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President Barack Obama's National Export Initiative, an ambitious plan to double U.S. exports within five years, is helping small businesses sell their products or services in new markets. For example, small business loan authorizations from the Export-Import Bank in the first half of the fiscal year grew to $2.3 billion, from $1.7 billion over the same period in 2009.
As some exporting barriers fall, others may remain—including issues of culture and language. This year's UPS Business Monitor United States, an annual survey of U.S. small and midsize business exporters with fewer than 500 employees, found that one-third of respondents cited cultural or language barriers as the reason why they didn't follow up on an international sales lead. Small businesses that were new to exporting said that their limited knowledge of the marketplace in foreign countries constituted one of their biggest barriers to overseas expansion.
As president of UPS's international division, I've faced many cultural challenges. I've committed my share of faux pas, such as arranging a 7 p.m. dinner with customers in Spain, where most people dine much later, and giving myself 45 minutes to get to a meeting on the other side of Mumbai, a trip that takes more than two hours.
I've learned from (and eventually laughed at) these mistakes because international growth is imperative today for businesses of any size. Ninety-six percent of the world's consumers live outside the U.S., so failing to export today may mean you'll have to play catch-up later. The key to not letting language and cultural barriers slow you down is to have the right advisors and keep learning from your peers. The following are a few things we've learned along the way from our experiences and those of our customers.
Do your homework. Companies need to carefully and holistically plan entry to a new market, which can run counter to the American proclivity to act quickly. In addition to doing market research, executives at small businesses that succeed in new markets gain a basic understanding of common business etiquette by visiting the country where they intend to do business and by working with organizations that know the market firsthand, such as chambers of commerce.
No matter how prepared a business might be, an etiquette faux pas or two is inevitable. Learn from mistakes. (In Spain, I now arrange breakfast meetings; when I'm in big cities such as Mumbai, I always build extra travel time into my schedule.)
Relationships are everything. Outside the U.S., cultivating business relationships is essential. This is especially true in China, Vietnam, Brazil, Poland, and other emerging markets. What do you do if you don't know anybody in your target market? The U.S. Commercial Service (USCS), the trade arm of the U.S. government, is an excellent resource to help businesses find distributors and partners and secure the right introductions.
After introductions are made, you0 must cultivate relationships with business partners. In China, for example, going to dinner with colleagues is really important; the underpinnings of confidence and trust are built around the table. I'm in China every six weeks, and each trip I take involves long conversations over meals with colleagues and partners. Without taking the time to build those relationships, business wouldn't get done.
In addition to building relationships with business partners, it's critical to get to know other exporters. By networking with peers, you learn a lot from each others' experiences. UPS regularly hosts small networking events connecting seasoned exporters with those just starting out, which help small businesses save time, money, and heartache.
Slow down. U.S. businesses must adapt to a slower pace of business elsewhere. Consider this lesson learned from our customer Style West, a fashion company that distributes high-end Brazilian fashion and exports its U.S.-made rainwear line, Däv. "I'm from New York, so I tend to be very up-front and abrupt in business. That's something I really had to temper in Brazil," says Style West founder David Sengstaken. "To walk into a business meeting, put down your briefcase and say, 'here's what we're going to do about …,' isn't going to fly. People are much more relationship-driven."
There's a lot in a name. Starting out on the right foot in a new market means knowing the proper way to address your colleagues. In China and Vietnam, for example, surnames come first and job titles such as "Director" are important. That took me a long time to get used to. At UPS, we call each other by our first names but in China, I've had to get used to being "President Brutto."
When it comes to business cards, it's customary in many countries, including India and China, to read the business card. Don't just put it away immediately. It's also seen as a sign of respect to have the information on one side of your business card printed in the native language of the company you're visiting.
English spoken here. Many small and midsized businesses cut their exporting teeth in markets where English is a primary language, such as the U.K., India, or closer-to-home Canada. "India has a high population of English speakers, which makes it easy to enter the market, negotiate with vendors and partners, and set up operations," says Steve Hochradel, assistant vice-president, distribution, for PBD Worldwide, which distributes textbooks and educational materials. "You also don't have to worry about producing a product line in multiple languages, which is great for the first-time exporter."
New exporters should consider starting in Canada, the U.S.'s largest trading partner—and the first non-U.S. market in which UPS did business. Canada has common business practices, a common language, and a great infrastructure for doing business.
Show you're in for the long haul. Nothing is more off-putting in a new business relationship than indicating you're looking for a fast return on investment. Many small and midsized businesses mistakenly think that fast-growth markets mean they're certain to make a quick buck. It takes time to establish a presence in another market, and your colleagues and partners expect a long-term commitment.
One size never fits all. Businesses must understand that every country has its own customs and etiquette rules; what works in one market won't necessarily work in another. In such countries as India, which has 29 states and multiple cultures, a regional strategy and approach are critical.
Negotiations everywhere will be different. In India, you should avoid saying "no" in business discussions because it's considered rude. In China, it would be a mistake to take the word "yes" literally. Chinese executives frequently say "yes" and nod during conversations, often merely to show that they are paying attention to what you are saying, not necessarily agreeing with it.
All of these cultural nuances may seem challenging at first. Over time, they will become second nature. By doing your homework and tapping into the resources to help small businesses export, there's no reason to let cultural or language barriers serve as blockades to your business growth.