Executives from the Chinese energy company Sinopec and the Brazilian energy company Petrobras recently sat across from one another at a negotiating table to discuss a proposed business transaction. The leaders on both sides had only limited experience with international negotiation, and both teams were hesitant to get the conversation started. Without an understanding of each other’s backgrounds, it was hard to know where to begin.
The reluctance to engage with people from another country is not uncommon. Language barriers may be just the tip of the iceberg in an international negotiation. Because each culture has its own customs for communicating in business and social situations, it can be difficult for members from different groups to bridge those gaps in a short amount of time.
“The cultural element adds another layer of complexity,” says Gaylen Paulson, a negotiations expert. “It’s harder to understand and explain the choices that the person on the other side of the table is making. It’s harder to deliver value effectively because you don’t understand quite as well what they’re after and why they’re after it.”
Paulson, associate dean for executive education at the McCombs School of Business, facilitated the simulation in international negotiations between the executives from Sinopec and Petrobras, who were on campus participating in Texas Executive Education programs created for their respective companies. In the exercise, students were divided into teams—some with one Brazilian student matched up against two or three Chinese students, others with a Chinese student partnered with a Brazilian student to negotiate with another Sinopec student.
The simulation revealed some of the challenges inherent in negotiating across cultures. It also demonstrated some ways that those obstacles can be overcome.
For example, people from certain cultures, including Asia and Latin America, place great value on creating deep personal relationships, even—or perhaps especially—in business, says Orlando Kelm, an associate professor of business and Spanish and Portuguese at the University of Texas at Austin. In cases when there has not been enough time to build a bond of mutual trust between business partners, negotiations tend to be more difficult, says Kelm, who has interviewed many international business executives about the ways culture influences negotiations.
Juan An, a participant in the Sinopec program, found this to be true. “I have to admit, the two companies do not know each other much due to the totally different culture and management mechanisms,” he said.
Looking for common ground can help speed up the relationship-development process. “Brazil and China are in the same situation: Both of the two countries developed very quickly,” said Frank Zang, another Sinopec participant. There are also similarities between the corporate strategies of Sinopec and Petrobras, which are both steadily expanding their international presence. “Our group and the Petrobras group also have the same background—we are all executives,” Zang added.
Language barriers are frequent obstacles to successful cross-cultural negotiations, and different cultures have different ways of dealing with that hurdle, Kelm says. In his observations, professionals from China tend to be more self-conscious about conversing in a foreign language with native speakers. Brazilians, he says, are generally more open to speaking freely, without worrying about imperfections in their diction.
“We sometimes don’t appreciate how hard that is when you have two people who are not totally fluent in whatever language they’re speaking,” Kelm says.
The best way to overcome language barriers in a professional setting is to keep communication as clear and direct as possible, Kelm suggests. Speak slowly and use visual aids, and avoid presenting a large amount of information at once, because this can cause an overload and important details could get lost in the shuffle.
“I’ve been in situations where I’ve known that people have an opinion or a sense of what they want to say, but the volume is too much,” Kelm says. “You’re hit with too much information too fast to actually process all that information and then contribute with comments out loud.” The result of this avalanche can be that people listen more than participate because it’s too much to listen, speak, and understand nuances and numbers all at once.
Follow-up correspondence can also be useful. In China, it is common to arrange one-on-one meetings after a negotiation to smooth out any unfinished business. Kelm also says it can be helpful for both parties to send each other written summaries of what they got out of the meeting, along with feedback about how they thought it went. This can help everyone avoid misunderstandings and bring to light any issues that need to be corrected for the next meeting.
Lacking a basic knowledge of the customs, history, and politics of other countries is a recipe for almost certain failure in an international setting—a problem Americans, in particular, frequently bring to the negotiating table.
“Foreigners know so much about our country,” from current events to politics, Kelm says. Many Americans, on the other hand, do not know something as simple as the name of the president of the country they are visiting. “That puts us at a disadvantage with them because we can’t talk about those sorts of things,” Kelm says.
“If you want to make a negotiation successful, the best way is to understand each other’s cultural background and do some research,” said Roger Zhou, the group leader from Sinopec. This homework will help you respond authoritatively to any topic that might arise.
Zhou noted that in addition to knowing the background of the other culture, it is also important to know what the other side hopes to accomplish in each individual negotiation. One strategy he found particularly effective was approaching the negotiation with multiple goals in mind rather than one critical issue.
“In a negotiation, we have many issues. Maybe we focus on one, two, three issues; maybe you focus on four, five, six issues. So we can make an agreement eventually. If we all just focus on one or two issues, we can get stuck,” Zhou said. “Negotiation is not a zero-sum game. It should be win-win.”
The mock negotiation may have started slowly, but as Paulson prompted students to discuss the strengths and weaknesses of the business cultures in the U.S., China, and Brazil they quickly developed a common understanding and opened up. The simulation intensified, as the executives animatedly exchanged offers and shot down proposals they deemed inadequate. When it was over, many students weren’t ready to quit.
“This session was too short,” said Petrobras student Marcos Baião. “The results were wonderful, but it could be better with more time.”
Paulson says the students’ experience in the simulation is likely to translate into practical skills with immediate relevance. Sinopec and Petrobras recently concluded negotiations on a deal to develop offshore oil drilling on the coast of northern Brazil, where Sinopec is rapidly expanding its operations.
“The world is moving fast and cross-culture negotiations occur every moment, but in many circumstances, culture has become a barrier and reduced efficiency,” said An from Sinopec. “Cross-cultural communication skills are vital to business development.”