How cultural differences make online negotiations fail

Do you remember the pre-pandemic times when engineers, accountants and project managers needed their bosses for international negotiations? Organisations used to resemble icebergs whose top-tenth bosses helicoptered back and forth in representation of the underwater nine-tenth. Goals, instructions and results ascended to the top, got transferred to nearby icebergs called client, supplier or partner firm, where they were taken down to problem-solvers. Then, COVID19 closed physical avenues and opened digital ones, stranding most of the jet-setting ten percent but promoting everyone with a broadband connection into global negotiators. It sounded like a promotion, but appointments always come with some disappointments.

Civilisation is about standardisation. Two thousand years ago, Romans in Europe and Chinese in Asia simultaneously invented the curiously similar ideas of building roads and assigning uniform measures of distances and weights. That, of course, didn’t make people the same: where people took those roads and what they bought for a unit of silver still depended on their hopes, fears, troubles, pleasures and ideas of a good life. Time passed, but people are the same. Shopping malls, hospitals and airports are cloned by worldwide designers, but how people queue (or don’t), how they spend waiting time and how loud they complain when something goes wrong is so cultural that Edward T. Hall, a forefather of intercultural research and author of several books on the topic, experimented at worldwide airports. People went online from home offices a couple of years ago hoping that virtual meetings would be cultural shortcuts. Salespeople and managers lost exotic trips with curious food, enviable selfies and duty-free shops, but also escaped jet lag, climate shock and diarrhea. Surely, video conferencing rooms would be culturally neutral equalising chambers where East and West, North and South would negotiate on equal terms regardless of genders, ethnicities, religions and traditions. As it turned out, they aren’t. They are sleek airport lounges crowding together those who loudly push forward and others who resentfully wait their turn, those who try to focus while others nag them for a chat. Most don’t realise how weirdly they act and if you doubt that, you are one of them. Take these three essential negotiation points as examples.

How does your business work? People want to do business with those they know and trust—otherwise we would all find suppliers, lawyers and dentists online. But trust is hard to build virtually, which is why virtual meetings are known to be ineffective and wasteful. Why is that? Enquiring about a counterpart’s business, some present vision, others describe processes. The lucky ones negotiate with like-minded people, but others confuse, bore or scare each other. Lawyers and CFOs politely fidget at monologues how “our firm has fans, not customers”. Visionaries conceal yawns at balanced scorecards and flowcharts. Differences depend on personality, nationality and industry, which is why complex international negotiations like large mergers fail more often than local team meetings. It’s also why seasoned intercultural negotiators learn to describe the same business in objective and subjective terms, showing charts in one call and videos in another, depending on the work style of their virtual counterparts.

Who are your other clients? Social networks that intercultural experts call 'in-groups' (trust networks) and 'out-groups' (everyone else) are the reason why cultures exist at all. Building trustworthy in-groups takes a lot of time and care, so people suspiciously screen newcomers. That applies to hard-earned client bases at negotiations, but people use them differently depending on their local and corporate cultures. Empathy-based social cultures enjoy ‘name-dropping’—casually mentioning famous firms or people they know to improve their image and authority. Cautious and perfectionist cultures consider information as privilege, and often mention “a market-leading industrial firm” instead. Name-droppers are vague on details, perfectionists protect privacy, and trying to challenge them results in mistrust. Instead, smart intercultural negotiators improve their listening skills and infer the missing half of data from visuals, tone of voice and replies to their sharp but respectful questions.

What’s your price? Only pointless negotiations can avoid financial details. But attitudes to money are minefields of cultural misunderstandings, starting with the most mundane business interactions. In Bangkok, customers are king because they pay; in my native Budapest, business owners and managers wield an attitude because they are in charge. Online price negotiations create similar culture clashes where parties see the value of disclosure or secrecy, thrift and flexibility differently. Overpaying is control for a Chinese state firm and a favour to be returned for a Thai family business. Dumping prices are smart for an Indonesian manufacturer, unfair for a Danish one and impossible for many American or Japanese firms. Money is the most standardised commodity we have, but both sides of each coin have stories that are easily misunderstood. Experienced intercultural negotiators learn to add the ‘why’ to the ‘how much’ and help counterparts read price tags in the given geographic, political, commercial or even moral context.