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Building trust and relationships in Latin America

by: Almiro dos Reis Neto, Associate partner of Hofstede Insights

 

Important

 

The five most important things to know about doing business in Latin America:
  1. Relationship is an important issue for any Latin American business partner, but you should focus on the business’leader/owner, since he/she is the one who must rely on you and will ultimately decide whether to do the business or not;
  2. Look for a third person who can introduce you to a partner: this provide you with legitimacy and liability;
  3. Prefer face to face meetings always when possible – meals are ideal occasions for introducing business proposals;
  4. Do not rush: Latin Americans are not straightforward; they like to talk and ask about personal life facts, to tell their business’ history. Thus, avoid starting a meeting and going straight to the point: start with small talks. It is recommended that you let the conversation flow and allow your Latin American partner to introduce the subject;
  5. Present your business proposals with transparency, by even showing some financial data. Clearly demonstrate the advantages to each of the parts. It is recommended to mention whether you are also dealing with another person or company as well.

 

Short Introduction

 

Latin Americans are widely known for their warm way, passionate behaviour and hospitality. This is result of the importance given to the relationship within the family, friends and colleagues. Relationships are paramount. Its importance may overcome business performance: one might abdicate some sort of direct financial gain to the detriment of a relational status.

 

Building a relationship with a Latin American partner may seem extremely difficult, but it may bring about genuine results and a strong tie.
 

 

 

Latin Americans countries have a distinctly collectivistic trait, which can be seen through the usual low score on the Individualism Index. As a result, people tend to give major importance to the group. The ties among people are, therefore, relationships. Some other effects may also be seen as a result of this: loyalty to the group, fitting in with the group’s identity and opinion as preserving the group’s harmony prevails over individual performance or opinion.

 

The high score on the Uncertainty Avoidance Index (UAI) is another fundamental element in the Latin American culture. Concerning relationships, this fact shows that Latin American may be very suspicious of strangers, since it is a potential source of uncertainty and risk. Also, the high UAI level is related to the emotional behaviour of Latin Americans and justifies why they may seem very warm and happy, but can also be deeply sorrowful or angry at something. 
In addition, it is worth pointing out the expressive trend Latin Americans have towards high Power Distance Index scores. It states a surveillance predominance inside the groups and between them (social classes, for example).

 

Since opinions and behaviours are collectively acquired and there is a strong hierarchical element within the society, it is important that you focus on building a relationship with the business owner/leader. Regardless of other opinions, they have the final word. And as stated, relationships for Latin Americans are based upon loyalty and trust – it is difficult for them to separate the moral and emotional elements from the professional ones.

 

It is expected that your Latin American business partner tell you about his family, his history and he may expect the same from you. Therefore, it is highly recommended that you say a few words about yourself, the history of your company and so on. Negotiations have a warm-up moment, in which small talks concerning football, the landscapes you would like to visit at his/her country, the weather and other superficial subjects. Nevertheless, avoid talking about politics, their country’s weakness or polemic issues.

 

Eventually, it may actually take few meeting as a warm-up for deep negotiations. This is a result of the time required for the Latin American partner to feel comfortable with both you and your proposals. Take it as an investment and not a waste of time: your Latin American partners can turn out to be friends of yours forever! This is a result of the emotional engagement that usually surrounds their relationships. Therefore, prepare yourself with significant time buffer in your negotiation plans, because it is necessary and worthy.

 

Whether in the first, second or few later encounters, present your proposal with transparency. Bring financial projections and allow your business partner to ask for some more financial data. Bringing and showing this data can be a significant signal of your intention to be honest. Moreover, the feeling that you are hiding something or taking advantage over your partner can be harmful to get his/her trust. Show how each one of the parts can succeed.

 

Look for a third person who can introduce you to your partner. A member of the embassy, another business partner or any other acquaintance who can really help you establish a reliable link. For example, it is very common in Latin America for people to hire a new employee from an indication of an acquaintance, rather than analysing the curriculum. This is because the fact of being introduced by a trustful person indicates that the candidate will also be reliable.

 

Concerning communication, Latin Americans are usually indirect, contextual. They may take a long way to say something, especially a negative statement. Their body language, speech firmness, voice tone, gestures and other attitudes can be saying something as much as the actual content of their speech. So does yours for them: the way you reply for their jokes, your facial expressions and gestures. So be careful with negative expressions and show reciprocity with towards their generosity. It is highly appreciated when it is shown genuine gratitude and contentment. Feel free to respond to hugs, smiles, touches during conversations, etc.

 

The points above justifies why it is highly recommended that you schedule face to face meetings, that you look your partner in the eyes and so on: doing business is a very personal thing in Latin America. That does not mean that if you skip any of the tips you will fail on doing your business. Instead, these are only usual elements that can smooth this long process. Use them for a better general comprehension. However, you should never seem to be manipulating or controlling your partner and behaving as you knew his/her strategy, because it might sound an offensive, outrageous and unreliable attitude.
 

 

 

Short case study 

 

Soren Amundsen, Director of North Europe Publishing House, based in Oslo, Norway, was pleased because he believed he would finally close the contract to edit the Editora Inca and its wonderful examples of pre-Columbian Peruvian art and history.

 

He was surprised to see his future business partner Pedro Canquichoque, General Director of Editora Inca, waiting for him outside the airport. It was the first time they had seen each other personally, besides their long conversations on Skype, but there was no doubt: that was Pedro! Talkative, cheerful and friendly.

 

Pedro seemed very happy to receive Soren. Smiling, he said: "We have a special dinner tonight. It is the eve of Inti Raymi, homage to the Sun God. Tomorrow I will take you to Cusco to see the ceremony. We will talk about business later!”

 

The next day, they visited the Temple of the Sun in the city of Cusco, and walked through the Haucaypata, the Plaza de Armas, to see the impressive ceremony where two llamas were sacrificed.

 

Incidentally, Soren had scheduled his visit to Peru for June 24, which is the shortest day in the southern hemisphere, the day that the Incas organized a "Sunshine" party.

 

During that day, they drunk coca tea, to support the height of the region, and “chicha morada”, which is prepared with a particular species of purple corn, pineapple, clove, cinnamon and other seasonings. Pedro explained that chicha is antioxidant, anticancer, anti-inflammatory, so it is always good to taste this delicious drink.

 

During the week, between meetings they ate ceviches, anticuchos, olluquito con charque (llama meat), chicken etc, always refreshed by good local beer, or a pisco sour. They talked about their families, their children, their beliefs, and how they led their businesses in their countries. They discovered some differences and many converging points.

 

Already sitting in his airplane seat on his way back home after four intense days in Peru and a few pounds more fat, Soren Amundsen thought how pleased and grateful he was with this recent experience. He thought he certainly could have made his business trip in much less time, but it would not have the same result. In addition to signing the contract he wanted, with the approval of his local and international lawyers, he had conquered a new and good friend, and he had the feeling that this relationship would last for many years.

 

Questions:

 

  1. What were the behaviors of the Peruvian partner that surprised Soren Amundsen? Why?
  2. Would it be the same if the meeting were in Norway? How would it be?
  3. How do you build relationships in your own country? Is it different from the Latin American process? How?
  4. Would you be open to this way of doing business? What adjustments would you need to make?

 

 
* The case described in this text is fictional. The names of the characters and organizations are merely illustrative. Any resemblance to real facts would have been mere coincidence.