroe), Eisenhower and Kennedy, an F-16, NASA, CNN, Wall Street, GE, HP, Microsoft, General Motors, Exxon, Motorola, Google and so on along with you to a negotiation anywhere in the world and you have instant status.

The point is that when an American travels overseas to negotiate, he/she should not carry a 200 year old cultural inferiority complex when compared to the old world like Asia, Europe or the Middle East. The reason is that people from other countries look at Americans as achievers.

America is viewed as being a country that has introduced many fantastic technologies and solutions to the rest of the world. This is a powerful position to be in when you are negotiating with the Italians, the French, the Chinese, the Algerians. Everyone is looking for a solution and America and Americans are seen as having the solutions that they need.

When negotiating with people from other countries, the other side of the table expects good products, good prices, training etc. However, American negotiators often have a lack of cultural knowledge about the rest of the world, and it can sometimes be a detriment to successfully reaching a deal.

Examples Of International Negotiations Gone Bad

Nadir has a lot of great stories about international negotiations. The president of one of Nadir’s previous employers did not know where Argentina was located, and on another occasion he confused Taiwan as the capital city of Hong Kong to the dismay of his distributors. He knew nothing about the history of any country of the world. Sadly, this was a clear example of what is often the weakest part of an American involved in international negotiations – geographical awareness.

When in Barcelona Nadir’s Spanish distributor insulted his boss and shouted out loud “You have no culture, have no taste, you do not know how to enjoy life, you just work, work, and [want] money, money” This happened when Nadir’s boss put pressure on him to deliver more sales results. The business relationship ended that same day.

Nadir’s Italian distributor treated the negotiating team very well, brought all his distributors from all over Italy for a corporate training, and after one year not a single sale had happened! When they checked on him, they found out that by signing a contract with Nadir’s company as a sole distributor it was also his way to cut the company out from the Italian market, but most importantly kept them from participating in the largest sale that happened during that year.

After some soul searching, Nadir’s company understood that this distributor was ready to spend thousands of dollars for his “spaghetti movie” to lure the company into believing that he was the right choice for us. He succeeded and they lost.

It’s About More Than Just This Deal

In the Middle East, the other side of the table’s American educated managers understand the American expectations and they are also familiar with the American technology. They just want good prices, exclusivity, training etc. They speak English and not French nor Spanish. This allows them to deal smoothly with English speaking negotiators.

Chinese and other Asian countries look at business as a relationship build up process and not just a sales opportunity. They place a major importance in the long term while the short term is part of the buildup process. Americans are just the opposite. More often than not, only large corporations are successful negotiators simply because they have the funding that allows them to participate in extended negotiations – making the deal depends on cash flow limitations!

Another weakest link issue is on the fact that US publicly traded companies must show gains at the end of their operating cycle, thus the pressure from their international operations. Whereas, Asian traded companies like Mitsubishi, Sony, Sumitomo are conglomerates known as Zaibatsu in the past, but still function in the same cultural spirit today can afford what a US publicly listed company cannot. Therefore, negotiating expectations from both sides are different.

On one side, we want results fast, and on the other one we want to build the steps that will take us to a lasting business relationship first. A Japanese executive from Minolta Corporation now Sony whom Nadir met in Osaka told him how he finds Americans culturally ignorant while praising the American way of life and how sophisticated it is.

What All Of This Means For You

Nadir’s stories just go to show that no matter how good you get at negotiating on your home turf, all bets are off when you start to negotiate internationally. Different cultures and different customs can quickly make even the most straightforward negation much more difficult.

If you are an American negotiator, you have strengths and weaknesses that other negotiators may not have. America is a well-thought of country with a great deal to offer; however, all too often American negotiators have not done their cultural homework to prepare for an international negotiation.

It is always possible to be successful when you negotiate internationally. You just need to be aware of the differences and you need to prepare yourself for a negotiation that will be unlike any others that you’ve ever had!

– Dr. Jim Anderson
Blue Elephant Consulting –
Your Source For Real World Negotiating Skills™

Question For You: What’s the best way to prepare for an international negotiation?

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