... or How to self-sabotage your global business in a few clicks.
By Rodolfo Maggio and Tatiana Miron
We have decided to bring to your attention two recent thought-provoking cases of French and Italian companies which fell victims of cultural incompetence. The first case took place in Italy, Rodolfo’s home country and the second case happened in France, Tatiana’s country of residence and “adoption”. Both companies blamed China publicly for the pandemic without measuring the consequences on their companies and brands. They went as far as asking for financial compensation from the Chinese government for damages they incurred as a result of the crisis. By applying the Hofstede Model, we will analyze and explain the reasons behind these unfortunate incidents.
We talk here about two well known brands. First case is related to Champagne Deutz, famous champagne producer and experienced exporter with more than 45 % of their turnover going to international markets. Their cultural oversight is even more surprising as Champagne Deutz is a company with an international pedigree, a Franco-German biography dating back to the beginning of the 19th century.
The second casualty of cultural incompetence is Bottega Prosecco, a company with a history of four centuries in the world of wine and grappa. They export 85 % of their wine to 132 countries including Germany, the United Kingdom, Canada, Benelux and Japan. It was heart-breaking to see the Twitter attacks of the owner go viral, considering their financial interest in the Chinese market: more than 15 % of their turnover.
So, what happened? Both companies blamed the Chinese government on social media for the mismanagement of the pandemic. As a result, their Chinese partners stopped their distributorship agreement and publicly asked Chinese consumers to boycott both companies' products. As we discussed these two cases, we agreed they told a well-known story.
All companies that wish to operate globally, in our diverse and interconnected world, sooner or later fall into the traps of intercultural incompetence. As you can see, Bottega Prosecco and Champagne Deutz self-sabotaged their own business relations with the Chinese market. In this article we will use the Hofstede 6-D Model to analyse their mistakes, as we have already done many times after similar accidents. Our aim is to alert you, lest you will be the next person who underestimates #theculturefactor.
Geert Hofstede defined culture “as the collective mental programming of the human mind which distinguishes one group of people from another.” It is through the lens of the Chinese culture that we must look at the misguided communication of Bottega Prosecco and Champagne Deutz. More specifically, we will consider three dimensions of the 6 Dimension Model.
Collectivism Vs Individualism (IDV)
According to Hofstede, Italy and France are very different from China in terms of a person’s self-perception as an individual or a member of a group.
In several cultures with high IDV scores, the individual is deeply dependent on his/her reputation in the group. In China, this concept is called “face”. As a consequence, if you want a local to become your enemy, you can just do one or a combination of the following: publicly criticize them, challenge them, disagree with them and display your anger against them. That is exactly what Bottega Prosecco and Champagne Deutz did, and an enemy is exactly what they got. Actually, they got several millions.
“...only if the Chinese partners join to refuse cooperation, will bigots who practice such discrimination learn their lessons.”
Ma Bijie, an industry insider from Wajiu.com,
GlobalTimes, 2020/4/1
Long-term orientation (LTO)
LTO measures the extent to which people look at the past to cope with present and future challenges. Hofstede observed a large difference between China’s LTO on the one hand, and Italy and France on the other.
As a consequence of China’s higher score on the LTO dimension, a trustworthy relationship is key to doing business with the Chinese. We hear so often about the importance of Guanxi and its impact on decision-making in China. Still, the French and Italian companies did not expect the Chinese partners to cancel the contracts so swiftly. They did not realise that their words were enough to break the relation down. A costly miscalculation.
Uncertainty avoidance (UAI)
According to Hofstede, neither Italy nor France enjoy uncertainty. High UAI, in this case, means that the ambiguity and the unknown consequences of the crises caused a lot of anxiety. It was on these feelings both companies acted. In contrast, with a relatively low UAI score, the Chinese feel more at ease with ambiguity. That’s another reason why they did not fear canceling the distributorship with these two companies: they are not afraid of searching new partners.
Conclusion
When a company is hit by a social storm, revenues evaporate, people lose jobs, and the company’s brand gets unwanted attention; sometimes the consequences last for years. We both believe it is possible to avoid these accidents: the solution is taking culture seriously. Businesses must be aware of cultural differences. Although this is a very serious matter, after so many similar mistakes, as consultants, we amuse ourselves imagining Bob Dylan singing “How many companies must cultural incompetence break down, before the lesson is learnt?”
The answer to that question, my friend, is not blowing in the wind. If that was the case, these accidents would not happen so frequently. The answer depends on the companies’ willingness to prepare. Reach out to us to discuss your strategy of global growth.
About the authors
Rodolfo Maggio has conducted research, worked, and lived in different countries around the world. He is trained as an anthropologist, led a research project at the University of Oxford for three years, and was Special Foreign Researcher at Waseda University, Tokyo. He has been conducting anthropological research on values since 2010, when he was part of a collaborative research study in the Asia-Pacific region. Today, Rodolfo lives in Milan, Italy, where he holds the National Scientific Qualification to Associate Professor of Anthropology. Working between academia and the public and private sector, he is committed to making sound academic research accessible for companies and professionals with a global mindset.
Tatiana Miron is a private global strategy consultant, advisor and trainer. Her company, Prime Target, helps customers improve their global performance. Tatiana has been involved in international business, negotiations and consulting, and experienced in person the impact of failures and mistakes due to lack of cultural competence by businesses and their executives. Tatiana holds an MBA(Master of Business Administration) in Global Management from Kedge Business School (France, China and USA). She speaks five languages and worked extensively in France, Spain, South Africa, USA, China and in Eastern Europe, her home region.
Rodolfo and Tatiana are Associate Partners of Hofstede Insights with a focus on intercultural management consulting and training.
A word from Rodolfo and Tatiana:
Among the numerous cases that prove the importance of cultural competence, we decided to compare these French and Italian cases as a starting point for our collaboration. We think companies learn from impactful examples. With our experience and expertise, we help them avoid cultural traps.
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