How important is language and culture when entering overseas markets?

Your business survival increasingly depends on reaching out to the people and cultures of the world to sell your goods and services.

Culture has to with diverse groups of people – their customary beliefs, social forms and the material traits of a racial, religious group. The environment of international business is composed of language, religion, values and attitudes, law, education, politics, technology, and social organisations that are different.

Culture gives you a set of codes to deal with and sets priorities among those codes. Whatever a nation’s culture is, it works for them. So to be able to function within it you must know it, accept it and join it.

The key implication is that by getting it wrong one could lose the whole business in any given market. Cultural awareness is not limited to just interpersonal relationships, but it can also affect some or the entire export marketing & sales package. For example, packaging design, use of graphics and symbols, and choice of names, even launch dates could all be sensitive to cultural influences.

The exporter must:

• study the local culture& language requirements in advance
• include a linguist in your team
• be culturally sensitive to everything in that market
• do not impose one’s own culture on others
• adopt/adapt to the other party’s culture
• work at a speed suiting the other party
• not use any behaviour that can offend the other culture

To do this you need to:

• Understand that the cultural factors that contribute to international business success or failure.
• Remember that our own cultural values affect the way we behave in the eyes of others
• Understand that other cultures have different values from our own (they are not ‘better’ or ‘worse’ – just different)
• Understand why conflict between cultures occurs as a result of different values.

Written 30th June 2011 by Dick Brentnall - S&H LLP Associate/ Trainer

Related Training:

Online Training - Developing export business through the internet

Public Training - Export Essentials , Import Essentials

Coming soon to Online Training ... 'Successful Investment in International Trade Shows & Market Visits'

Buyers - What do they know about importing? Well!

Once upon a time I became a buyer with the heavy engineering division of a legendary multiglobal Company, I was really proud to be joining an experienced group of well seasoned professionals, they sent me on a 3 day basics residential course and when I returned I was given a desk, a chair and a telephone and was expected to get on with it. I did get on with it but looking back I can see how old fashioned it all was. Jimmy, Ken, Mike and co were very technical and talked about EN8 grade steel and 'Reaming' to their hearts content, they knew about 'tin bashing' and lots of stuff about machining specs and tolerances. Supplier partnerships, Supplier Rating and Supplier selection were rarely, if ever, mentioned, and although a lot of parts came in from outside the UK there was no procedure for controlling the importations. Not only was there no procedure but the system of dealing with paperwork and any additional charges over and above the agreed unit price on the Purchase Order was primitive. Additional costs such as freight, Customs duties, VAT were put under a cost collection code and in due course were paid without query.
"Of course" I can hear you say " that was probably a long time ago and things have changed since then" and it may be true in some cases but when we in our current role of giving training in International trade procedures talk to import staffs in the supply chain we ask them what causes them most problems in their daily work they almost unanimously reply "Buyers !!". They find that their Purchasing people are not comfortable with Incoterms, with Duty Relief options, selection of service providers such as Freight and Forwarding companies aand how to determine the landed value of goods as opposed to the Purchase Order value. If this is true and we believe it to be so then it begs the question "WHY?". The answer would seem to be that Purchasing from overseas is not included in the core training of Purchasing staffs, this in a global market economy seems a glaring omission and is also an indictment of Managements who in turn may have a poor understanding of supply chain issues.
Let's hear from you out there.

Some information on the Tariff

These are some things about the structure and use of the Tariff and the Commodity Code system posted on my twitter account in June 2011.

1. Did you know that if you have the CAS/ CUS of a chemical you can cross ref to the com/code? see ECICS the European Customs Inventory of Chemical Substances. It is an information tool managed by the European Commission's Directorate General (DG) for Taxation and Customs Union which allows users to:
• clearly and easily identify chemicals;
• classify them correctly and easily in the Combined Nomenclature;
• name them in all EU languages for regulation purposes.
It was first published in 1974 and became an activity of the Group of European Customs Laboratories in 2009. It is available freely as part of DG Taxation and Customs Union's Data Dissemination System. ECICS lists chemical names in a number of EU languages (currently mainly eleven) along with their tariff classification in the European Community's Combined Nomenclature (eight-digit CN codes). As the CN codes are based on the "Harmonized Commodity Description and Coding System" emanating from WCO, the ECICS tariff classifications are helpful throughout the world.

2. Harmonized System (HS) for commodity codes came in 1 Jan 1988 it used 200,000 commodities traded internationl to make appropiately 9,000 codes. Managed by the World Customs Organisation (WCO) to is harmonised in over 200 countries which account for 98% of world trade by value.

3. There are 21 Sections in the structure of the tariff schedule each divided into Chapters. There are 97 Chapters in all. The HS Coding system is designed so that the more developed or manufactured a product is the later it comes in the tariff. This works for Chapters and within the headings and sub-headings of chapters.

4. The General Interpretative Rules (GIRs) give 6 rules that must be used if it is not clear which commodity code number is suitable for your goods. You do not choose the commodity code with the lowest duty rate or the one that describes the goods as "other". You must look at the goods not the additional information when deciding on a code, and if in doubt, ask Customs.

5. You can receive an "opinion" from Customs, but these are not legally binding. For a legal decision you must apply for a Binding Tariff Information (BTI) Ruling.

6. The commodity code number is important because it:
* corresponds directly to the rate of import duty payable
* points to any import restrictions
* indicates if any preferential agreement applies
* relates directly to any trade policy measure affecting the import of the goods
* is used in trade statistics
* Facilitates trade negotiations, eg preference agreements
* shortens customs clearance times
* reduces the number of disputes between Customs
* increases trade supply chain security

7. You must select commodity code numbers with care - here are some tips:
1. Need full product information
2. Need access to the commodity codes
3. Use Chapter Headings
4. Use Explanatory Notes
5. The European Inventory of Chemicals
6. Know the General Interpretative Rules

Need to go further ????
Check for EBTI rulings , Tariff Notices, the Compendium of Classification Opinions, Official Journal – Commission Regulations, HS Decisions – on World Customs Organisation website

Whatever you do when classifying goods - TAKE IT SERIOUSLY!

Further reading: S&H Articles
History of Customs Duty
General Interpretative Rules - the GIRs
Brief Guide to Tariff Classification
Relevant training: Tariff Classification Explained