Culture, the Ultimate Barrier to Trade

Course: International Marketing

CULTURE THE ULTIMATE BARRIER TO TRADE?

The simple speech “I have got something you need and I need something you have got and I want it” [Professor Pedley, lectures] is basically the leading phrase in the world trade and actually the main reason of the trade. The International Marketing deals with identifying and meeting human and social needs, not only on level local markets, but also on multicultural international level.
Many transformations appeared in the early years of the new century, played a role for the world trade. The eastern enlargement in the EU following by the Lisbon Treaty, the expansion of the European Market and etc., the changes in the Arabic world, steep growth of the Chinese economy and historical decrease of the US rating, all those events led to an increase on the complexities of international marketing. Hence, as we can see in nowadays, many companies going far beyond exporting and simply become more involved in the local marketing environment within a given country or market. In this case, by penetrating to the new market, either by indirect or direct import and export or by investing, we need to find out how to adjust to an entire new marketing strategy, in order to fit into new market demands.
The first important challenge is the understanding of the different environments: the understanding of a completely new and different culture, a new economic system and a new political environment. These are the major tasks for every international company which is looking for success in the foreign markets. These, including the official economical trade barriers like quotas and tariffs, bring some negatives for foreign companies.
First, let us clear the meaning and give a definition of CULTURE. According to the Wikipedia, culture represents “all the ways of life including arts, beliefs and institutions of a population that are passed down from generation to generation”. Here is the place to say that those beliefs and institutions transferring from one to the next generation are changing a bit the essence of the culture trough the centuries. “Some other cultures have being defined by national borders, especially when the countries are isolated by natural, geographical borders. Examples are the island nations (Japan, Ireland, Australia) and peninsulas (e.g. South Korea)” [CH_04_GMME5ed_Global_Cultural_Environment_final_4-22-09, p.5]. In that case, the cultural traditions may remain the same with years and not get influenced. But nevertheless, this is not a real impediment for countries to cross these barriers.
As we stated previously, one of the central trading barriers is culture. There are many aspects of culture, but the main ones that directly affect trade are the social, economic and political cultures of a state (or a nation). We are using the scheme from the expert literature for the complex view of cultural environment of the country. For purpose of this work, we will choose only few aspects and analyze them deeper.
The following chart here shows the major aspects of the cultural analysis.

Culture Adap-tation
Culture Change
Education
Intermediary Actions
Reference Groups
Work and Leisure
Religion
Family
Cultural
Analysis
Language

Scheme: Cultural Analysis Adopted from: JEANNET, J. P. – H.D. Global Marketing Strategies, 1998.

As we see on the graphic, seven of the components are pointing the inside circle, while the Culture adaptation and Culture change are presented as two-way influenced by the rest elements. The culture adaptation- and change are reflected by the human behavior.

Language In the context of international marketing, we consider language as the primary factor of cultural analysis, because it has a major impact on the international marketing strategies in different cultures. “Language has been described as the mirror of the culture” [L S Walsh, 1993, p.22]. Language, as the key component of culture forms, is not only the channel of understanding the message but it also “expresses the thinking pattern of the culture” [Jeannet/ Hennessey, 1998, p.72]. Nowadays, we are experiencing the time of transmitting international words to many different languages. The massive source of this phenomenon is not only Internet, but also the international marketing which transmits names of trade marks, their mottos into different languages without any change, any adaptation. In this context we have to be careful, while the existence of languages particularly sensitive about their national expressions and take care not to transmit foreign ones into their language. Instead they use the national version of “internationally broadly spoken” word. Language, as a very important aspect of culture, might be the ultimate barrier to international trade. On the first stage, the developing strategies stage, the marketer does not understand the environment he wants to penetrate. It is difficult to find the best way how to attract potential costumers, who speak and even think in different language. At the second stage, the legal and administrative stage, the marketer needs to not only understand the legal conditions and environment of the potential target country, he needs to know this environment. For this he can use the person who can speak languages, our native and the language of the target country and know legal environment well. To overcome the language barrier can be more difficult in particular countries, which protect their culture and domestic environment strictly and want to keep it pure of too intense foreign influence. In some countries where more than one language is spoken, the minority language may become a much-esteemed expression of a separate cultural identity. Hence, it will be more difficult for the foreign companies to adapt into the local markets. An example is Quebec, “where a Charter for the French Language enforces the right of every person to communicate with the public bodies and business firms in French, now the province’s only official language. Bilingual French and English signs are not permitted. More than a quarter of a million Anglophone Canadians are said to have left the city of Montreal on language grounds” [L S Walsh, 1993, p.24]. Definitely helpful in overcoming the language barrier is the translation of not only the legal documents, but also sales materials. The impact of the language is huge. Therefore the appropriate name of the product or the brand name is important and companies pay more attention to naming their products as neutral as possible for as many cultures as possible. Religion Religion can be the biggest factor that one can come across in the social aspect of culture. Religion is the barrier to the trade, because it connects basically the traditions based upon the religious customs. The barrier might be not eating pork in Islamic states, or not eating beef in India. With the existence of such a barrier, the marketer must be able to offer the adequate substitute of the original product to the market to be adopted. One of the religious traditions that have the greatest impact on international marketing is Christmas. It is fascinating to observe how soon the shops start to remake their windows for Christmas. In Harrods, the Christmas offers start already in August. This has its rational reasons. The foreigners from East Asian regions spending their summer in Europe return home at the end of August and they already shopped for Christmas there. On the other hand, the Islamic religion based on the Koran (the holy book), “provide guidance for a whole range of human activities, including economic behavior too” [L S Walsh, International Marketing, 1993, p.20]. It means that the Islamic cultures lays on what is allowed and accept from the society and that will be the major criteria of one successful business deal. For example, to sell the new colorful series of H&M swimming suit (bikini and top) in Saudi Arabia seems to be impossible, because the women dress code in Islamic regions do not allow naked part of the body to be shown public. Is it not then the religion a barrier to trade? From the above stated example it is clear that the marketer has to know the religious traditions and customs before entering the market to take advantage of this knowledge, or to avoid the unexpected loss of sales. Family Family is the fundamental cultural group. Because the individual gains his customs and habits generally in the family surrounding, international marketing has to focus on this cultural element too, “particularly since the family is a primary reference group and has always been considered an important determinant of purchasing behavior.” [Jeannet, Hennessey, 1998, p.84]. To overcome the barrier of different types of families (nuclear, extended, one parent) the marketer needs to study the culture, the history and the political issues of the country he wants to penetrate. “The Germans have the 2nd highest point on individualism, right after the Americans. It means the tendency of people to look after them selves and their immediate family only.”[http://suite101.com/article/german-business-culture-a45268]. The purchasing power of the family unit may differ not only by the region, but also by the number of children, women employment or the social policies of the government. Education The degree of education in one country is of a big significance on how the consumers respond to the submission of new products distributed from foreign companies. “In most West countries full time schooling is compulsory to age 16.”[L S Walsh, International Marketing, 1993, p.20]. In Germany before taking the bachelor degree, it is obligatory to make praxis either into the countries or in one of the EU members. After graduating the high school, the decision of the young people to continue their educational process influences “literacy level and economic development of the countries” [Jeannet, Hennessey, 1998, p.83]. Between the less developed, developing and developed countries the education’s quality is different. In less developed countries using the printed media as a tool for advertising new product will not have the same success comparing the same situation as in one developed state. As we clarified above, language, religion and family (cultural forces) plus education, have a major impact on the buyer behavior and on the international marketing as a whole. An example of how easily those trade barriers can be crossed, are few companies such as Coca Cola or McDonald’s. They seem to have no real problems with these culture barriers and are able to sell their products more or less as standardized products. Although, McDonald’s does not sell ham in the predominantly Muslims countries such as Saudi Arabia, also in their menu in Hindu areas in India is missing the beef as a food ingredient, but they still keep the high incomes from sales in these countries. Coca Cola writes its brand name in the Arabic Language in the whole Middle East. To conclude is the culture an ultimate barrier to trade? Definitely, those firms that cross the culture barriers cannot have the same fortune if they choose another analyses then the cultural one. One example is H.J. Heinz and their attempt to promote the product – oatmeal on Chinese market. After a previous failure of adjusting the traditional baby’s breakfast – the oatmeal, very popular for many Americans, but completely unknown to Chinese mothers, the marketing research based on cultural perceptions in China, shows that Chinese were not familiar with oats. The whitebait (small fish) was a staple food for babies in this country. The oats whitebait combination had big success in China’s baby food market. Without the knowledge of one culture, the globalization of the trade will be meaningless. Also in that spirit of thinking we can conclude that culture is the final and the biggest trade barrier. The challenge of standardization in the international marketing is extensive. Although the cultures are different and people want to keep their unique cultural identity, buying the standardized products, same for consumers all over the world is just fashionable and “in”. So, the one strategy is to keep the product standardized, to keep the image unchanged and on the other hand, to use the unique cultural distinction for inventing the unique way how to sell our product. The willingness to keep the traditions and the power of already learnt habits is so strong, that the strategy to standardize might not be successful. Nowadays, people are used to having what they want, when they want it and how they like it. Therefore is worthwhile to spend time and money on inventing suitable adaptations of our products to be demanded for in absolutely different cultures than our own. Consumers are from time to time bored by buying the same product all time long. For that reason they try something new. If the something new fulfills the basic requirements of flavor or size or design, they adapt, just as the product was adapted to them. That is why the research and examining is in many cases worthwhile and this could be the way of how to overcome the culture as the ultimate barrier to trade and make the culture a challenge for international marketing.

SOURCES: Lectures - International Marketing, Prof. M.Pedley http://en.wikipedia.org/wiki/Culture L S Walsh, 1993, International Marketing 3rd Edition; Financial Times/ Pitman Publishing; Jeannet/Hennessey 1998, Global Marketing Strategies 4th Edition; CH_04_GMME5ed_Global_Cultural_Environment_final_4-22-09, Readings on Moodle; http://suite101.com/article/german-business-culture-a45268 http://suite101.com/article/cultural-trade-behavior-a42333