Innocents Abroad
Doing business overseas requires more than just a passport. It means having cultural savvy.
By Aleksandrs Rozens November 19, 2007
"Travel is fatal to prejudice, bigotry, and narrow-mindedness, and many of our people need it sorely on these accounts. Broad, wholesome, charitable views of men and things cannot be acquired by vegetating in one little corner of the earth all one's time." -- Mark Twain, "The Innocents Abroad," 1869
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When you hear the call to prayer in the streets of an Islamic nation, what do you do? As a non-Muslim guest of the country, do you keep walking, or instead stand still and bow your head in respect? When you sit across from a Japanese businessman, what is the proper etiquette for chopsticks? In China, how does one receive and offer gifts?
For many bankers, getting a passport is not enough when conducting business overseas. To avoid embarrassing social gaffes that could jeopardize a business relationship or a deal, many Wall Street professionals are fine-tuning their social etiquette. Some turn to local advisors and consultants, while business programs at universities offer extra training for those who plan to work overseas as students increasingly understand the importance of proper etiquette.
"If you want to build a relationship with someone and do a deal, you have to understand how they think and what drives their decisions," says Tonio Palmer, director of language programs, marketing and recruiting at the Lauder Institute of the Wharton School at the University of Pennsylvania. The Lauder Institute is tailored to students who want to conduct business across borders.
"It is not realistic for someone to be culturally astute from the get go. If you get sent to a different country, you realize that anything is up for question. There is no room for assumptions," says Palmer.
Founded in 1983 with funding by Ronald and Leonard Lauder of the cosmetics giant Estee Lauder Cos., the Lauder Institute has 60 students -- roughly 8% of the Wharton School's student body -- who immerse themselves in eight different cultures: Chinese, Japanese, Russian, Arabic, German, Spanish and Portuguese. The Spanish program is aimed at Spain and Latin American nations.
American businessmen, says Palmer, do not always appreciate that people outside of the US have a "completely different way of doing things. The analogy is being in space. There is neither an up nor a down," meaning one culture's way of conducting business is neither wrong nor right, according to Palmer. "Americans are too quick to assume that people who speak English understand what they are saying."
But not everyone learns in programs such as Wharton's, or has consultants and advisors on the ground to coach them around cultural tripwires. Sometimes, professionals learn by watching for subtleties overseas, particularly when it comes to business lunches or dinners.
Spitting in someone's soup?
Joe Schmuckler, a veteran investment banker now with Mitsubishi UFJ, recalls a meal with senior Japanese bankers at another firm in the late 1990s. The luncheon was at the Japanese firm's New York office, and with him were other US nationals working for the Japanese banking firm. It was, as Schmuckler recalls, "a courtesy lunch with senior leaders from Tokyo to talk about issues."
One of the US bankers sitting at the table, a star banker, "was a very animated, colorful fellow," who gestured with his chopsticks in the air as he was speaking. Eventually, "amid his enthusiasm," the banker took his chopsticks and stabbed them into his rice bowl. That's a no-no, says Schmuckler, noting that the action was tantamount to "spitting in one's soup."
"Everyone recognized what was happening. It was uncomfortable at the table," says Schmuckler, but people "allowed the moment to pass."
When it comes to social etiquette with Japanese businessmen, Schmuckler has learned by observing the culture closely and listening to advice from other professionals. For example, you don't wave chopsticks around while eating, much the way you would not wave a knife and fork around while eating in polite company within the US.
"If you are doing business on the international scene, it is a requirement that you understand the culture and what is appropriate. You want to treat people with respect and part of that is not putting them in an uncomfortable situation," says Schmuckler, adding that "the notion of that's the way we do it in America' is an inward way of doing business and, unfortunately, too common."
Schmuckler has likewise learned that Japanese business culture calls for a guest to sit facing the door while the host's back is to the door. Assuming the dining table is rectangular, the most senior participants will sit in the center of the table -- the long axis of the table -- while sequentially junior people sit on either side of the senior managers. For some US business professionals, the obvious move would be to sit at the end of the table, but in Tokyo business culture that seat at the end is not a "seat of power."
The very first impressions in a business courtship can mean everything, so it should come as no surprise that there is even a proper etiquette to presenting one's business card. For many US business professionals, throwing a card or cards across a meeting table would not be considered a bad move, but in Japan presenting a business card with both hands -- and accepting one with both hands -- is a sign of respect.
"In Asia the way you present your business card is to use two hands, pause and take time to look at the card," says Jerry Eicke, managing member of Yorkville Advisors, a money management firm based in Jersey City, NJ. "In the US it is not uncommon to deal out the card like a deck of [playing] cards."
Respecting the call to prayer
Yorkville's Eicke, whose firm manages $1 billion in assets, finds himself increasingly on the road, meeting with investors in Asia and the Middle East. It is, he admits, a big change for someone who grew up in New Jersey. "A big trip for me, growing up, was a trip to Florida," he says.
Yorkville has business dealings in Kuwait City, where Eicke first heard the call to prayer resounding through the Muslim nation's streets and was taken by surprise. What was he to do? A contact, a consultant based in the region, offered advice.
"Stand still. Take a pause. When the prayer is done and you see people get up" you can continue to go about your business, he says. "If we did not have someone there from the region we would not have known what to do."
Houlihan Lokey, a US banking firm that has been increasing its presence overseas in Japan and China, has made a point of hiring nationals of a specific market to help them understand a nation's business culture. "We make sure that we have somebody on our team that, ideally, grew up in the culture," says James Zukin, Houlihan's chairman of Asia who is managing the firm's emerging market strategy. "These are people who have done well in developing their careers in their own homelands." Speaking of these local hires, Zukin says "they are proud and idealistic. It produces a profound motivation to bring in our technical expertise which tends to be modified to particulars of the culture."
Eicke and others at Yorkville find that having a local contact can be helpful in a variety of ways. "When you have a consultant, it makes for a more productive meeting," says Eicke, noting that having a friend on the ground has its practical uses. For example, during a recent visit to Sao Paulo, he was cautioned against wearing too expensive of a watch while in the city's streets.
Yorkville is often in Asia, where the process of gift giving is an important part of the business relationship. "Gift giving in Asia is part of the tradition. You should have something to offer back," says Eicke. The money manager has received from Chinese business counterparts a golden bull with writing, usually a proverb. "We are not as profound as they are," he says of Yorkville's gifts, which can include something emblematic of New York, such as a New York Yankees' jacket. "It could be something as simple as a pen ... as long as you put some thought into it," says Eicke.
Eicke was surprised by the tradition of gift giving in China, "where it almost feels as if you have to do four hours of something socially for one hour of actually doing something business-wise." A translator aided Yorkville executives in overcoming not only the language barrier but also the gift-giving process.
When a "yes" is a "yes" and a "maybe" is a "no"
Lauder's Palmer says that for many US businessmen, much of the aim is to sign a contract. But in China, the contract is "just the beginning of the relationship," so executives ought not to make assumptions about the success of their meetings "until things actually happen." "In many places there is a consensus culture. A consensus takes longer," says Zukin, noting that his firm will ask, "How long will it take us [to complete a transaction] working under their cultural parameters?"
Zukin advises that professionals considering business overseas remember that they will have to commit to maintaining a relationship with their counterparties. "It is not just 'get the engagement and move on.' The review process in China, when you commit to a joint venture, is subject to government approval. This can take six months," according to Zukin.
The nuances of a culture when working across borders are not only important in Asia and the Middle East. Europe may have a common currency, and many of its business leaders speak English, but each nation has its own way of doing business. For example, showing up with an attorney in Germany "creates suspicion. The counterpart does not understand why you are doing that," warns Palmer. Also, businessmen are likely to exchange gifts -- such as wine and champagne -- during the Christmas season whereas in the US pricey gift giving is not encouraged as much.
When it comes to arranging meetings, Palmer, who ran marketing in Germany for a medical firm, has found that once a German businessman has set aside time for a meeting, there is no need to confirm the meeting. That meeting will take place even if the German executive gets summoned by his or her boss. In the US, says Palmer, "if you don't confirm four times before (the meeting) chances are the person won't be there. We are constantly shifting our priorities."
Houlihan's Zukin says there are plenty of humorous stories about bankers who forget they are guests when conducting business overseas. There is the anecdote of a banker with a bulge-bracket firm in South Korea who was "behaving in an arrogant manner, an I-know-what's-best-for-you attitude. He sat back and put his feet up, the soles on the table right across from his hosts. It was very insulting. We went to a dinner and this guy continued to be condescending," Zukin recalls.
In Papua New Guinea, Zukin recalls one of his bankers insisted on visiting a remote spot known for its cannibalistic inhabitants -- in spite of warnings by local contacts against such a visit. In Indonesia, Zukin found himself in a meeting with senior officials for sovereign advisory work. "We were sitting with high-ranking senior officials. The meeting got friendlier and the Indonesian officials started giggling. My guys then did a rough approximation of a giggle," Zukin recalls, noting that by then he was confused and only "found out afterwards, it [the giggling] was their way of accepting us."
So, Zukin points out, "the message here is that when I go to meetings in Asia I ask to get debriefed. You miss things."
Some banking professionals naturally adapt to overseas cultures. Zukin's father, for example, worked overseas, exposing the family to different ways of life in Greece, Ghana, Saudi Arabia and the Ivory Coast. "When my family went to Greece, they went native," he says, pointing out that this may be a key to how some professionals do better overseas than those who simply get a cursory sampling of a culture overseas.
"It is more than just being respectful. You want to make a more personal commitment to understanding their culture."
(c) 2007 Investment Dealers' Digest Magazine and SourceMedia, Inc. All Rights Reserved.
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James Zukin
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