Building Trust and Relationship in South Africa
This document gives specific details on building trust and relationships in South Africa, with a few pointers on dos and don'ts. It also highlights aspects of South African culture that might help foreigners build strong bonds to support their business goals.
Why should I read this document?
South Africa is Africa's most industrialised, technologically advanced, and diversified country. It is part of the top five main emerging world markets (BRICS). It also has one of the younger populations, showing bright prospects for future growth and business. This article provides insights and broad guidelines on building trust and strong relationships with decision-makers and key business targets. The article would be a vital resource for foreign businesses intending to expand to South Africa.
Five most important things to know about doing business in SA (if you only read one thing, it is what you should read)
Understand the country's diversity – South Africa's tortuous apartheid past has made diversity and inclusion an essential topic in the nation. Appearing to be non-inclusive (especially less concerned with the plight of disadvantaged groups) could be costly to your business. When doing business, always watch out for racial, ethnic, and gender diversity.
Leverage local connections, affiliations, and personal involvements - Building good personal and business relationships is essential. It may not be the most significant determinant of trust in business but still, it goes a long way to open doors and enhance success.
Use discretion when dealing with power, hierarchy and status - It may be subtle sometimes but be aware of the hierarchy in the country. The country is more egalitarian than most other African countries, however, there still exists a significant emphasis on hierarchy. You would also do well to show success in your appearance.
Be careful with gifts - There are various norms and guidelines surrounding gifts in South Africa. Understand them before giving or receiving a gift. It is recommended to get advice from a local partner or consultant on this and the other issues above.
Apply tact and diplomacy wisely - In most contexts, society appreciates honesty and directness. However, be tactful when dealing with racial and ethnic issues.
South Africa is one of the most developed countries in Africa (GEIDCO, 2019, p. 96). Although it is in the middle stages of industrialisation, it is the most industrialised nation on the continent (Thopil, 2021, p. 253; GEIDCO, 2019). It is also the third-largest African economy after Nigeria and Egypt (Kamer, 2022). The country's critical industrial sectors include agriculture and food processing, financial services, business process outsourcing, industrial manufacturing, and mining (Creamer Media, 2021; Pariona, 2018). The country also has a vibrant tourism industry. Every year, thousands of tourists visit the country to admire its impressive landscapes, wildlife, and cultural diversity (Nel, 2022; Commisceo Global Consulting Ltd, 2022; Expatica, 2021).
Apartheid, a political system that enshrined white-minority rule and severely discriminated against the majority black African population from 1948 to 1994, is probably the darkest point in South African history (Nel, 2022, Mhlauli, et al., 2015, pp. 203-219). From the late 1970s until apartheid's end, the South African economy suffered as many foreign countries prevented channelling investments to the country. However, post-apartheid, the country's economy has steadily grown with the return of significant investment, especially from western nations (Nel, 2022; Mhlauli, et al., 2015, pp. 203-219). The government has since actively created measures and policies to integrate the previously disenfranchised black majority into the economy (Vilakazi & Bosiu, 2021, pp. 189-212).
South Africa has a mixed economy. Primarily driven by private enterprises but there is a significant participation from the state. The primary purpose of South African economic policy is to maintain growth and achieve self-sufficiency in targeted industries. The country's rate of crime, poverty and inequality remain widespread, with about a third of the population unemployed (the highest in the world as of September 2021). However, its gross domestic product (GDP) per capita (around US$ 5,650) is significantly higher than most of the other countries in sub-Saharan Africa (World Bank Group, 2022).
Understand the Diversity
South Africans often call themselves "the rainbow nation" (Commisceo Global Consulting Ltd, 2022). Former president Nelson Mandela, and Archbishop Desmond Tutu, coined this term at the end of apartheid to describe South Africa's multi-racial, multi-ethnic population (Mofu, 2020, p. 67).The black African ethnic groups (incl. Zulu, Xhosa, Bapedi, Tswana, South Ndebele, Basotho, Venda, Tsonga, and Swazi) make up around 80% of the population (Nel, 2022). People of European ancestry (especially descendants of Dutch and British settlers) are around 8% of the population. Persons with mixed ancestry (referred to in South Africa as 'coloureds') account for around 9% of the population. The rest of the population includes people of Asian ancestry (especially Indian and Chinese descent) and other origins.
After transiting to full democracy in 1994, the South African government firmly pushed for interventions to resolve the economic disparities Apartheid policies created, favouring white business owners. The government started initiatives like the Black Economic Empowerment (BEE) programme to help redistribute the country's assets and opportunities. These programmes encourage businesses to integrate black people into the workplace and support black businesses (Vilakazi & Bosiu, 2021, pp. 189-212).
The acceptable practices and norms may differ for the diverse groups. Foreign businesses should get help from a local partner or consultant that understands the country's diversity. For instance, people are usually egalitarian in the larger cities which are usually populated with people of various ethnicities and races. However, respect for elders, chiefs, and traditional rulers in rural communities is fundamental. For example, as a sign of respect in rural areas, you should receive items from older people with both hands, rather than just one hand. This rule is almost entirely neglected in the more cosmopolitan cities. Understanding this and other customs will help foreign investors better position their businesses and brands for good integration in the South African market, and increase their success. Foreign entrants should also consider the increasing call for gender equality and inclusion for building business relationships in South Africa.
Local Connections, Affiliations, and Personal Involvements
Compared to most African countries, South Africa is an individualistic society. It has a high score on the individualism dimension of the Hofstede 6D model. This situation means society does not give much importance to belonging to groups. However, affiliation with influential groups is still crucial in building the right business relationships. Belonging to the right groups in South Africa can be beneficial and would help establish a flourishing business. For foreign businesses looking to enter SA, an effective way to set up a local presence is by joining relevant groups. They can also connect with an influential local representative who can help with networking. Formal channels like the Chambers of Commerce can be pretty helpful as well.
South Africa may not be a high context (collectivist) society; however, personal relationships could be advantageous for doing business. South Africans appreciate it when you show some interest in their family life. They could invite you for a braai (a barbeque) in their home, and you should accept because it could help you build stronger bonds. You could also join a business network or social club, play golf, or engage in other private social activities to help build business relationships. Still, they would not guarantee business deals or commitments, especially when dealing with people in the urban centres. The activities could help build good connections and leverage these for business advantage.
Use Discretion When Dealing with Power, Hierarchy and Status
Foreigners should make significant efforts to understand how the distribution of power is vital in South Africa. Although it is more egalitarian than most African societies, there is still a significant show of hierarchy in the country, mainly in the townships and rural areas. The main urban hubs are less hierarchical.
Nevertheless, foreigners need to apply some discretion when dealing with powerholders. The lines between the egalitarian and hierarchical contexts are often blurred. It is invaluable to get a local expert to help you navigate through different business situations. For instance, when building relationships with businesses in the more egalitarian city centres, you should focus more on senior-level internal experts than the Chief Executive Officers (CEOs). In these contexts, the CEOs usually rely on advice from their senior managers to make decisions. In these instances, it might be counterproductive to bypass these senior managers and deal directly with the CEO (or the power holder). The opposite is the case when dealing with people in rural communities.
Furthermore, despite being more egalitarian than other African states, South Africans are more likely to emphasise their status and achievement. The country scores high on masculinity in the Hofstede 6D model, implying that appearing successful is essential. By extension, the type of clothes you wear or the car you drive to business meetings could impact your ability to build good connections. Therefore, it is essential to attend formal meetings in proper business suits (unless your counterpart pre-informs you not to do so). Likewise, a befitting executive vehicle (or status car) would also help communicate to your counterparts that you own (or are part of) a successful business. To buttress this point, South Africa showed the highest demand for luxury cars in Africa and one of the highest in the world when compared to its population (African Business, 2012). In addition to the suits and cars, people should also pay attention to sorting out more delicate details like their shoes, fingernails and, especially for the ladies, their hair.
Be Careful with Gifts
In South Africa, different private and public sector policies surround gift-giving in business situations. Your business counterparts may not expect gifts but would appreciate them when such gifts are acceptable in line with the company policies.
Figure 1: Corporate Gift Pack from South Africa
Image Source: Gifts by Fusspot (2022)
When invited to a South African home or event, you can go along with a gift but be sure to understand the acceptable practices before giving gifts. As a rule, you should do business first and complete projects before giving gifts. Doing this would prevent your counterpart from assuming that the gifts are a covert attempt to influence business decisions.
Apply Tact and Diplomacy Wisely
South Africa is a more individualistic society than most other African countries. It scores relatively high on Individualism (IDV) on the Hofstede 6D model. While there are stark differences between the rural and urban communities, communication is in general low context. There is usually no need for too much 'diplomacy' in the business context. Speaking your mind or 'telling it like it is' often goes a long way to strengthening relationships. Foreign businesses should avoid being too patronising (especially the urban centres). They should also be aware that racial tensions defined the country's history. It is important to remain sensible, sensitive, and respectful of racial and ethnic differences. Foreigners may also seek local knowledge expert advice to understand society's culture and acceptable norms.
Short case study
Saskia is a project management consultant from the Netherlands. She moved to South Africa six years ago and set up a project management consulting firm there.
A massive fan of the spy movie, Ronin, she bought a used Peugeot 406 car (1995 model). This car was identical to one she owned and loved driving when she lived in the Netherlands. She got a decent bargain on the car: although it was cheap, the vehicle was reasonably good and served her well. However, her South African friends and acquaintances often made unfavourable (sometimes disparaging) comments about the car. She didn't pay much attention to them, often replying that the car was a classic and good enough as far as she was concerned.
One day after making what appeared to be a superb proposal presentation to a new client, the company's CEO offered to walk with her to the car park. They discussed the fine points of her presentation as they went. As they said their goodbyes, she noticed that the CEO wore a somewhat puzzled look when she opened the car door.
Three weeks later, she received an email saying that the company would be 'going in another direction, as they chose another consultant to manage their project. One of Saskia's friends, who introduced her to the company, called her a few days later. She mentioned that 'some people' in the company felt that while she demonstrated a high level of expertise, she didn't seem capable enough to handle such a large project. When she wondered how the company could ever come to such an assessment, her friend informed her that a few people saw her in her old rundown car. They assumed that if she were as successful as she claimed, she certainly would be doing better financially to afford a suitable vehicle.
Saskia learnt her lesson quickly. She took a company loan to buy a brand-new Toyota compact SUV but kept her beloved Peugeot 406 as her weekend pleasure car. She always drives her 'status car' to her clients' premises. Unsurprisingly, she's been constantly winning new mandates and has never received any comments about her delivery ability.
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