Doing business in a foreign country is always a challenge. A large factor in the success of such a venture is understanding the culture of the country and people one is working with. An effective leader will learn, understand and appreciate the cultural differences they will be faced with and will adhere business strategies accordingly.
Doing business in India is not easy for a variety of reasons. Poor infrastructure is one; cultural differences, which may impede a business relationship, are another. However, doing business in India has great potential and benefit. “India is predicted to pass both China and the US by 2050” (Moran, 2014, p.365). “It is the country in the region with the greatest predicted potential” (Moran, 2014,p.367).
“India stands poised to become one of the world’s largest economies over the coming years as economic liberalization kicks in after decades of political stagnation. It has a population of almost 1.3 billion of which 50% are under the age of 30 and therefore the consumer potential of the country is almost limitless. The lack of historical investment in the country means that India needs everything. Very importantly, India has a highly educated, aspirational workforce who can help you build your business on the ground” (WBC, n.d.)
The most important hurdle to overcome and understand when doing business in India is that relationships are paramount and a very structured hierarchy exists in organizations, which must be respected. Any attempt to relax and equalize that structure will not be accepted well.
“India is a country in which relationships are placed before business and thus the relationship phase of the business cycle could be considered to be the most important” (WBC, n.d.) Part of this phase includes a slow developing relationship often beginning with small talk and pleasantries. Gift giving is also a big part of building a relationship.
“The legacy of the caste system ensures that businesses are extremely hierarchically structured and that the boss is very definitely the boss. It is absolutely essential to understand how deeply these hierarchical thought-processes impact on Indian attitudes to business. Companies tend to be run by one very strong individual who will issue direct instructions down the chain of command. Everybody expects that these instructions will be given in a fairly authoritarian manner and that they will be followed unquestioningly by those further down the chain. People do not question either their position within the organization or the validity of decisions taken” (WBC, n.d.).
Despite my having no present intentions of doing business in India, the detail and nuances that as a leader one must possess and time that must be invested in the development phase of a business relationship, is a concept that is applicable to any foreign business venture. In my professional life, currently working and developing a relationship in Panama with an indigenous tribe on a small island has been more than a challenge. While I feel I have paid attention to the cultural differences, like India more attention to detail on the actual business practices and differences that exist between our cultures must be made. By hiring a local intermediary who not only serves as an interpreter and guide but also as a cultural educator and relationship facilitator is one way of overcoming differences in cultural business practices.
References
“Doing Business in India”. (n.d.) WorldBusinessCulture. Retrieved from https://www.worldbusinessculture.com/country-profiles/india/business-structures/
Moran, R. T., Abramson, N. R., & Moran, S. V. (2014). Managing cultural differences: Leadership skills and strategies for working in a global world. New York: Elsevier.
Thanks for commenting. I have been working with the Guna (pronounced Kuna) in establishing a partnership. The business revolves around the fair trade of their vast coconut supply and building a sustainable business wherein both the women and men of the tribe are involved. In turn they are fairly compensated, stakeholders and improve the quality of their relatively impoverished lives by reinvesting in their community. This is a very brief and bare bones description.
The most difficult challenge has been the slow development of our relationship. Based on their mistrust of outsiders and foreigners, the language barrier and cultural differences getting a working business relationship has not been easy and took 2 years for the tribal chief to finally give his blessing on the venture. Those have been my challenges.
I find it very interesting that you are currently working on building a business relationship with an indigenous tribe in Panama. I’d really enjoy to hear more about that engagement and what you find to be the most difficult challenge. What type of business?
In relation to doing business in India, one thing that I picked up is that gift giving is a way of building relationships but that this is frequently a frowned upon gesture in western cultures. In the healthcare industry I know of many hospitals that have very strict policies about employees accepting anything from vendors trying to do business with these hospitals. It could be seen as bribery and it would be important for someone from the US to not be offended or feel “bought” by a business person from India who perhaps is only trying to establish a relationship.