Siah Hwee Ang: Differences here to stay

In many parts of China, workers take an afternoon nap right after lunch. Photo / Thinkstock

However international business becomes, we will never all be the same. The final in a six-part series

For two decades, the word "internationalisation" (or its synonyms) has populated every business magazine and the annual reports of many organisations. We would therefore expect the world to be more globalised. As a matter of fact, only 10 to 25 per cent of business activities across the globe - including trade, output, travel, investments, funds transfer and communication - are cross-border, with the extent of globalisation depending on the industry and types of activities. Cross-border differences look set to stay - and in a big way.

Cross-border differences take many forms. According to Pankaj Ghemawat of the Harvard Business School, differences between countries can be measured by cultural, administrative (which covers government policies and institutions), geographic and economic distances. Most of these elements in some form have been covered in this series.

Beyond cultural distance, there are tacit types of distance that are essential to consider when conducting business internationally - those relating to norms and practices.

Norms refer to beliefs about behaviour. For example, in most of China, it is customary to take an afternoon nap right after lunch. In some areas, this means a lunch break from noon to 3pm. In other parts of the country, this means a lunch break from noon to 2pm. It is also normal to work on Saturdays in China, and many jobs require individuals to be on call for seven days. For a New Zealand organisation seeking to locate offices and operations there, it makes sense to take into account such norms, which differ across cities in a large country like China.

Practices relate to the cognitive aspects of people's thinking. Some of these are influenced by, but not limited to, cultural background. For example, the first article in this series highlighted who our New Zealand organisations should observe and perhaps follow and learn about when expanding abroad.

Many organisations around the world used to follow the example of United States counterparts, which were considered to be in a more advanced stage of development. These days, with the rise of Asia in the world economy, more and more organisations are looking towards this new breed of multinationals and what can be learned from them.

In many ways, cross-border differences are clearly more than the difference between a bow or a handshake to greet someone, or using two hands to hand over a business card. Take, for instance, the market in China. There is no single market in China. Doing business with China from New Zealand is a challenge, given the geographic distance, but it is not a reason for not expanding abroad.

But locating within China itself also poses a challenge as the land area is vast and transportation costs can be high because infrastructure is still being built across the country.

A lot of challenges in fact might boil down to sensitivity about norms and practices and understanding of the Chinese market itself. And, of course, knowing the differences in regulatory frameworks is becoming more important than ever before.

Nonetheless, it is important to sign off here by saying cross-border differences cannot be eradicated. There are many things that different countries are nationalistic about. For this reason, differences will persist.

In addition, cross-border differences actually enable organisations to explore opportunities. For example, the fact that kiwifruit can be produced here for only several months allows our competitors to produce them in other countries to cater to those markets as well. So cross-border differences do create opportunities. The best we can do is to be sensitive and recognise and embrace the differences, and potentially explore the opportunities they present.

Three lessons about differences

1. Cross-border differences can be classified in many ways, including the division into cultural, administrative, geographic and economic distances.

2. Differences in cultural norms and practice are tacit and can be difficult to measure, but should not be ignored.

3. Cross-border differences will persist on a large scale and cannot be eradicated. The best we can do is be sensitive and recognise and embrace the differences.

• Professor Siah Hwee Ang is BNZ chair in business in Asia at Victoria University.