It’s tough doing business in China … and in America

Western business has developed a mindset that it’s tough doing business in China. This year, international firms are reaching a similar view over doing business in America

In the gossip of business airport lounges around the world, it has been a regular refrain that doing business with China is worthwhile but tough. This tallies with the received wisdom in textbooks on international business. Cultural differences and subsequent misunderstandings are often mentioned.

Maybe it’s time to look also at how doing business with America is also fraught with the difficulties of cultural differences for international organizations. When ‘normal relationships’ are disrupted, the rules of the game are found to be different from what was assumed to be the case by the organizations at the centre of the dispute..

The Toyota Case

Toyota has been remarkably successful in its growth into a global superstar. Then a well-reported crisis occurred which in shorthand was labelled as a safety issue. Toyota took steps internationally and was criticised for lack of speed of response. The criticism was particularly harsh in the United States. A legislator made a highly-charged statement about the dangers of buying any Toyota car. An earlier Leaders We Deserve post noted

Toyota is experiencing one of those crises which can rock a company to its core. Shares plummeted, as the company prepared to recall eight million vehicles globally because of problems with accelerator pedals on seven models. At a Congressional hearing on Wednesday, [Feb 3rd 2010] US Transportation Secretary Ray LaHood alarmed both investors and consumers with the advice, which he later retracted, that owners of a recalled Toyota should “stop driving it”.

This week, [May 2010] lawyers in the States are reported as bidding for the lucrative business of suing Toyata through the courts. It’s tough doing business in America.

The BP case

BP Oil Spill has become one of the most damaging ecological events in recent memory, as well as a personal tragedy to many individuals including the casualties of the initial burst. The case differs from that of Toyota. However, it has some parallels in the confrontational public stance taken by the US Government. Mark Mardell BBC’s North America editor commented as BP claims success in efforts to stem to oil leak:

Remember President Obama saying he was going to pursue BP “aggressively”? Remember him talking of the “ridiculous spectacle” of the companies involved in the spill making excuses [to Congressional hearings]? The aggression hasn’t lessened, as BP tentatively proclaims the success of its plan to suck up the oil and gas spilling out of the ruptured pipeline into a storage ship. First the secretaries for the interior, Ken Salazar, and homeland security, Janet Napolitano, sent a stern letter demanding to know if BP really meant what it said when it promised to pay all the costs. Now another barbed statement has followed.

“This technique is not a solution to the problem, and it is not yet clear how successful it may be. We are closely monitoring BP’s test with the hope that it will contain some of the oil, but at the same time, federal scientists are continuing to provide oversight and expertise to BP as they move forward with other strategies to contain the spill and stop the flow of oil. We will not rest until BP permanently seals the wellhead, the spill is cleaned up, and the communities and natural resources of the Gulf Coast are restored and made whole.”

Mardell has taken the view that President Obama was aware of criticisms levelled at the previous administration of its tardiness and insensitivity to the human suffering in the aftermath of Hurricane Katrina. His current public stance has a calculating ring to it. There is talk of retrospective legislation to recoup all damages consequent on the spill.

How tough is that?

Such talk from the Chinese government would produce the ‘difficult to do business in China’ reaction. Maybe Global Business leaders are starting to whisper about the ‘difficulties of doing business with the Americans’.

Acknowledgements

Image from Congressman Zach’s webpage, showing the Congessman in robust form at a hearing with Chinese officials [June 2009] to examine discrepancies in the trade relationship between China and the U.S.A.

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