Kellogg World Alumni Magazine, Spring 2004Kellogg School of Management
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Doing business in other cultures
Relationships key in establishing cross-cultural business trust, say Kellogg School experts

What do the United States and most of Southeast Asia have in common when it comes to trade and marketing negotiations?

Kellogg Professor Angela Lee  
© Nathan Mandell
Prof. Angela Lee
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Not much. Our styles are pretty yin-yang, say Jeanne Brett, the DeWitt W. Buchanan Jr. Distinguished Professor of Dispute Resolution and Angela Y. Lee, associate professor of marketing at the Kellogg School.

Even with increased global trade and marketing, Americans find themselves a little baffled by their Asian counterparts — and vice versa — when it comes to negotiating business deals.

Americans tend to conduct business in a straightforward way. They readily share information. They get right to the point and try to reach a deal as quickly as possible, says Brett, who directs the Kellogg School Dispute Resolution Research Center, founded in 1986 to support and disseminate leading-edge thinking in negotiations and dispute resolution. In business parlance, Americans are "low context," meaning they are direct and focused on the deal, not the intangibles such as studying the nuances of the person with whom theyíre trying to negotiate a transaction.

In contrast, Asians — and the Chinese in particular — are high context. Establishing a relationship with a prospective business partner, even an Asian one, is an essential part of their negotiating process, Brett says. It allows them to develop the trust they need to proceed with a deal. Asians also are guarded about sharing information; historically it has made them too vulnerable. Inferences are good, directness is not.

"Information sharing is the lowest common denominator, but the Chinese wonít participate in that," Brett says. Itís not that they are stubborn. Rather, "it's culturally inappropriate for them to come down to our level." Brett says this philosophy also holds true for other cultures, such as those in the Middle East and parts of South America.

  Kellogg Professor Jeanne Brett
© Nathan Mandell
Prof. Jeanne Brett

So what's an American to do? Let your Asian partner lead the dance, say Brett and Lee.

They recommend that American businesspeople study Asian culture. Once they do, it quickly becomes apparent that Asians have a distinctly different mind-set from most of their U.S. corporate peers.

"Americans live in an individualistic culture," says Lee. "We seek out products that make us feel energized and beautiful, that advance the self and make us feel better. Asians, on the other hand, are collectivistic and focused on 'how do I avoid bad things like cancer.' We both want good things, but in a different way."

Americans and Asians may even want the same products, she says, but the products need to be custom-marketed to make them successful in each culture.

"The key is to do proper market research," Lee explains. "For example, sports marketing is a concept that wouldn't have worked in China until recently because China traditionally is not into spectator sports." But when China joined the World Trade Organization in 2001, the Chinese became exposed to more uncensored media, such as commercials featuring professional Chinese athletes promoting American soft drinks and computers.

Knowing this, U.S. marketers can shift their strategy to encourage Chinese consumers to identify with their country's star athletes, Lee suggests.

"Some American companies have already realized that they have to change their marketing strategy to appeal to Asians, while others have yet to catch up," she says. And lest Americans think Asians will come around to embracing U.S. models of marketing and negotiating, well, don't bet on it.

"Their traditions won't change fast," Brett says, because "most of their negotiations are internal."

And that translates into business as usual.

— Deborah Leigh Wood

©2002 Kellogg School of Management, Northwestern University