Home / International Trade and Marketing / Module 3
Every culture has its own rules for speaking, deciding and closing a deal. Learn to read them without falling into stereotypes, to prepare your negotiation with a clear floor and to give up price only in exchange for something.
Goal: Prepare a negotiation with a target, a minimum and a best alternative, and compare a one-off discount with a contract with volume and an advance payment.
Every culture has its own rules about how people speak, how they decide and what is considered polite. If you ignore them, you can offend without meaning to or misread an answer. The differences are tendencies, not rules: every person is different. Use them as a starting point and confirm with the real person in front of you.
Four differences weigh heavily in business. In communication, high-context cultures say a good part of the message through tone and silences, and a “no” is rarely said directly; low-context cultures expect explicit language. In time, punctuality can be strict or flexible. In hierarchy, sometimes one high-ranking person decides and other times the group does. In relationships, some markets ask for trust before the contract and others go straight to business.
A documented example: PROMPERÚ's market guide on Japan recommends arriving on time, giving and receiving business cards with both hands, avoiding curt “yes” or “no” answers and being patient, because closing an agreement can take several days and meetings. Other markets expect more direct language and faster decisions. Before a meeting, read the business culture section of the country and find out who decides in that company.
Language is the first barrier. Speak slowly, in short sentences and without idioms. If you do not master the customer's language, use a professional interpreter in important meetings. When you finish, confirm what was said in writing with a short email that summarizes the agreements. In remote meetings, mind the time zone and answer messages within a reasonable time.
Negotiating means seeking an agreement that both sides accept. Prepare: define your objective, your minimum acceptable and your best alternative if there is no agreement, that is, what you would do if they say no. Distinguish positions (what they ask for: “I want a 10% discount”) from interests (why they ask for it: to lower their cost or secure supply). With the interests in view, you can offer more than price: volume, payment term, scheduled deliveries or a longer contract. Do not give away concessions: trade them for something, and put what was agreed in writing.
| Axis | One extreme | The other extreme | What to do |
|---|---|---|---|
| Communication | Direct and explicit | Indirect: much is in the tone and the silence | Ask clearly and confirm in writing |
| Time | Strict punctuality | Flexible schedules | Always arrive on time and confirm appointments |
| Hierarchy | One high-ranking person decides | Decided as a group, by consensus | Identify who decides and do not pressure |
| Relationship | Straight to business | Trust is built first | Spend time getting to know each other before rushing the close |
Result: Trading a price concession for volume and an advance leaves the company US$ 17,280 a year, compared with US$ 2,700 from the single order with a 10% discount. Knowing its best alternative let it negotiate without fear of losing the deal.
23/09/2015
PROMPERÚ's Multisector Market Guide: Japan, with a recorded update of 23/09/2015, includes a section on business culture. It recommends arriving on time, giving and receiving business cards with both hands, avoiding curt “yes” or “no” answers, respecting hierarchy and being patient, because closing an agreement usually requires several days and meetings. It matters because a negotiation that is settled in one meeting in one market may need several in another.
Before meeting a buyer from another country, read the business culture section of that market's guide and adjust your agenda and the way you respond.
Source: PROMPERÚ, repositorio – Guía de Mercado Multisectorial: Japón (actualizada el 23/09/2015)
09/08/2017
On 09/08/2017, at PROMPERÚ's “Exporter's Wednesday” seminar in Lima, consultant Jorge Caycho Celle presented “Strategic Management of International Intercultural Negotiations”. He recommended planning each negotiation by analyzing the counterpart, their interests and what can be exchanged, and building rapport and active listening to reduce misunderstandings and stereotypes. He gave examples by country: in China negotiation is done as a group, with a high-ranking executive; in the United States direct, clear language is expected.
Prepare each negotiation in writing: your objective, your minimum, what you can trade and what the other side is probably seeking.
Practise with the calculators, the COMEX Simulator and the review questions on the main page.
Open this topic in the calculator →