Ever looked for the 4th floor of a hotel in China? You will be looking for a long time…
This week I had the opportunity to speak at the National Association of Corporate Directors (NACD) Spring Forum in Washington D.C. The theme was “Global Leadership and Transparency” and speakers were asked to share insights on how Boards can prepare for emerging technology trends and the impact of globalism. My panel discussion was entitled “Translating Corporate Culture Across Continents.” I was joined by HomeAway Inc.’s Chief People Officer Lori Knowlton, with the session moderated by Dennis Whalen from KPMG’s Audit Committee Institute. The audience was truly outstanding, and we had a lively discussion on how American companies often underestimate what it takes to successfully expand their businesses globally. I was asked what advice I provide to corporations I work with in Europe, Asia, and America as an outside advisor, in particular on cultural sensitivity, regulatory and legal issues. We also discussed the fact that most business people outside the United States tend to think of a corporate commitment as lasting longer than two or three quarters. Lori added great insights on French labor law from her time in France and Dennis provided thoughtful analysis based on his extensive experience in Hong Kong and China.
One especially important topic was some of the more epic failures from recent corporate history and what we can learn from them. Home Depot, a very well run corporation with a highly competent management team and Board, opened a lot of stores in China before realizing that most middle-class Chinese would be embarrassed to be seen in one of their stores. While economic growth in China over the past 15 years has been impressive and while a lot of key consumer spending metrics indicated that Chinese consumers would flock to Home Depot’s stores, the reality is that in China you are seen as “poor” if you have to do your own home-improvement project. Labor rates are still quite low and China is more of a “Do-It-For-Me” culture. Store performance was so poor that rather than tweaking their approach, Home Depot decided to shut all of its stores and pull out of the world’s second largest economy entirely! Walmart’s foray into Europe’s largest market, Germany, met a similar fate although for different reasons. German laws interfered with stores staying open 24 hours a day and German consumers were suspicious of all the discounts, suspecting inferior quality products. Again, a well run company that failed to truly understand what it was setting out to do before committing hundreds of millions of dollars and a significant time investment by its senior leadership team. Walmart shut all of its stores in Germany and pulled out of the market.
I recalled being in a meeting in Shanghai almost ten years ago. Actually, it was a pre-meeting to go over a presentation to a potential Chinese business partner that was to take place the following day. The second slide listed “Four Reasons to Do Business With Us.” I remember interrupting the meeting and saying that we are either going to have to come up with a fifth reason or that we would have to cut one to make it three. Blank stares all around from the Americans. In Chinese culture the word for the number “four” (四) sounds similar to the word for “death” (死 亡) and the number really is avoided at all cost. You think I am kidding? Beijing’s traffic management bureau does not issue license plates containing the number “4”! And there is no fourth floor in any hotel in China.
One of the participants at the NACD event shared a story with me afterwards of a Chinese colleague visiting the United States and refusing to call the number for a taxi company that ended in -4444. With the increasing number of Chinese travelers….something to think about for companies in the tourism business.
The bar really is set low when it comes to international expectations of American companies and executives, so a little bit of effort and knowledge will go a long way. Before you go to that business meeting in Hong Kong, take 30 minutes and go through the South China Morning Post online to see what local issues have been occupying the attention of your potential business partners or clients. Your awareness of a local scandal or successful fundraiser for a local arts organization (that never made it into the New York Times) will impress immensely. And while you are at it, please use Google Translate and at least learn how to say ‘Thank you’ and ‘How are you?’ in the local language. As another of the meeting attendees pointed out, this will go a long way.
Thank you, Vielen Dank, Merci, Gracias, and 謝謝 to NACD for inviting me to speak at their Spring Forum in Washington, D.C.!