Preparing to Do Business in Other Countries
A California attorney’s tips on how to avoid disputes in business without borders
on February 12, 2019
Updated on June 22, 2022
If you’re a business owner in the U.S. thinking about broadening your scope, Jeffery Daar has some choice pieces of wisdom to share. First and foremost: “Check your assumptions and expectations at the door.”
Daar is an attorney at Daar & Newman in Woodland Hills who has worked on countless international business and transactional matters. Having reputable legal counsel in such situations is important, because planning ahead is key.
“For the businessperson, you want to know enough to pause and make sure you’re addressing them,” he says. “Have them in mind so you know when to pause, when to make sure you’re thinking this through right, when you need help to do it correctly, and most importantly, do these things early so that you’re being strategic. It’s all strategy.”
Cross-Cultural Mishaps in New Markets
What is normal to some is not normal to others, Daar says, and you want to be conscious of those cultural differences before starting on the wrong foot and putting the other one in your mouth.
“Don’t generalize or assume that everyone in one country is the same, or all cities and regions in the country are the same,” he says. “A good example is Germany, which is a big place with lots of different regions much like the U.S. If you were doing business or marketing with somebody in the United States, would you assume the Northeast versus the South versus the West are all the same?”
Daar cites examples such as social status, gender, age, work-life balance, and levels of formality. “You need to try to do your homework, or at least be sensitive without misunderstanding,” he adds. “People usually appreciate if you show awareness and interest in their history, customs, and culture. It just warms people up, in my experience.”
If you believe you’ve broken a cultural rule, Daar encourages bringing that out in the open and apologizing for it rather than ignoring it. “Most important of all: just stay open-minded,” he adds.
U.S. Companies Lost in Translation
Obviously language is another barrier in these kinds of business meetings, but something you may not know is that translating doesn’t always work.
“Lots of things don’t translate,” Daar says. “If they appear to be in English, it doesn’t mean that they translate to what you actually think they may mean. And of course, words can have many different meanings. There’s a whole art to translation when you’re doing business with people in other languages.”
Even a word that has an understood meaning, like “now,” can have vary from one international market to another. In Mexico, for example, Daar says attorneys in Guadalajara have a similar concept of punctuality to the U.S., but “you have other parts of Mexico where mañana doesn’t mean tomorrow, but maybe a week or two from now.”
Which Laws Apply in Foreign Markets?
When you get to the point of doing business overseas where contracts have to be drawn up, it’s imperative to understand the laws of not only your country and state, but others’ too. In some cases, you may be able to work them in your favor.
“Every deal should have a choice of law so you control the outcome,” Daar says. “If you were in California or New York, you would want your state law to apply, but it may not be so simple if you’re dealing with somebody in another country because they’re going to want their law to apply. You need to know the differences between the possible laws so you know what’s really in play. You should consider consulting with a local counsel in the foreign country. You want to have that person, even if it’s just a quick consult, because you don’t want to be the one who later found out that you missed something big.”
Not only should you know which laws are helpful or not, but also which country’s court will enforce them and how it might do so, Daar says. When you consider selling goods to other countries, for example, an international treaty from the ’80s will come into play: the Convention on the International Sale of Goods (or Vienna Sales Convention).
“Virtually every country you would do business with is a member of this treaty and it basically creates an international sale of goods law, which if you don’t know about it and you do sale of goods between the US and about 83 other countries, guess what? This treaty applies,” Daar says. “It’s something that probably applies to most people’s contracts. They don’t even know that they’re opting in by being silent. The CISG applies to sales of goods where each party is in a different nation that’s adopted it. So, if somebody is located in the US and the seller is located in China, guess what? This treaty applies unless you affirmatively exclude it by name.”
It should go without saying that these issues are the mere tip of the proverbial iceberg, but any business owner looking overseas should read up and seek counsel so they can see those issues coming.
“You’re the dealmaker. You need to know enough to know, ‘OK, I don’t want to get too far ahead because I need to make sure we’re thinking through correctly how we’re going to make this work the way I want it to work,’” Daar says. “I’ve seen so many times where things, even with really good strategy, don’t work out as intended, just because that added dimension of multiple cultures, countries, languages, legal systems, venues just don’t play out as intended—even with the best planning.”