1 8 i n s i g h t N OV E M B E R 2 0 1 2

Striking a promising business deal requires t ime and preparation – especially in China.

Yet even the most seemingly secure of arrangements can collapse due to a

last-minute hiccup. A mutually rewarding relationship cannot exist unless both sides understand each other – and that is not always as simple as it sounds.

A poorly mistranslated text that somehow goes unnoticed until it is time to sign, for example, has

the ability to topple well-fought negotiations in the blink of an eye. Similarly niggling errors in communication also pose threats of irreversible damage for foreign companies operating in the Chinese market.

Due to the past few decades of a larger foreign presence in China, the game has no doubt been refined. But, whether it is the newcomers looking for a piece of the pie or the veterans eyeing expansion in the market, foreign entities are still facing serious language barriers when doing

Bridges and Barriers business with Chinese companies. Today’s slip-ups are often the result of more

subtle miscommunication between foreign and local Chinese parties, but the results are not necessarily any less serious.

“We take for granted the skills of a lot of our Chinese staff, especially their ability to speak English and understand what we say,” said Mike Diliberto, general manager of New Zealand retail design manufacturer Lynx Innovation’s China arm.

“There was a time when the U.S. office had mistyped the word “too” as “to” in a directive to our Chinese staff, which misled them to believe that the new dimensions for a major project needed ‘to be tightened’ instead of relaying the message that the dimensions were ‘too tight,’” he said. “The mistake managed to slip through the cracks, but in the end we caught the error, luckily, due to having made some prototypes before starting production.”

To p r e v e n t s o m e t h i n g a s s e e m i n g l y incons equent ia l as a care less typ o f rom snowballing, the art of being able to speak to both sides is essential when working across borders, said Diliberto.

“One of our toughest barriers to overcome is being able to make sure that our teams in China

and the U.S. understand each other and what is meant when they communicate with one another, not just the words that are used during the interaction,” he said.

Indeed, the failure to misalign cultural assumption or sensitivity is dragging on company productivity and bottom lines, according to a recent Economist Intelligence Unit (EIU) study, Competing Across Borders: How Cultural and Communication Barriers Affect Business. The report showes that 43 percent of nearly 600 global executives admitted to incurring financial s e t b a c k s a s a re s u l t o f c om mu n i c at i on misunderstandings standing in the way of a major cross-border transaction.

Almost two-thirds of the respondents further identified differences in language and culture as challenges preventing them from securing their place in the market, while 90 percent of the executives felt that company profits, revenue and market share would climb if cross-border communication is improved.

As the economic downturn – combined with advances in technology and trade dynamics – compels companies to place bets outside their home markets, research indicates that many of them are also dangerously underestimating the ro l e t h at c om mu n i c at i on s k i l l s p l ay i n

B y L i n DA y U

BU s i n E s s & C U Lt U R E

Mike Diliberto, general manager of Lynx Innovation’s China arm says expressing yourself is important when talking to someone who speaks a different language.

“Indeed, the failure to misalign cultural assumption or sensitivity is dragging on company productivity and bottom lines…”

Foreign executives say language and cultural misunder-standings can often scuttle a deal or hurt company performance

N OV E M B E R 2 0 1 2 i n s i g h t 1 9

tips foR BREAking Down BARRiERshere is some advice from executives interviewed for the story.Make time for one-on-one time with direct reports. Company executives should not underestimate the importance of spending ample time with subor-dinates. Those who develop a weekly rapport are better positioned to gain a better understanding of how their employees operate, which helps to pre-vent confusion and improves the overall work flow.Invest extra time into getting to know colleagues or relevant business partners outside of work.

Building trust and strengthening bonds place an added value on the relationship and ultimately cre-ate a more favorable working environment for the involved parties, which is beneficial for tense situa-tions or when problems arise.Have the relevant parties from both sides work with a qualified language and culture training instructor. Guidance in these areas, particularly sensitive ones, in terms of how they relate to the workplace, assists in facilitating a more comprehen-sive understanding of “the other,” paving the way to more efficient and effective avenues for com-munication.

18-21.indd 18-19 12-10-25 下午8:04

1 8 i n s i g h t N OV E M B E R 2 0 1 2

Striking a promising business deal requires t ime and preparation – especially in China.

Yet even the most seemingly secure of arrangements can collapse due to a

last-minute hiccup. A mutually rewarding relationship cannot exist unless both sides understand each other – and that is not always as simple as it sounds.

A poorly mistranslated text that somehow goes unnoticed until it is time to sign, for example, has

the ability to topple well-fought negotiations in the blink of an eye. Similarly niggling errors in communication also pose threats of irreversible damage for foreign companies operating in the Chinese market.

Due to the past few decades of a larger foreign presence in China, the game has no doubt been refined. But, whether it is the newcomers looking for a piece of the pie or the veterans eyeing expansion in the market, foreign entities are still facing serious language barriers when doing

Bridges and Barriers business with Chinese companies. Today’s slip-ups are often the result of more

subtle miscommunication between foreign and local Chinese parties, but the results are not necessarily any less serious.

“We take for granted the skills of a lot of our Chinese staff, especially their ability to speak English and understand what we say,” said Mike Diliberto, general manager of New Zealand retail design manufacturer Lynx Innovation’s China arm.

“There was a time when the U.S. office had mistyped the word “too” as “to” in a directive to our Chinese staff, which misled them to believe that the new dimensions for a major project needed ‘to be tightened’ instead of relaying the message that the dimensions were ‘too tight,’” he said. “The mistake managed to slip through the cracks, but in the end we caught the error, luckily, due to having made some prototypes before starting production.”

To p r e v e n t s o m e t h i n g a s s e e m i n g l y incons equent ia l as a care less typ o f rom snowballing, the art of being able to speak to both sides is essential when working across borders, said Diliberto.

“One of our toughest barriers to overcome is being able to make sure that our teams in China

and the U.S. understand each other and what is meant when they communicate with one another, not just the words that are used during the interaction,” he said.

Indeed, the failure to misalign cultural assumption or sensitivity is dragging on company productivity and bottom lines, according to a recent Economist Intelligence Unit (EIU) study, Competing Across Borders: How Cultural and Communication Barriers Affect Business. The report showes that 43 percent of nearly 600 global executives admitted to incurring financial s e t b a c k s a s a re s u l t o f c om mu n i c at i on misunderstandings standing in the way of a major cross-border transaction.

Almost two-thirds of the respondents further identified differences in language and culture as challenges preventing them from securing their place in the market, while 90 percent of the executives felt that company profits, revenue and market share would climb if cross-border communication is improved.

As the economic downturn – combined with advances in technology and trade dynamics – compels companies to place bets outside their home markets, research indicates that many of them are also dangerously underestimating the ro l e t h at c om mu n i c at i on s k i l l s p l ay i n

B y L i n DA y U

BU s i n E s s & C U Lt U R E

Mike Diliberto, general manager of Lynx Innovation’s China arm says expressing yourself is important when talking to someone who speaks a different language.

“Indeed, the failure to misalign cultural assumption or sensitivity is dragging on company productivity and bottom lines…”

Foreign executives say language and cultural misunder-standings can often scuttle a deal or hurt company performance

N OV E M B E R 2 0 1 2 i n s i g h t 1 9

tips foR BREAking Down BARRiERshere is some advice from executives interviewed for the story.Make time for one-on-one time with direct reports. Company executives should not underestimate the importance of spending ample time with subor-dinates. Those who develop a weekly rapport are better positioned to gain a better understanding of how their employees operate, which helps to pre-vent confusion and improves the overall work flow.Invest extra time into getting to know colleagues or relevant business partners outside of work.

Building trust and strengthening bonds place an added value on the relationship and ultimately cre-ate a more favorable working environment for the involved parties, which is beneficial for tense situa-tions or when problems arise.Have the relevant parties from both sides work with a qualified language and culture training instructor. Guidance in these areas, particularly sensitive ones, in terms of how they relate to the workplace, assists in facilitating a more comprehen-sive understanding of “the other,” paving the way to more efficient and effective avenues for com-munication.

18-21.indd 18-19 12-10-25 下午8:04

determining success on the global stage, said Abhik Sen, managing editor of EIU’s industry management research and also the editor of the report.

In general, smaller companies (with annual revenues of less than US$500 million) are having a tougher time managing such challenges, according to Sen.

“Over one-half , or 54 percent say that communication misunderstandings have stood in the way of a major cross-border transaction c omp are d to 4 6 p e rc e nt o f t h e i r l a rge r counterparts (with annual revenues in excess of US$500 million),” he said. “The same proportions of small- to-medium sized companies (54 percent) say that cultural and linguistic diversity can make it difficult to collaborate internationally across borders with external partners.”

But whether small or large in size, companies from English-speaking nations are more inclined than others to benefit from an international environment since a majority of non-English speaking countries typically have little choice but to adopt English as their working language in the

N OV E M B E R 2 0 1 2 i n s i g h t 2 1

global setting. U.S. companies, for instance, appear to be slightly better placed for cross-border e x p ans i on c omp are d to t he i r Eu rop e an counterparts, particularly those from Spain, France and Italy, the EIU research suggests.

The point is also evident within the direction of development for China’s workforce, according to Kent Kedl, managing director (Greater China and North Asia) at global consultancy Control Risks.

“Chinese employees are speaking better English now than 10 to 15 years ago and more Western companies have Chinese-speaking people on their teams, so the language barriers are certainly not what they used to be,” he said.

“But they’re still a problem because people aren’t thinking about them, and that’s when ‘bam!,’

things get missed, something happens – a key word is missed or a bad translation angers someone – and everything goes crazy,” he said.

For that reason, a s i d e f r o m t h e critical importance

of bilingual fluency, the ability to operate within culturally accepted norms is crucial, and even more so during times of crises, he added.

“Cr is i s management i s when Western companies really need to be careful about how they work through things,” said Kedl. “If there is a labor issue at their factories, or a supplier is being threatening, then there’s increased risk of these situations quickly escalating and it can be quite nerve-wracking.”

“In the Chinese context, people tend to talk around the problem, so despite having a solid command of Mandarin, foreigners are still left with a lot to infer whereas Americans tend to be direct, and that can offend Chinese,” he said. “So, it really goes beyond just a language issue here and becomes one of cultural communications.”

Jack Sun, China country manager for English First, an international English language training school, which sponsored the EIU study, agreed that the situation is more complex than ever.

“Chinese customers or colleagues can speak quite good English now, but their expressions or presentations don’t suit the traditions of native Engl ish-language speakers , so they can’t u n d e r s t an d e a c h ot h e r an d t h at c au s e s misunderstandings,” he said.

Sun asserted that the current situation calls for greater cultural understanding of one another.

“The major gaps in the use of English, for example, are not coming from the actual English skills, but more from the cultural differences between Chinese and foreigners, and that influences how they are able to make themselves understood or not,” he said.

A working knowledge of how cultural norms

apply to industry applications is another part of the mix that foreign companies working with Chinese need to be aware of. It may at least help to fill some of the more obvious gaps.

Such opportunities are best taken by ensuring that the required means of communication are fitting from the start, said Eddie Wang, president of New York-based property developer F&T Group.

“We’re at a point now where language barriers don’t rea l ly come into play dur ing dai ly conversations,” he said. “But take for instance, professional terms: the gai nian or concept is a very different word for Chinese firms than it is for U.S. companies.

“For the U.S., a concept is something that’s supposed to represent the ‘big picture,’ but for Chinese, they expect a lot of details, like the floor plan, quotations, land design, etc. – it can be a very different product for both sides,” he said. “If you cannot put the things on the table that are wanted then there’s going to be an automatic loss.”

What it boils down to is that expectations in China are working on a global basis these days. With that comes the need for foreign companies to get around language barriers by not only clearly articulating expectations, but also developing appropriate channels to achieve them.

As increased foreign investment in China b r i n g s i n m o r e s t a n d a r d i z e d m o d e s o f international operations, the local talent – and most notably, the mid-to-senior management – are being exposed to professional norms that international companies expect, said Tim Lamb, managing director of g lobal consultancy JLJ Group.

“But, where you see a significant gap is with junior staff and in particular recent graduates, who naturally lack experience with cross-border dealings, especially those that exist within a best corporate practices arena,” he said. “The way to set behavior in a company starts with recruitment and then led by solid training programs designed to coexist with operations.”

“…90 percent of the executives felt that company profits, revenue and market share would climb, if cross-border communication is improved.”

2 0 i n s i g h t N OV E M B E R 2 0 1 2

Kent Kedl of Control Risks

Tim Lamb of JLJ Group

Don’t expect an interpreter to solve all language barriers at meetings, executives say

ISTOC

KPH

OTO

Linda Yu is a freelance writer based in Shanghai.

18-21.indd 20-21 12-10-25 下午8:04

determining success on the global stage, said Abhik Sen, managing editor of EIU’s industry management research and also the editor of the report.

In general, smaller companies (with annual revenues of less than US$500 million) are having a tougher time managing such challenges, according to Sen.

“Over one-half , or 54 percent say that communication misunderstandings have stood in the way of a major cross-border transaction c omp are d to 4 6 p e rc e nt o f t h e i r l a rge r counterparts (with annual revenues in excess of US$500 million),” he said. “The same proportions of small- to-medium sized companies (54 percent) say that cultural and linguistic diversity can make it difficult to collaborate internationally across borders with external partners.”

But whether small or large in size, companies from English-speaking nations are more inclined than others to benefit from an international environment since a majority of non-English speaking countries typically have little choice but to adopt English as their working language in the

N OV E M B E R 2 0 1 2 i n s i g h t 2 1

global setting. U.S. companies, for instance, appear to be slightly better placed for cross-border e x p ans i on c omp are d to t he i r Eu rop e an counterparts, particularly those from Spain, France and Italy, the EIU research suggests.

The point is also evident within the direction of development for China’s workforce, according to Kent Kedl, managing director (Greater China and North Asia) at global consultancy Control Risks.

“Chinese employees are speaking better English now than 10 to 15 years ago and more Western companies have Chinese-speaking people on their teams, so the language barriers are certainly not what they used to be,” he said.

“But they’re still a problem because people aren’t thinking about them, and that’s when ‘bam!,’

things get missed, something happens – a key word is missed or a bad translation angers someone – and everything goes crazy,” he said.

For that reason, a s i d e f r o m t h e critical importance

of bilingual fluency, the ability to operate within culturally accepted norms is crucial, and even more so during times of crises, he added.

“Cr is i s management i s when Western companies really need to be careful about how they work through things,” said Kedl. “If there is a labor issue at their factories, or a supplier is being threatening, then there’s increased risk of these situations quickly escalating and it can be quite nerve-wracking.”

“In the Chinese context, people tend to talk around the problem, so despite having a solid command of Mandarin, foreigners are still left with a lot to infer whereas Americans tend to be direct, and that can offend Chinese,” he said. “So, it really goes beyond just a language issue here and becomes one of cultural communications.”

Jack Sun, China country manager for English First, an international English language training school, which sponsored the EIU study, agreed that the situation is more complex than ever.

“Chinese customers or colleagues can speak quite good English now, but their expressions or presentations don’t suit the traditions of native Engl ish-language speakers , so they can’t u n d e r s t an d e a c h ot h e r an d t h at c au s e s misunderstandings,” he said.

Sun asserted that the current situation calls for greater cultural understanding of one another.

“The major gaps in the use of English, for example, are not coming from the actual English skills, but more from the cultural differences between Chinese and foreigners, and that influences how they are able to make themselves understood or not,” he said.

A working knowledge of how cultural norms

apply to industry applications is another part of the mix that foreign companies working with Chinese need to be aware of. It may at least help to fill some of the more obvious gaps.

Such opportunities are best taken by ensuring that the required means of communication are fitting from the start, said Eddie Wang, president of New York-based property developer F&T Group.

“We’re at a point now where language barriers don’t rea l ly come into play dur ing dai ly conversations,” he said. “But take for instance, professional terms: the gai nian or concept is a very different word for Chinese firms than it is for U.S. companies.

“For the U.S., a concept is something that’s supposed to represent the ‘big picture,’ but for Chinese, they expect a lot of details, like the floor plan, quotations, land design, etc. – it can be a very different product for both sides,” he said. “If you cannot put the things on the table that are wanted then there’s going to be an automatic loss.”

What it boils down to is that expectations in China are working on a global basis these days. With that comes the need for foreign companies to get around language barriers by not only clearly articulating expectations, but also developing appropriate channels to achieve them.

As increased foreign investment in China b r i n g s i n m o r e s t a n d a r d i z e d m o d e s o f international operations, the local talent – and most notably, the mid-to-senior management – are being exposed to professional norms that international companies expect, said Tim Lamb, managing director of g lobal consultancy JLJ Group.

“But, where you see a significant gap is with junior staff and in particular recent graduates, who naturally lack experience with cross-border dealings, especially those that exist within a best corporate practices arena,” he said. “The way to set behavior in a company starts with recruitment and then led by solid training programs designed to coexist with operations.”

“…90 percent of the executives felt that company profits, revenue and market share would climb, if cross-border communication is improved.”

2 0 i n s i g h t N OV E M B E R 2 0 1 2

Kent Kedl of Control Risks

Tim Lamb of JLJ Group

Don’t expect an interpreter to solve all language barriers at meetings, executives say

ISTOC

KPH

OTO

Linda Yu is a freelance writer based in Shanghai.

18-21.indd 20-21 12-10-25 下午8:04