What Cultural Factors Do I Need to Consider with International Trade?
When you are running a business with a global network of buyers and suppliers, you need to understand what factors help define international trade in each country, including leading exports and local customs. When you are choosing between different international trade finance companies to assist you with supply chain financing, you want to work with a company that is familiar with the different cultural aspects of the regions you serve.
Cultural Impacts on International Trade
When establishing financing for your international trade operations, you need to consider how culture affects international negotiations. When global business deals get made, they cross much more than borders. International agreements also cross different cultures. Cultures impact how people communicate, behave and think as well as their transactions and how they negotiate them.
Here are a few cultural conditions and how they can affect your relationship with a specific customer or partner:
- Consider the type of relationship desired by your client. When you are negotiating, you will need to consider if you want to build a long-term relationship or focus on the contract at hand. In general, it is usually much safer to focus on current priorities than to think about future business. If the situation presents itself, then a proven track record, based on your current contract, will reinforce your ability to conduct future business.
- Consider the tone of your negotiations. Determine whether your style should be formal or informal. Ideally, you want to create a professional posture; you can later become less formal if suitable. In some cases, casual can be offensive. You don’t want to attempt a casual approach with your suppliers and business affiliates that could jeopardize your contract even before it is written. Use titles, speak and interact in an honorable fashion.
- Consider the suppliers’ and partners’ preferred contact method. Contact is either direct or indirect. Some cultures are dependent on communication methods that are simple and direct; in these cases, there is one main contact person. Other cultures use communication methods that are more complex and indirect; they have specific people that address particular parts of their business.
- Consider time sensitivity. When addressing financial situations and as you are working with a trade finance company, you need to consider whether sensitivity to time comes into play. Discussions and negotiations focus on a specific culture’s attitudes toward time. Some cultures believe in slower negotiations, others are quick to make a deal, and many focus on punctuality.
- Consider the negotiating attitude. Differences in personality and culture affect how businesspeople approach a contract. Some may use a win-win approach in which both parties benefit from the deal. Others have a win-lose approach in which one side benefits more than the other. When you start negotiations, you must know what kind of person is sitting across the table from you and with whom you are negotiating.
How Working with a Supply Chain Finance Company Can Help Your Business Internationally
When you partner with a supply chain finance company like Tradewind, you are able to submit payment to suppliers earlier. There is no waiting for the sale of the merchandise to the customer. This is accomplished through purchase order funding, inventory lending, letters of credit, and structured guarantees. Supply chain financing frees up funds that are otherwise inaccessible so you can keep your business up and running at its full potential.
Supply chain financing allows multinational buyers on one side of the world to conduct business with another diverse group of suppliers located around the globe. The best factoring companies familiarize themselves with your business operations, your products, and your clients. Then they work to become knowledgeable on the cultural factors of the clients you plan to do business with. These factors include language barriers, cultural differences, as well as currencies. They help ensure a pleasant experience for your company as well as for your customers and suppliers.
Supply chain financing benefits the supplier and the buyer. The buyer optimizes their working capital while the supplier generates more operating cash flow. The entire process minimizes the risk across the supply chain. When you allow Tradewind—a leading international trade finance company—to handle the financial end, you can focus on learning the cultural norms of other countries and strengthening your relationship with your client.