Cross-border negotiating skills are important, and cultural differences can get in the way It is important that companies and their risk managers understand where the pitfalls may lie. Chris Fox write

O wad some Pow'r the giftie gie us
To see oursels as others see us!
It wad frae mony a blonder free us ...
Robert Burns

Those of us who have blundered through international negotiations, feeling our way in the dark and hoping that our instincts are helping, rather than hindering us in our quest to adapt to the strange ways of our overseas business partners, will sigh wistfully at Burns's words here.

For it is our inability to see ourselves as others see us which leads to one of the key problems in negotiating across borders. We often spare little thought for how our potential overseas partners might prefer these negotiations to progress. Instead, we blithely assume that they will share our own preferences.

The chances are that they see your normal way of doing things as at best strange, and at worst, a dirty trick designed to destabilise them. On exactly such misunderstandings has many an international negotiation fallen apart.

Now let us not pretend that a bit of cross cultural know-how will seriously adjust the power balance in a negotiation. As we will see, negotiating with people from Latin American countries can be quite a challenge for people used to dealing with the business environments of Britain and the US. But I am pretty confident that when J K Rowling's agent opens negotiations in Mexico for the rights to the latest Harry Potter novel, her agent doesn't need to worry too much about the complex personal synergies of doing business in Mexico. When you have something to offer that people desperately want they are going to need to dance to your tune rather than vice versa.

But all the same, even in this highly privileged situation, your attention to the niceties of how your counterparts see the world compared to how you see the world is important, and may result in your getting an even better deal than you would have got anyway. Besides, although on this trip Rowling's agent may be touting a 'must have' title, the next trip may involve a much less desirable tome. If too much weight has been thrown around when the power balance was in the agent's favour, you can be sure that the publishers will seize the opportunity to exploit their own power when the boot is on the other foot.

The power balance is of great importance in any negotiation. But in many cases, neither of the two parties to the negotiation will have considerably more power than the other, and will not generally be able to impose a deal on the other. In practice, negotiation is about finding the best possible way for both parties to achieve movement towards a mutually acceptable deal.

To achieve this critically important objective, you need to do justice to yourself when you approach the negotiating table. And, paradoxically, the best way to do justice to yourself at the negotiating table is to understand as far as possible all the significant factors that are affecting, or are likely to affect, the people with whom you are negotiating. Going back to Burns' poem, it is indeed a tragedy that we are unable to see ourselves as others see us, because this inability so often fails to allow us to do justice to ourselves. By restricting our imaginations solely to the matters and preoccupations that bother us, we behave, in the eyes of our counterparts, as if we are trying to impose a deal, rather than negotiate one, even when the balance of power is by no means weighted in our favour. This causes suspicion and resentment, and stops the crucial movement required to get a deal.

Here is just one example that demonstrates what can happen when well-meaning international negotiators fail to 'see themselves as others see us'. Two companies had been short-listed for a major infrastructure contract in Mexico. One was North American, the other Swedish. Both companies were invited to Mexico to present their proposals to the relevant ministry and to start negotiating the terms of a deal.

The Americans put a lot of effort into producing a high-tech, hard-hitting presentation. Their message was clear: 'We can give you the most technically advanced equipment at a price our competitors can't match.' The team, which consisted of senior technical experts, lawyers, and interpreters, flew down from their New York head office to Mexico City where they had reserved rooms in one of the top hotels for a week. In order to put on the best possible performance for the minister and his officials, the Americans had arranged to give their presentation in a conference room at the hotel and had brought all the necessary equipment with them from the US. All the arrangements had been written down in great detail and sent to the Mexican officials two weeks earlier.

At the agreed time the American team were ready to present, but they had no one to present to. The people from the ministry arrived at various times over the next hour. They did not apologise for being late, but just began to chat amiably with the Americans about a wide range of non-business matters. The leader of the American team kept glancing anxiously at his watch. Finally, he suggested that the presentation should start. The Mexicans seemed surprised, but politely agreed, and took their seats.

Twenty minutes later the minister - accompanied by some senior officials - walked in. He looked extremely angry and asked the Americans to start the presentation again from the beginning. Ten minutes later, he started talking to an aide who had just arrived with a message for him. When the American presenter stopped speaking, the minister signalled that he should not continue. By this time, most of the audience were talking among themselves.

When invited to ask questions at the end, the only thing the minister wanted to know was why the Americans had told them so little about their company's history.

Later, during lunch, the Americans were very surprised to be asked questions about their individual backgrounds and qualifications, rather than the technical details of their products. The minister had a brief word with the American team leader and left without eating or drinking anything.

Over the next few days, the Americans contacted their Mexican counterparts several times in an attempt to fix a meeting and start the negotiations.

They reminded them that they had to fly back to the States at the end of the week. But the Mexicans' response was always the same: 'We need time to examine your proposal amongst ourselves first.' At the end of the week the Americans left Mexico angry, frustrated and empty-handed.

The result of this particular case was that the lucrative contract on offer from the Mexican ministry was awarded not to the American company but to its Swedish competitor. The Americans had played by what they regarded as the rules. According to their own cultural perspectives, they had done everything they should have done.

But the trouble is they were doing everything they should have done had they been dealing with other Americans. They were not thinking about - or perhaps they were not even caring about - how the Mexicans saw them and the world.

In practical terms, the Americans were over-focusing on their own cultural 'given': that people should be judged solely on what they do. Like it or not, in Latin America (among other places) people are judged not only on what they do, but also on factors such as age, position, and family connections. When the Americans presented to the Mexican team, the Mexicans were not as interested in the technical abilities of the Americans as the Americans thought they would be. The Mexicans were more interested in the fact that the seniority level of the American team was way below that of the Mexican minister and his officials. And so, from the Mexicans' perspective, there was no way the negotiation could be conducted on equal terms. To show the kind of respect the Mexicans expected, the American team should have been led by a board member, at the very least. As the minister himself was involved in the proceedings, a president, chairman or CEO would have been more appropriate, especially for the initial exchanges.

Another mistake the Americans made was to include lawyers on the team.

America is a famously litigious society. Firms will often include lawyers in their negotiating team, if only to ensure that the contracts might pose no future threat to them. This, of course, rests on the principle that, if things go wrong, the first stop will be the law courts. For Mexicans, and indeed for people from many other countries that enjoy warm climates and value warm relationships, business is very personal. You would as soon bring your lawyer to the courting period of a business relationship as you would during the opening exchanges of a new romance.

Frequently the business relationship flows from a good personal relationship, which is rather different from the attitude prevalent in countries such as Germany or the US, where business life and personal life are seen as things that need to be kept relatively separate. Saying to someone you love "you're fired, darling," might make sense in an American context, but would be pretty incomprehensible to people in countries where personal relationships often come before business ones.

Yet another problem this story highlights is the different attitudes the two sides have towards time. Of course, the Mexican attitude towards time has been stigmatised in the concept of manana: the idea that it does not matter if things happen tomorrow rather than today. This is unfair on the Mexican business environment: the excellent and imposing buildings of Mexico City today were not built by people who did everything manana.

But all the same, there are differences in how American business people and their Mexican counterparts are likely to regard time. It is probably fair to say that for Mexicans, precise punctuality is less important than cultivating a good atmosphere. For Americans, and indeed for most corners of the Germanic and Anglo-Saxon business community, punctuality is extremely important and no-one can really expect more than a few moments of grace before tempers start to fray. It is the time itself, rather than the timing, which is of value.

This is just one example of the potent cross cultural cocktails in international negotiating. But you can avoid many of the pitfalls awaiting you simply by considering some of the points below.

Key areas

What are likely to be the key areas of difference between your own preferences for how business works and those of your counterparts from different cultures?

Here are some of the most important.

- INDIVIDUAL OR GROUP ORIENTATION In the US, for example, the individual's chief responsibility is widely seen as towards himself. In Japan, the expectation is that the individual will prioritise the group's interest above his own.
- FLAT OR VERTICAL HIERARCHIES In some countries, such as Scandinavia, Australia, Germany and Switzerland, have fairly flat hierarchies, where bosses are likely to consult widely. In others, such as France, Spain, Latin America, India and China, bosses tend to hold power, rather than share it.
- ACQUIRED OR GIVEN STATUS Countries differ on the extent to which they put a premium upon status achieved through merit or through seniority or family connections.
- FUNCTIONAL OR PERSONAL BUSINESS RELATIONSHIPS Countries and cultures differ according to how soon people want to get down to business rather than making small talk. This often reflects whether or not people see meetings as two people forming a relationship, or of two job functions meeting to join forces.
- PHYSICAL PROXIMITY Cultures differ in their willingness to be physically close when negotiating. Walking around his headquarters hand in hand with your Arab counterpart might seem unusual and uncomfortable for you, but refuse the hand and you are sending a rather hostile signal to him.
- COMMUNICATION We all agree that business communication can be delicate, and that it needs to be handled carefully. But different cultures deal with this in rather different ways. Some - Americans and Germans, for example - elect to cope with this by being clear, explicit, and direct.

Others, like the Japanese or the British, prefer to cope with the delicate nature of business communication by being implicit, diplomatic and indirect.

When two cultures with such opposing preferences meet, it is often a recipe for a communication disaster.

- TIME Is time your slave or your master? Do you prefer to worry about getting the timing of an event right, or is your priority to make sure it runs 'on time'? These questions affect the pace of a negotiation. Set the wrong pace, too fast or too slow for your counterparts, and you will destabilise them.

Perhaps the most important piece of guidance may be this. Take the trouble to identify the preferences of the people with whom you are negotiating and be aware not only of the factors that most condition and affect their business thinking, but also of the factors that most condition yours.

That is to say, think hard about what they are likely to find weird or unusual about the way you 'normally' do business, and try to take a step or two towards their 'normal' approach. After all, this is only a common courtesy, but how few people take the trouble to do it? If you want to negotiate successfully with anyone you had better take the trouble to get to know them and what they care about. It is common sense; the more different their outlook is from yours the more likely there are to be pitfalls.

The good news is that because so few business people who are negotiating internationally really do take the trouble to find out what factors affect the thinking of their counterparts, if you do take that trouble you are likely to enjoy a significant advantage over people who do not.

- Chris Fox is a senior consultant with the international business communication consultancy, Canning, Tel: 020 7370 1055, E-mail:

A report on a roundtable discussion on why deals fail (available from Unified Mergers,
- Be straightforward/honest
- Be prepared with facts
- Be firm and clear from the start
- Provide full disclosure
- Nail down the big issues early
- Involve all advisers early on
- Know the parameters of value
- Establish a strategy
- Start with issues in agreement
- Set a time limit/allow adequate time
- Establish rapport
- Identify deal breakers
- Learn primary/secondary interest
- Establish credibility
- Listen more
- Demonstrate reasonableness
- Use humour when appropriate
- Be sensitive to cultural issues.
- Develop alternatives to the deal
- Find hot buttons of counterpart
- Use good guy/bad guy interplay
- Be prepared to lose the deal.
- If the answer is no, understand what is no.