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Cultural Differences Affecting Transactions: From The Western Perspective

by John Vigman

The world may be getting smaller, the internet may make us feel like one global village; however, for all the technological advancements and all the enhanced awareness of other cultures, when negotiating a deal with business people from a non-Western culture, the same basic issues of miscomprehension remain. Subtle east-west communication differences can derail even the best-planned transactions.

Eastern and western cultures have been misunderstanding each other for centuries. Let us start with the time when the Portuguese and later Dutch sailors who had found their way to Asia began trading with the Japanese. More than 500 years later, lawyers and corporate executives say western and eastern negotiators and their business partners understand each other better; yes, they have read many books, even studied abroad; however, speaking a language well (whether it be a Japanese national who has lived many years in the West or an American polyglot who has lived many years in the East) does not ensure actual comprehension on all levels. Simple concepts can have different connotations. Most breakdowns in communication emanate from inherent cultural differences. Both sides now know that differences exist - and, in fact, usually know at least superficially what the salient differences are; however, putting the knowledge into actual use in understanding those differences is a completely different story. I know this from personal business experience.

Certain cultural anthropologists and linguists speak of concepts of high-context cultures and low-context cultures. In low-context cultures (Western cultures such as in Europe and North America), people are typically from diverse backgrounds and use language to communicate with each other. Grammar is very rigid and determines the exact word order. By contrast, people in high-context cultures (which are more common in Asia) tend to rely on collective cultural experiences and expectations rather than actual language to communicate. For example, one aspect of Japanese language that has always amazed me is the ability for Japanese to understand their counterpart without fully expressing (out loud) their sentiments. Japanese often have no need to finish the sentence (doing so might even be inappropriate). When members of a high-context culture are in negotiations with those from a low-context culture, those things which were previously left unsaid now must be said. If they are not, the miscommunication that occurs at that point is often just the first of a long line of miscommunications yet to come.

Communications becomes even more difficult; high-context cultures are not only concerned with what remains unsaid but how it is said. Japanese speak of the concept of nemawashi incorrectly translated by some dictionaries as backroom negotiations? which means roughly "planting the seed and taking care of the roots." From an American perspective, one notable aspect of negotiating with the Japanese is the relative strict adherence to hierarchy and use of rank-appropriate honorifics to address each other. American negotiators, on the other hand, tend quickly to call each other by their first names and have no problems speaking out of rank. Imagine if I, an American, started negotiating a contract by saying "Hey, Yoichiro, great to meet you. I am looking forward to working with you on this project, sit down and lets get started" after shaking his hand vigorously and directing him to his chair. The experience for "Yochiro-san" would be uncomfortable at best, most likely embarrassing and resulting in his loss of face vis--vis his colleagues. In any case, the negotiations would not start off in the most positive and friendly manner that the Americans would have expected.

Memboku or face in Japan is important. We Westerners tend to think of it as a very Japanese or Asian concept but in reality it is more than just culturally required courtesy, the preservation (and giving) of face is the fundament to the creation and honing of a business (and personal) relationship. If you make someone (inadvertently) lose face, then that person will have no interest in seeing the deal go through, even if it means "cutting off your nose to spite your face". We Westerners see face often as over-emphasis on courtesy, almost an Asian pet peeve. However, unlike Westerners who are able to "split" their work persona from their "private" persona, Asians do not separate the two facets of their persona; the work and private persona are indivisible.

Another fundamental difference between western and eastern context is the role of the relationship. Western businesses tend to look for quick returns on their investments. Blunt frankness and candidness are a positive in that relationship. And yes, while a good working relationship with the Asian partner is of course a positive, the "bottom line" is the most important aspect! In Japan, however, the entire partnership is built upon a good business relationship, and a much longer-term view is taken regarding profits. We Americans tend to see each deal as a onetime event. Japanese often focus on initially whether it is worthwhile to do business with the counterpart and more importantly on the long-term; therefore, the Japanese will take their time (what is excruciating for an American). We American focus on the results; the Japanese, while of course result driven, are perceived as focusing on the process. Negotiations with Japanese businesses can progress very slowly because of an inherent cultural attitude of considering each matter carefully. One could say that this emanates from the concept of Nemawashi or cultivating the roots.

High-context cultures tend to be relationship-oriented, while low-context cultures are more deal-focused. We Americans are deal focused. For example, we accept the concept of cold calling (for example with insurance or stockbroker advice). This would be inconceivable in a high-context culture, simply because no one would buy a product or service unless there is a pre-existing relationship. In the West, the transaction determines the relationship and the relationship can be a one-time event. We Westerners pay lip service to Japanese sensibilities and no matter how well we understand why Japanese or other high-context culture people are, we forget or underestimate the amount of time required to establish a successful relationship. In the West, we say "the early bird catches the worm." In Japan, they say kaho wa nete matte which means success comes to the one who sleeps and waits. Such basic expressions reflect inherent contradictory approaches to relationships (and the time necessary to achieve the desired result).

As a lawyer having worked with Japanese, Korean, and Chinese, the difference between high and low context cultures becomes most apparent with the preparation of a legal contract. This divide between East and West manifests itself with the simple concept of what a contract is. We have thousands of years of history with contracts, which dates back to the Old Testament and later Roman law. (I would go so far as to say the contract as we know it is a purely Western concept.) Asians, even the law abiding Japanese, pay lip service to the rule of law and the sanctity of a contract. In the East, a contract is more like a template regarding the intentions, goals, and expectations of the parties. In the West, a contract deals with the details of contingencies - the worst-case scenario - it is akin to a prenuptial divorce, all departure issues are handled in detail. The Japanese want a strong relationship; the Americans want a strong contract. For the Japanese, problems will be dealt with in the context of the relationship; for the Americans, we fall back on the contract. Knowledge of these differences between our cultures and acceptance of the differences will not only enhance the transactional process but also deliver better results (and a better relationship!).

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