LQ International Cultural Differences Important

March 5, 2007
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In the United States, signing a contract ensures that two parties know exactly what they are getting for the tenure of the contract. But in China, a contract is more a symbol of a relationship, changing as the benefits differ for each party.

This is just one of the many legal and cultural differences that companies must deal with when they wish to start marketing or producing in foreign countries, said Craig Meurlin, partner at Warner Norcross and Judd and chair of its international practice group.

"There are some cultural and legal mountains out there," he said of delving into international business.

Meurlin said such cultural translations are usually more difficult in Asian countries than in European countries.

"It is, I think, a much more significant cultural difference," he said. "Those mountains are much higher."

Meurlin said it is highly important for companies to understand the cultural background of a country where they wish to do business. Meurlin said in Japan, for example, there are very strict observances pertaining to how people are introduced, who asks and answers questions, and how decisions are made, all of which can lead to relationship problems if American businessmen and women are not aware of cultural norms and etiquette.

Much of Meurlin's experience in Asia stems being general counsel for Alticor Inc. for seven years, during which time he took both Amway Asia Pacific and Amway Japan private. Meurlin said he still works with the company through his position at Warner Norcross and Judd.

With his experience came the ability to navigate the process, asking the right questions and getting the right answers, Meurlin said.

One of the things attorneys can help businesses with is compliance, including the current issues of the federal Anti-Bribery Act.

"It has much broader applications than people might have expected," he said.

Donating to pet charities of business partners in other countries was once seen as a gesture of goodwill, but now can be construed as bribery, Meurlin said, and companies need to be aware of this.

It also is necessary to be aware of what business partners are doing, especially whether they may be engaged in illegal behavior.

"You have to restrict what your distributors can and cannot do," he said.

The challenge of dealing with corruption is one that more companies may face as they become involved with the Russian market, said Richard Walawender, head of the international business practice at Miller Canfield Paddock and Stone. He has worked with four companies in the past year that do business in Russia

"It's really challenging to do that because of the high governmental red tape issues that you have there, and also it is very corrupt," he said. "Finding a good partner — a trustworthy partner — in a place like Moscow is very important, and also difficult to do."

Similar problems arise in Vietnam, Walawender said, but with the implementation of an anti-corruption compact with the Organization for Economic Cooperation and Development, signed by countries such as France, Germany, Italy, Canada and the United States, it is becoming easier to do business through legal avenues.

"I think the playing field has become a lot more level these days," he said.

Meurlin said the international business landscape has changed since his time helping Alticor make the transition to the Asian market during the 1990s and early 2000s.

"We all know about the Alticors of the world and the Wolverine World Wides of the world," he said. "Now international companies cover a much broader range of size."

Walawender said it has taken American companies — especially those in West Michigan — some time to see the benefits of joining the global marketplace.

With the rush to take their business into countries such as China, Walawender said companies in the United States forget that they are able to keep their business here in America while doing business in other countries.

"It's not a zero-sum game," he said. "It doesn't mean closing a plant in Michigan. In order to grow the business with a customer who is in China, you can't expect to do that from Grand Rapids; you have to be there as well as in Grand Rapids

"Historically, Michigan has been perceived as looking at globalization as something not necessarily to be embraced, but to be feared or blocked," he said. "That mentality, I think, has changed."

Companies should be in both the domestic and foreign markets, Walawender said.

"You can have both — and you should have both," he said. "Companies for the most part have really turned the tide in the last couple of years."     LQX

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