Why Mexicans Don't Drink Molson

by Andrea Mandel-Campbell

  In China, they have a word for it: guanxi, the power of personal relationships. Instead of being encouraged over a shot of tequila, it’s cultivated over an expensive dinner and copious shots of baijiu, the fiery Chinese vodka. “In Canadian culture, after 5 pm everybody goes home — in China after 5 pm, people get active,” Ken Kwan explains. “It’s after-hours when people start to talk business, and the next morning they go to the office to sign the contract. Every company offers a good price, good service and a good contract— that’s surface stuff. The question is, how do you make your company outstanding? It’s the relationship.”

  Dress to impress

  Because so much in business is based on personal relations, the way in which you present yourself is almost as important as product and price. Personal aesthetic, poise and sophistication are a proxy for business acumen, so leave the “frump factor” back in Canada. “The Chinese value protocol — how you introduce yourself, how smart and sophisticated you are,” explains the University of Alberta’s Edy Wong. Adds Ken Kwan, “Within the first three minutes a Chinese buyer already knows whether he will sign a contract with you. He is judging your body language, eye contact, even the way you sit. If you want to sell a product, you have to sell yourself first.”

  Let me entertain you

  Navin Chandaria, the charismatic owner of Toronto-based Conros Corp., goes to extraordinary lengths to impress his customers. When he was looking to co-brand his LePage tape products with the U.S. Postal Service, he brought the U.S. postmaster general for a tour of St. James’s Palace in London, England, and introduced him to his good friend, Princess Sophie. “We don’t bribe, we entertain,” says the Kenyan-born entrepreneur with an expansive open-arms flourish. “I will do anything for my customers — isn’t that what it’s all about?” Not according to most Canadian businesspeople, who subscribe to the straight missionary-style sales strategy of product plus price. “Sometimes it’s embarrassing,” admits Viceroy’s Andrea Bermudez, who’s had to explain to surprised customers arriving from abroad that there’s no car to pick them up at the airport in Toronto.

  To Canadians’ credit, a Protestant ethic underlies much of Canada’s business culture. Unfortunately, it is accompanied by a propensity for cheapness and a rigid rectitude that leaves little margin for less formal approaches. It’s also really boring. Doing business in most of the rest of the world is about wining and dining, and Canadians need to learn how to court their customers. When clients are visiting from out of town, don’t just take them to lunch at the local family eatery— show them around town, or invite them to your home for dinner. If you have a sales rep overseas, make sure his expense account covers bottles of fine wine and single-malt whiskies. “It costs a lot to a company,” admits Bermudez, “but it’s worth it.”

  Time is time, and money is money

  One of the things that most distinguishes cultures is the concept of time. Patience is a virtue, and you will need it, because very few countries are as preoccupied with how time flies as Canadians are. Yvan Bourdeau, the CEO of BMO Capital Markets, estimates that it takes twelve to eighteen months before the Chinese will trust an outsider. Then, of course, there’s all the bureaucracy and consensual decision-making. “Whatever time it takes is the time it takes,” says Neil Tate, a special adviser to BMO on Asia; “Money is separate.” Still, your patience need not be limitless, and knowing when to call time is important, says Phil Hodge, formerly with Westport Innovations. “Sometimes we defer too much. We tell ourselves it takes time, we need to wait, but they also want to do business,” he says. You can only talk nicely for so long — you need to figure out where the tipping point is.”

  When yes means no

  Canadians aren’t great at confrontation, but they are bullies compared with most cultures. In some countries being told “no” is about as frequent as a lunar eclipse, but that doesn’t mean they aren’t turning you down. It’s important to tune out the obfuscation to hear what they are really telling you, in the politest of terms. “There’s no such word as ‘no’ in China. It’s always, ‘I’ll see what I can do, I’ll look into it,’” says BMO’s Neil Tate. “There’s usually a sunset period, so if you haven’t gotten approval within a certain period — it’s no.” Similarly, Sun Life’s Gary Comerford has learned he’s got to phrase his questions in a certain way if he wants to get a real sense of what’s happening at the insurer’s Indian subsidiary. “I can get a yes to 100 per cent of my questions,” he says. “Business is always ‘great,’ and it could be the most horrible month known to man.”

  Look below the surface

  The Chinese invented paper two thousand years ago and have been using it to write reams upon reams of rules and regulations ever since. Which is why, if you abided by the letter of the law in China, you would never get anything done, explains Gervais Lavoie, an anthropologist and entrepreneur who has spent twenty-five years studying the Chinese market. To circumvent the prodigious bureaucracy, which has perfected the art of theoretical if not reality-based rules, the country has come up with a pragmatic alternative that, to the foreign eye, may seem absurd, but in practice makes perfect sense. “People get confused because they look at what they can see, but in China the surface is only there for show,” says Lavoie. “If you applied the rules word for word, you might as well close the country.”

  Scratch below the surface and you’ll find an entire underground system of well-organized civil servants dedicated to getting things done, either by “extending, ignoring or discreetly applying” the rules. That’s how both Starbucks and the French supermarket Carrefour managed to open hundreds of outlets in China that, at least according to the law, are technically illegal, says Lavoie. The key to deciphering what appears to be a confusing morass is simple enough: “Their value system is upside down, so the whole system is upside down. When you see white, it’s black and when you see black, it’s white,” says Lavoie. “It’s easy to understand— it’s the opposite of what you see.”

  Learn to play chess

  Chinese children start studying the art of negotiation in Grade 1, says Neil Tate, who compares dealing with the Chinese to playing a game of chess in which they’re always three moves ahead. “Before they put anything on the table, they’ve thought about the first move, what your response will be, what their next question is going to be, what your response is going to be and how they will handle the next one before they ever ask the first question,” he says. “Wall Street may think it has smart negotiators, but when you hit the Shanghai people you’ll understand they are the most advanced, sophisticated negotiators in the world.”

  Tate recommends reading The Asian Mind Game by Chin-Ning Chu to get a handle on Chinese strategy. He also advises keeping your cards close to your chest. “If you play all your cards at once, the Chinese will think less of you,” he explains. Persevere, press your advantage and, when necessary, stand your ground; the Chinese will respect you for it, say observers. But while direct and confrontational is sometimes appropriate, being a “bull in a china shop” won’t get you far, says lawyer James Klotz. “There are many situations where you need to know what the underlying issues are on the Chinese side. It’s not a matter of negotiating politely or not, it’s a matter of knowing why they are asking for the things they are asking for and what’s motivating them.”

  Women and Saudi Arabia don’t mix

  When doing business in a foreign culture, there are some things you can’t change and others that you can. The key is to distinguish between a country’s general business culture and those practices specifically related to your company, and then to pick your battles. You can’t, for example, change the fact that Mexicans eat lunch at 2 pm, explains Roger Belair, but you can keep them from stopping the production line every other day to celebrate a birthday party. You need to face up to the fact that women can’t do business in Saudi Arabia or that a lot of businessmen like to talk shop at the nudy bar. If you are not comfortable going there, send a local representative who is. “Th
e point is, it’s their culture,” says Mark Romoff, a former trade commissioner in Japan. “We’re not going to convince them they should do business our way.”

  Don’t count on your contract

  Vancouver entrepreneur David Fung recalls how one Canadian company that he worked with in China spent two years and $1 million to draw up what it considered an iron-clad contract with its Chinese partners. The tome-like volume had nineteen appendices, but in a country where you’re lucky to find a judge with legal training, the odds of being able to enforce a contract are not in your favour. It’s better to think of a contract like a marriage certificate, explains Ken Cai, a Chinese-born Vancouver businessman. “A lot of people sign an agreement and think they are done,” he explains. “But it’s like a good marriage. You go to the church for the wedding, but then you spend a long time — the rest of your life — working together on the marriage. In the same way, signing an agreement is not the end of a deal; it’s the beginning.”

  Instead of suing when a contract is broken, advises Fung, sweeten the pot. “It’s no different from doing business in British Columbia when you want the First Nations on your side,” he says. “You say: ‘Let’s talk to them, offer them something,’ and then everybody moves on. Yet outsiders won’t do that in China. A contract is signed, and if it’s not abided by, they sue. The Chinese don’t care. These are not corruption issues. This is how society operates, and if you refuse to accept it, why get in?”

  Keep your patents to yourself

  New technologies in China are not seen as proprietary, but rather as a tool for the common good. So if you don’t want someone borrowing it, don’t lend it. Software company Zi Corp. works with eighteen Chinese cell phone manufacturers but keeps the predictive-text technology under lock and key in Calgary, while Westport Innovations relies on third-party suppliers such as Germany’s Bosch or Siemens— internationally recognized firms against whom it has legal recourse — to manufacture some of its more sensitive technology in China. When Montreal’s Toon Boom discovered its animation software had been pirated by a Chinese studio, it provided technical support and convinced the studio to become a legal customer and pay for the technology. “It’s better for us to know who they are than for them to stay underground,” says president Joan Vogelsang, who estimates company revenue would double if its products weren’t pirated. To counteract the problem, Toon Boom plans to come out with a special Chinese-language version of its lower-end software to see what business it can drum up.

  You’re not Marco Polo

  Ultimately, as culturally different as another country may be, people are still people. Whether they are Chinese, Czech or Canadian, they are all motivated by the desire to do business and make money. So while certain behaviours may baffle you, let common sense prevail and never lose sight of your goal. You wouldn’t sign a contract in Canada with someone you’d never met, so why would you do it in China? “Learning Mandarin was important, but it wasn’t the thing that helped me the most,” explains lawyer Omer Ozden, who spent a decade working in China. “It was understanding instinctively how to deal with people. Any good businessperson in China can see immediately whether you are a waste of time or if they can have their way with you. So just make friends, develop a rapport— and get down to business. Don’t waste six months shaking hands and drinking tea; you’re not Marco Polo. In the end, everybody wants to make money.”

  BUT WHAT IF PART of doing business involves what you would consider, at least in Canada, questionable practices? How do you distinguish between culture and corruption? Many people interviewed for this book argue that bribes, payoffs and “facilitation fees” are just the cost of doing business; everybody does it, and being a prude only hamstrings you when it comes to competing against more accommodating Americans and Europeans. Others counter that you always have a choice, and once you’ve slid down the slippery slope of corruption, it’s difficult to pull yourself back up. Whatever your take, however, the maze of government bureaucracy and the survival ethos that pervade so many countries requires a certain manoeuvrability that has no equivalent in Canada. In Brazil they call it jiego de cintura, which refers to a soccer player’s ability to bob and weave around unexpected obstacles. Without that flexibility he might never be able to get past the clutch of defencemen blocking his path to score a goal.

  In Brazil, there are so many obstacles to getting things done quickly and expeditiously that they’ve given it a name: el costo Brasileiro, the Brazilian cost of doing business. The World Bank produced a two-volume report documenting all the difficulties, from delays in acquiring work permits and incorporating companies to applying convoluted salary scales. Having three levels of government whose rules and regulations often directly contradict each other, Brazilians pride themselves on figuring out ways to manoeuvre through the morass that border on illegal. These “shortcuts” are called jeitinhos, and the better able you are to grease the wheels, the smarter you are. Think of it as driving into a massive traffic jam that will take hours to unsnarl. You could wait patiently and lose valuable time, or you could take a short detour, driving the wrong way down a one-way side street. A block later, you’re free and clear. That’s a jeitinho.

  For many veteran businesspeople, the key to survival is being able to distinguish a jeitinho from real corruption. Canadians in particular, they say, often apply a very narrow set of moral standards to situations that require a certain flexibility and are the result of a radically different frame of reference. David Fung compares it to playing by the rules of hockey, when in China everyone is playing soccer. Why would you insist on court protection in a country that can’t provide it? It’s like insisting that everyone use their hands to play soccer. “This is refusing to accept that we are playing a different game with a different set of rules. Then we think the Chinese are bad. Well, what’s bad about soccer?” says Fung. “We play hockey and we say there is a red line and a blue line. The Chinese ask, why? There are reasons for it, but if you take out the red line and the blue line, you can still play the game.”

  “It is not a case of right versus wrong,” he adds. “It’s about, how do we make things work? Of course we all have a moral line of our own. That line in the sand is up to us to draw. Everybody will have a different line, based on their upbringing, based on their cultural background. In the case of Canada, we’ve drawn the line so far back that we totally ignore the value of the other society.”

  What makes it harder is when others, including Americans and Europeans, are more disposed to playing by different rules. While Canadians will balk at taking Asian businessmen to nightclubs, Americans may simply pay an agent to do it. When Ken Kwan worked at Honeywell in China the company routinely paid consultants a fee. “The attitude is that for big contracts you have to do that. If you don’t, then the opportunity will go to someone else,” he says. The Europeans are allegedly even more freewheeling, armed with generous public-relations budgets and equally accommodating governments. “Bribes for Germans used to be, and probably still are, marketing expenses. How can you compete against that?” says Andres Darvasi, a Chilean Canadian businessman based in Mexico. “Americans are a lot more flexible. If they have to give a bribe, they will find a way do it.”

  Still, many businesspeople with a long history of working overseas maintain that honesty is the best policy and it even has a certain cachet— like when you’re the only one wearing a bikini at a nude beach. While everyone else is letting it all hang out, you retain a modicum of mystery and your privates don’t get burnt. “We don’t take bribes, we don’t bribe anywhere in the world, nothing,” says Robert Schad, chairman of Husky Injection Molding. “Our competitors do it extensively; we don’t. It works very well because we stand out in the way we serve our customers.”

  You have to be persistent, acknowledges Nexen’s Charlie Fischer, especially when the French government is giving airplanes as gifts to the Yemeni government. But the oil company counteracts less scrupulous competition by winning over the community with
jobs and providing public services. “We’re often called naïve, but we’re clean and we don’t go to jail,” he says. “You can bribe people in power for a time, but it’s not sustainable. Once you cross the line, people know you have a price, and they’ll be at you again and again.”

  That doesn’t mean that you can’t be crafty when it comes to protecting your interests. Take Bombardier’s decision to publicly denounce what appeared to be a corrupt government tendering process in Mexico. “It demonstrated a lack of effort to manage the politics behind the deal,” concludes Miguel Juáregui, former chairman of the Canada–Mexico Business Committee. “You don’t tell Mexicans they are a bunch of crooks. A better approach would be to have made it politically impossible for the Mexican government not to follow transparent channels.” Similarly, Molson could have levelled the competitive playing field in Brazil by discreetly alerting authorities to the fact that rival brewery Schincariol was evading taxes. “You have to bring know-how,” explains Eduardo Klurfan. “But it has to translate into issues that are acceptable in the marketplace you are operating in. You need to understand the rules of the game locally.”

  Of course, you can minimize the problem by avoiding countries or regions where it is essentially impossible to do business without bribing someone. Nexen doesn’t operate on the African mainland because it has found corruption to be unavoidable. Russia and neighbouring satellites like Kazakhstan and Belarus are another region of the world to be bypassed for the same reason. Canadians and others have been repeatedly roughhoused in the former Soviet sphere, where corruption often commingles with violence. Maritime businessman Ken Rowe dubbed Russia “hopelessly corrupt” after his Halifax-based imp Group International was forceably evicted from the Moscow hotel it co-owned by a private security force in 2004. Bernard Isautier, the savy French-born oilman, described Russian energy giant Lukoil as a “monster” before being bullied into selling his wildly profitable Calgary-based PetroKazahkstan to the Chinese over disputes with Lukoil and Russian government regulators.