We all understand that there are cultural differences when we approach global expansion. The understanding of this issue is becoming more apparent in the business world, as we can see many seminars and articles that address the difficulties and solutions for the cultural dichotomy between two business partners.
The invasion of China brought this issue to the center of the business world dialogue, because of the great difficulties companies encounter with Chinese businessmen while setting up a new branch or subsidiary or relocating their value chain.
The solution to this difficulty was to hire a local representative or a local manager, so he/she might serve as the bridge between the two cultures. However, this is not the best solution, or to be exact, this is only part of the solution. Integrative business management processing provides a much better result in dealing with cultural barriers.
Integrative business management processing means that not only do we need our local representative to be familiar with the local culture; he/she also needs to be involved with the regional culture from which the parent company comes from. An organization that desires to expand globally must emphasize the importance of understanding the culture of its target market in every manner possible.
Understanding the cultural differences of a foreign market in order to create a successful entry into it, is foremost the responsibility of the parent company. As a result, all layer of its organizational structure needs to be educated and not only the top managers. This will allow companies to be able to do business in all levels of the organization.
The local representative is responsible for understanding the cultural barriers as well, for he/she will have to constantly operate while dealing with one culture or the other. This representative is in fact a direct extension of the global organizational structure.
It is true that a great deal of business partnerships and market expansion efforts fails due to the lack of understanding the cultural differences at the other end of the world.
However, a reliable representative is the key for a successful market expansion, whether it manifests itself as opening a new branch or setting up a new subsidiary. It is crucial to find a representative that is in sync with your way on how to do business. This representative’s loyalty will be tested many times; his/hers failure can have instrumental effect on your company, as far as damaging your brand or causing a financial crisis.