Corruption in Global business: A Taboo Subject

As featured in Dynamic Export eMagazine Feb/Mar 2017.

When speaking on the topic of international business protocol, there are numerous do’s and don’ts as well as some taboo subjects that are best avoided in conversation, no matter how candid that cross-cultural discussion may be. Corruption is one such subject.

Avoiding it in conversation may be wise, but ignoring it exists and failing to understand how it might impact your export venture may prove disadvantageous.

Corruption exists on some level within national borders and around the world. Yet it is not often regarded by those entering into partnerships as a factor that might influence their cross-border engagement.

For Australian exporters, whose key markets lie predominantly within the Asia Pacific region, data released by the World Bank in December 2016 would be of particular interest.

The data reveals that 1 in 3 companies feel constrained by corruption when dealing with governments.

In South Asia, 40% of the companies surveyed consider corruption a major constraint. In this region, over 45% expect to give gifts to secure contracts and 26% expect to give gifts to “get things done”. In East Asia and the Pacific, 16% of respondents considered corruption is a major constraint, 36% and 39% expect to give gifts to secure contracts or “get things done” respectively.

As exporters from a relatively stable economy with checks and balances that facilitate efficient trade, the behind-the-scenes complexities of doing business in markets that are culturally and politically diverse can hamper joint venture progress. Even when there is no language barrier or the legal system is closely attuned, a lack of knowledge or understanding of the structures that are intrinsically related can jolt optimistic outlooks.

What can exporters do to avoid getting into strife?

The answer is – do your homework seek the assistance of the relevant business Council or Austrade and Invest time and resources to clearly understand a potential partner’s ecosystem.

In some countries, governments and businesses have a symbiotic relationship and is one that is fundamentally vital to partnerships getting off the ground.

Investigate what are the values that drive the undercurrent of your target market culture and which inevitably impact business in that region. Religion and law may not only be intertwined but also permeate every aspect of society including trade. Being sensitive to this aspect of a business culture will help make it easier to work within that complexity.

Most important, take the time to build strong personal relationships. And whilst this may seem simple enough, in terms of interpersonal capability, “trust” is the central theme. However, trust and, more to the point, what characteristics this value, is a variable concept.

Trust and credibility

What attributes of an individual respond to gaining the trust of another? Track record may be what settles the question of trust and credibility for some but perhaps a strong, long-standing connection to an associate may be all that’s needed to inspire confidence in others.

Ethical approaches or standards can also vary. Contracts may be seen as a guide in some cultures whilst in others the document that is ultimately signed is treated as a very specific framework by which both parties must adhere to.  When something does not go to the letter of the contract document, how is that perceived by the parties? Is the contract suddenly “broken” and subject of litigation or merely open for flexible interpretation and ongoing modification?

For Australian exporters, strong relationships are paramount to doing business in the Asia Pacific region – a region that is diverse as its complex and one that includes six of Australia’s top 10 export markets.

These are market with business cultures that place a high level of importance on interpersonal connections and look to partners with whom they can foster strong, long-term business relationships.

International business will continue to be influenced by the nuances of culture. Building capacity and conducting thorough background research into the partnerships and networks involved will help clarify the optimum approach to take.