Over the past ten to fifteen years I’ve worked with a lot of major global law firms – helping them to build effective global networks across geographies, cultures, language and technology. In that period, I have noticed some key areas which, if not addressed, can have seriously negative impacts on a global law firm’s ability to deliver on the promise of a seamless service across multiple jurisdictions.
I make lots of keynote speeches at law firm conferences (partner retreats, practice areas training weekends etc.) at which I often speak about the impact international cultural differences can have on a globalising law firm and just before I speak I am introduced by the Managing Partner or Practice Head of that particular firm and they always talk about the cross-border cohesiveness of that firm. They always say, ‘What makes this law firm unique is A, B, C and D.’ And every firm I work with says more or less the same thing! It is really easy to write on a website that you offer your clients a seamless service across the jurisdictions, but I think everybody knows that dream of a seamless service is much more difficult to achieve in reality than it is to write on a website.
So, what areas do firms need to focus on if they are to gain maximum traction from their global networks? Here are 6 key topics that come up time after time when I’m working on cross-border effectiveness with a variety of firms:
Lawyers always complain that they simply don’t have enough knowledge about the firm’s global capabilities. This may seem almost unbelievable after so many years of law firm global expansion but almost all the partners and associates I work with tell me that they find it really difficult to find the right lawyer with requisite experience in an overseas office. The technology available to them simply doesn’t have the search functionality they need to help them pinpoint a particular lawyer in one of their offices in another jurisdiction – and even if the search functionality is available the data simply hasn’t been uploaded onto the system.
Bios on lawyers in other offices tend to be static, bland and impersonal. How can I tell if that lawyer has the knowledge, experience and charisma to service my client to the level I expect? Will I reduce my exposure if I don’t refer work to another jurisdiction within the firm network on the assumption that if anything goes wrong it won’t be my fault?
I would say that the two of the biggest barriers to successful cross-border cross-selling are lack of knowledge and lack of trust. Let’s face it, all major global law firms wrestle with the challenges of cross-selling (both cross-practice and cross-border) and these can only be addressed through working assiduously on a targeted, long-term strategy aimed at developing trust across the firm and this has to be underpinned by effective knowledge dissemination.
Many of the difficulties associated with developing ever greater levels of cross-border integration within the law firm environment can be traced back to the fact that cross-border activities are by their very nature conducted in a virtual environment. Almost all the research you can read points to the fact that effective virtual working is much more challenging than working with local colleagues and yet hardly any law firms have addressed this as a learning and development priority – at least to my knowledge.
When I work with law firms on the challenges of integration almost all the partners and associates I deal with raise a host of difficulties which they feel block greater levels of cross-border co-operation. These challenges are wide-ranging but include such issues as:
All these issues are real and can result in cross-border inefficiencies and poor take-up of cross-border opportunities – but all of these can be addressed through training and better project management capabilities. Other industries have recognised that effective cross-border working is imperative and equip their employees to rise to the challenge. For some reason the legal sector seems loath to take this issue seriously – it simply isn’t seen as ‘core’ but is very definitely is.
If you want people to be able to work seamlessly across the boundaries of culture, language, geography and technology, global cultural fluency becomes a ‘need to have’ and not a ‘nice to have’. But what does cultural fluency actually mean in a law firm context and how is it developed?
It seems an obvious observation but, if people are working with colleagues, clients or other stakeholders in another jurisdiction it seems likely that overseas contacts will have differing priorities, ways of working and expectations than contacts in one’s own jurisdiction. Cultural fluency is therefore about finding out what those differences might be, how they will impact on any interactions you might have and what approaches might need to be taken to ensure that cultural dissonances do not cause disruption.
The starting point is for people to accept that global cultural differences can have a significant impact across a wide range of business activities but then people need to develop knowledge. People need the detail around what the key cultural differences might be and then work out how to overcome any potential problems.
Cultural knowledge can be gained in a number of ways. The most common method of learning seems to be through experience. Experience can be the best teacher,
but it is often the most expensive one. If your learning results in mistakes and a dissatisfied client, then the cost is very high. We have found that the best ways to gain cultural knowledge are:
If you are running a complex multi-jurisdictional matter you are basically managing an international project with a legal slant. Any complex project requires good project management skills and technology to support it and this is even more true if the matter has an international dimension. Project management is not really something that should be learnt by osmosis – it is a discipline in itself and good project managers are worth their weight in gold.
Most law firms are competing in a legal landscape where fixed and capped fee deals are the norm. In a fixed or capped fee environment, internal efficiencies become the key to matter profitability. If your work is inefficiently managed, it seems inevitable that matter profitability will be reduced and conversely that good matter management will increase profit levels.
Historically law firms have been slow to invest in developing project management skills within their lawyer base and conservative in their moves towards employing full-time, dedicated project managers. Admittedly, firms are slowly improving in this area, but these trends need to accelerate. All firms need project managers and all lawyers need project management skills.
The answer to many of the challenges of law firm integration can be found with the effective deployment of relevant technology. Lawyers always complain that they just cannot find out the relevant internal firm information they need when they need it. Law firm tech systems have tended to grow piecemeal with new technologies being deployed to answer specific problems but without too much thought being given to a larger holistic picture. In addition, firms often lack consistency in systems across multiple jurisdictions meaning they are inherently disconnected. I think that most law firms would not start from where they currently are if they were trying to develop systems to overcome the challenges of fragmentation and knowledge sharing.
The problem is that not many of the technologies thus far deployed are specifically designed to enhance cross-border, cross-practice, cross-sector collaboration and integration. Most current tools solve a specific problem, but the problems of integration are multi-layered and multi-faceted.
Firms are crying out for the implementation of good internal community-building social platforms which can help people easily share information and build relationships. These technologies exist (Carii is a great example of a social collaboration tool which could bring enormous benefits to law firms) but there seems to be an unwillingness to explore these types of technologies.
I suppose there are two challenges in this area. The first is to get firms to invest in the systems in the first place and the second is to get lawyers to actively engage on the platforms. I really believe that the right community platform tool would see an active take-up – especially from the younger lawyers and partners who are already very fluent in the use of tools like LinkedIn, Facebook, Twitter etc.
When discussing challenges of cross-jurisdictional, cross-selling the elephant in the room is usually remuneration and recognition for referrals. We start off talking about many of the issues I’ve outlined above but eventually the conversation comes around to money. People tend to feel that cross-referrals are either inadequately rewarded or that the systems are so complicated that they are off-putting.
Each firm seems to have its own unique approach to remuneration in this area, but the outcome seems to be the same – dissatisfaction leading to lack of activity.
I ran a whole partnership development programme which looked at improving cross-selling but was told in advance that we were not allowed to discuss money in the sessions. Of course, as soon as we started everybody wanted to talk about financial recognition ‘pay me for it and I’ll be more inclined to do it.’
There isn’t one, easy solution to the problem but the answer isn’t to do nothing. This issue needs to be addressed, and it needs to be tackled as a matter of urgency as a precursor to improving cross-referral levels.
The challenges of effective global law firm integration are real, and they will become more pronounced as firms continue to expand internationally. One thing is certain – these challenges will not be resolved by ignoring them. Decide where you currently are on your march to full cross-border integration (and be honest about it), think about where you need to be and then make the decisions needed to take you on that journey.
Hopefully the six focus areas I’ve outlined above are a good starting point.
If you’d like to discuss these issues in more depth please contact me.
The economic pundits say that India will be the world’s second-largest economy by 2030 (with China top and the USA pushed into third place). Going back a decade or so this assertion might have seemed nothing more than a fantasy, but everybody now seems to agree that India is finally going places. With a rapidly growing population of 1.3 million which boasts a vibrant middle class and a demographic which is heavily weighted towards youth, the potential of India seems almost limitless.
In the past, many developed economies saw India as a destination for the low-cost outsourcing of back-office or R&D-type functions and, whilst this area of the economy continues to thrive, India needs to be viewed in a very different light these days. India is, quite simply, the world’s largest potential market for goods and services. Where China has already developed much of its infrastructure and service economy, India still has enormous work to do. Look around on the streets of Delhi, Bangalore or Chennai and the need for development is obvious – move into the second or third tier cities and this need becomes even more acute.
What does all of this point to? Opportunity. India is a land of endless possibility where the people are aspirational, energetic, open and eager for progress.
So, what is your corporate strategy with regard to India? Don’t have one? Well, it is high time you started to put one together. We have worked on many India projects and here are some key areas we feel you need to focus on when looking at India as a potential market.
All of the major India-based outsourcing projects we have been involved with have thrown up enormous cultural challenges. The underlying factors which drive Indian business culture are deeply rooted in the country’s religious, societal and ethnic past. Clients are often fooled into thinking that because Indian’s often speak good English and because the country has a western-influenced history, that the cultural challenges they might face will be minimal. Nothing could be further from the truth.
You simply cannot hope to succeed in India unless you gain a very good understanding of the local cultural landscape. Some of our clients come to us at a very early stage of their India journey and ask us to run an India cultural awareness training programme to help them work effectively in the Indian environment. However, many more of our clients come to us and say, ‘we have been in India for a couple of years now and we are finding it very difficult – what are we doing wrong?’ Factoring some key cultural aspects is essential from the get-go.
The biggest mistake organisations make when looking at India as a market is that they fail to do adequate research. To say that India is enormous would be a massive understatement. A country with 1.3 billion people, multiple languages, ethnicities, climates and geographies cannot be approached as a homogenous unit. You can’t really have an ‘India strategy’ – you probably need multiple India strategies.
The first question has got to be is: ‘Is India the right market for your products or services at this stage of your development, taking into consideration the current needs of India?’ This is not an easy question to answer. So many factors come into play when addressing this – what is your price point, and how does that sit against the competitive landscape in India? Who are your major competitors and how are they faring? Can you afford to invest in India knowing that the returns might not accrue for a number of years? Which city or region would be a good starting point?
All of these questions need answers, but good quality information is not always easy to come by in India. You will need to engage people on the ground in India who can really get under the skin of the local market and get back to you with honest, trustworthy answers to key strategic questions. Don’t convince yourselves you can do all your research via a laptop back at base – you quite simply can’t.
There are basically two ways to structure your entry into India – direct or indirect. This is fairly obvious – you can start your own permanent establishment, set up a rep or liaison office or form a joint venture with a local operator. These approaches would be deemed to direct entry models. Indirect models would include agency or distributor arrangements in-country or even by starting to sell through an online presence.
It is really easy to outline the options but a completely different situation when it comes to deciding which of these is the optimum route for you. All the options have advantages and disadvantages and the right solution will be determined only after a close analysis of your objectives. One India expert once said to me, ‘Entering the India market is free but leaving the market can be really expensive.’ This is such a true statement. If you don’t get the structure right in the first place the consequences can be very damaging. Get the right advice from knowledgeable people at the outset. In our view, the best approach is to see India as a journey. Start small, venture, validate each step of your journey and only ramp up when you are convinced the rewards are attainable.
India is full of really great potential employees. On the whole, Indians are well-educated, ambitious, enthusiastic and motivated. Lack of local talent definitely isn’t the issue; finding and retaining good people though can be very difficult.
The Indian employment market is very fast-moving. Indians are always on the lookout for ways of improving their career prospects, job titles and income. How are you going to convince good people that you offer them a bright future? Why should they join your company when there is a myriad of opportunities for the type of people you are looking for?
The recruitment process can be very complex, and you need to be ready to move very quickly once you have identified the right candidate. Hesitate for a few days while you seek approval back home and the likelihood is that your ideal hire will have accepted a role elsewhere in the interim.
Job titles or ‘designations’ are incredibly important in India. I’ll repeat that – job titles are incredibly important in India. Job titles reflect where a person is in terms of societal and family recognition – they can even impact on your ability to raise a loan. If you insist on keeping your job titles in India in line with how they are ‘back home’ you might find that you simply cannot get people to accept the position. Take local advice on this. Read this article by local HR expert Rohan Moktali which has lots of good advice.
Not all Western professional advisers really ‘get’ India? Do yours? If they say they do, what depth of experience do they actually have of successfully advising clients on complex India-related matters? You need to dig into this.
You might find that, as far as India is concerned, you need a whole new set of accountancy, tax, legal, HR and recruitment advisers. There are lots of really good people who regularly give great advice to people who are entering and developing the India market – you need to make sure that these are the people you are talking to because there are also many people giving very poor advice where India is concerned.
By the way, don’t necessarily expect advisers based in India to be cheap. Good people know their worth, the value they add to their clients and they charge accordingly. Our experience is that those clients who chose advisers in India based solely on price usually come to regret their decision further down the line and then need to turn to higher-charging professionals who have to untangle an unholy mess.
The first point to make here is that, although millions of Indians speak really good English, not all Indians speak English. In fact, a lot more people in India do not speak English than do.
However, it is likely that the people you are looking to hire or work with will have a very high level of fluency in English and this fact implies that there will be few, if any, language barriers. Unfortunately, this is not the case. Almost every client we have worked with on India related matters have cited language barriers as a major obstacle to successful business interactions.
The most common complaint people make is with regards to accent. People say that they often struggle to understand Indian accents. It sometimes makes me smile because the people who are making this complaint are often from Texas or Glasgow or Madrid – and have really strong accents themselves! Indian accents are only a problem when you are not familiar with Indian accents just like Scottish accents are only difficult when you haven’t had much contact with Scots. If you are looking at India as a long-term investment, take the time to acclimatise to the Indian accent – this comes quicker the more regular interaction you have.
A more challenging aspect of working with India is that people don’t always say what they mean. People in India generally want to tell you what they think you want to hear because bad news is difficult to convey. The obvious answer to this dilemma is to not tell people what you want to hear! If you say to people, ‘we are OK for Friday’s deadline, aren’t we?’ the answer is likely to be ‘yes’ but if you ask, ‘where are we exactly with the process’ you might get a clearer answer.
You might find you need some advice in this area – we’re happy to help.
Lots of companies find that, although there is a huge potential market for their product or service across India, certain adaptations need to be made so that everything really is ‘fit for purpose’ in an Indian environment. The changes you need to make might be very minor or they may be significant but before you attack the market you need to do sufficient research to enable you to act. This is another area where quality, in-depth research is invaluable.
India is vast and has multiple climatic and geographic differences. Think of India as a continent – would you address the whole of Europe in exactly the same way? Would you expect Swedes and Greeks to respond to your offering in a uniform manner?
Do not just take your successful China strategy and think you can apply it piecemeal on India. India is a unique, complex and varied country which needs to be approached accordingly. Start with a blank piece of paper, determine your objectives and work back from that – forget the ‘cut and paste’ function.
In fact, the approach you successfully apply in Delhi might not even work that well when you move down to Bangalore. All of this might sound very complicated, but India is complicated. It is also soon to be the third largest economy in the world and cannot be ignored simply because it isn’t easy.
Things don’t always happen quickly in India for several reasons. It is important to understand how important it is to build deep, long-lasting personal relationships with potential partners, employees or clients. Indians want to take the time to get to know you before deciding to business with you – in fact, I’d be wary of anybody who wants to jump straight into a relationship. Relationship-building takes time, patience and funding. You can’t really circumvent this process and you need to engage in it with willingness and sincerity. You will eventually reap the rewards.
Not only will you need patience, but you will probably also need investment and cash flow. Return on investment might take longer than you originally planned, and you will need the financial courage to stick with it for the long-run. (You might also at some point need the courage to decide that your India venture just hasn’t worked…).
These top ten tips are not really in any particular order of importance. Don’t think that you can use this list as a shopping list from which you can buy some and ignore the others. All nine tips form a holistic whole. All are important.
Global Business culture runs India cultural awareness training and market-entry strategy workshops for clients on a regular basis. Although our clients vary in size, sector and level of maturity with regard to India, they all have one thing in common – they recognise that India is different and can be difficult if not approached in the right way.
If you would like to discuss how we might be able to help you with your India issues, please contact us for an initial conversation.
China is on course to become the world’s largest economy by 2030 and its political, technological, cultural and economic influence will continue to grow at pace over the coming years. Any company who is looking to secure its continued success has to have a China strategy.
That strategy might take many forms. A strategy might be purely defensive as organisations struggle to envisage how they will cope with the future competitive pressures coming out of China across a wide range of products and sectors. Hopefully though, most corporate strategies which address China will look at how companies can capitalise on the burgeoning domestic consumer and B2B market within the world’s most populous country.
Any strategy needs to take into consideration certain key aspects of doing business in China and in this article, we look at the top ten areas to focus on:
China is different, and it therefore needs a different approach. Ditch your preconceptions about how business ‘is’ or ‘should be’ done. Take off your own cultural bias and look at China afresh. You cannot hope to succeed in the China market unless you study the local business culture. At Global Business Culture we run very regular cultural awareness training courses for people who are starting their China journey as well as people who have been operating in the China context for a while. People often want to focus on the superficial cultural issues like business cards or the use of chop-sticks but these areas are largely irrelevant. You need to start to understand the mindset of Chinese consumers and business partners. What makes them tick? What are their hot buttons?
You need to really focus on understanding some key Chinese cultural concepts and how they impact on day-to-day business interactions. In the China cultural awareness programmes, we run at Global Business Culture we always dig deeply into such core issues such as the importance of ‘face’, how a strongly hierarchical mindset impacts on information flow and decision-making and why building deep, lasting relationships are key to success.
China is vast, and it is very regional in nature. It might not be too much of an exaggeration to say that you cannot really have just one China strategy – maybe you need multiple strategies. Where will you start on your China journey? Do you go to the well-trod areas such as Beijing or Shanghai or would you be better looking further afield where the competition might be less fierce and the pickings potentially richer?
What are your competitive advantages from a China market perspective? Are your prices competitive? Will you need to develop a lower pricing point to compete with low-cost local companies or does your ‘foreign’ product have the potential for a price hike? You might find that your product could actually bring a premium due to its uniqueness and attractiveness in the market. Whatever the answers to these questions, you absolutely have to get it right from the outset as this (along with getting your cost structure right) will probably ultimately determine success or failure.
You need to do thorough and effective research. Don’t try to penny-pinch at this stage – it really is a massive false economy. And China research cannot be solely desk-top based. You need to get out into the field, and you need to work with local advisers who really understand your objectives and who will talk the hard truths to you.
Get your structural approach to the market right from the beginning. How do you intend to approach the market? Do you want to set up your own Permanent Establishment in China from the outset? If so, why and under what legal structure? Getting these issues correct from the get-go will probably determine your ability to repatriate profits, ensure the maximum tax efficient structure is in place and just as importantly how easy it is to retrench should you decide that China is not the market for you in the long run.
Is there a different route into the China market that doesn’t involve the cost of setting up your own permanent establishment? Could you put your toe in the water by trying an online strategy to start with and if so, how might your online China strategy need to differ from your online strategies in other, more familiar markets.
Might a distributor or agency model work for you in the early stages and if so, how do you find a distributor who you can trust and who will have your best interests at heart? (We know of distributors who have taken on overseas partners to keep them out of the market…).
Recruiting good employees in an overseas market is much more complex than people imagine and needs really careful consideration.
Firstly, as a new entrant into China with no track-record, why would ‘good’ people want to work for your organisation? The obvious answer might be that you can afford to pay them above the going market rate, but this is a very dangerous route to take. If you pay the first employees well above the market rate to tempt them in, you’ll need to do the same for all subsequent hires and how can you hope to develop a profitable local company when your cost base is out of sync with your competitors?
Secondly, when it comes to hiring local Chinese employees do you really know what ‘good’ looks like? Imagine you interview six candidates for a role which is China market facing – how can you tell which of those six candidates will be most effective in a China context? It’s difficult enough to get recruitment right in your own cultural context but infinitely more difficult when operating in a market and business culture which you might have only a superficial understanding of. People are often guilty of recruiting locals in China who fit into the mould of people we might recruit ‘back home’. This is usually a mistake and comes back to haunt you in the future.
Who will you get your tax and structuring advice from regarding your potential China strategy? It seems like a naive question, but organisations often look to their historic advisers to help them look to the future. Your current advisers may have served you well over the years and they may understand your business, but do they understand China and all its myriad complexities?
We often advise our clients to review their panel of strategic advisers when they start to aggressively grow across the globe. You really need advisers who ‘get’ China and who have a proven track-record of helping clients like you navigate its often turbulent and difficult waters. This doesn’t only apply to your accountancy and tax advisers but also to your lawyers. Not all law firms are competent on China-related matters and getting, for example, contract issues right in the early stages can help you avoid difficulties down the line.
You might also need in-country China advisers to help with issues such as market research, distributor search, translation, recruitment, office space and a host of other ‘nitty-gritty’ stuff. Lots of providers offer these services (often under one roof) but not all of them deliver what they promise. Take your time to choose the right local advisers and always ask to speak to previous clients from your neck of the woods so you can get an honest appraisal of their capabilities. (Don’t necessarily expect local, on the ground advice to be cheap in China. Good people know their worth).
English language levels in China are patchy at best. You come across a thin layer of good English speakers, but that layer is quickly exhausted. How will you deal with the undoubted linguistic challenges you will be faced with? Do you have Mandarin speakers within your organisation at home and, if so, how can you utilise those resources? If not, will you need translators and how do you know if they are accurately translating what you want to convey. Difficult messages are difficult to convey Chinese to Chinese and your words are often ‘adapted’ to make them acceptable to the Chinese counterparty.
Do you need product literature to be translated or maybe a new website based in China, SEO’d for Baidu and designed in a way that will be attractive to a China audience? Who will do all of this for you and how much might it cost?
Don’t underestimate the language challenge and put your approach to this issue at the heart of your China strategy.
Your products and services need to be fit for purpose in a China context. Don’t think you will just be able to ‘pick and pack’ everything in its current format and just place it successfully into China. You might be able to do this – but you’d be very, very fortunate if you can.
Adapting effectively to local market conditions and expectations is essential but you will not be able to do this unless you have a good understanding of what those market conditions and expectations actually are. This is again where good quality, in-depth research is so important. Get out into the market, study your local and international competitors and how they do things, test your findings and adapt accordingly.
As I said, China is enormous, and you might find that you need to adapt your products and services differently in different regions. That’s a big task but the potential rewards are also sizeable.
We have worked with clients who have taken one of two attitudes. Some clients say, ‘we have a global approach to things [could be product design, could be recruitment criteria, could be contracts] and we apply this in every country we operate in.’ This rarely works in China. China has its own dynamic and it plays by its own rules China is big enough and strong enough to do this where places like Vietnam, Taiwan or Indonesia might not be.
Other clients have said, ‘we entered the India market five years ago, this is the way we did it and we have been reasonably successful. Therefore, we are going to take the same blueprint and apply it to China.’ Again, this approach rarely works.Start with a blank piece of paper and a set of objectives. Work back from that – don’t let past experiences (good or bad) cloud your approach to new markets.
Things take time in China for a number of reasons. It is important to keep front of mind the importance of relationship-building within a China market context. People are loath to do business with you until they have decided that you are the type of person they would be happy and comfortable to business with in the long-run. Relationships unfortunately are not formed overnight but take time, patience and funding. You can’t really hope to go to China on a one-off trip and come home with a bunch of contracts in your pocket.
You need to factor in a longer lead time and all the associated costs and cash-flow implications of this. The organisations who fail in China are often those who don’t have the stomach or deep enough pockets to play the long game. The Chinese respect people who are obviously investing in China as a long-term strategy. Be patient and you’ll be rewarded; push for quick results and you are likely to push the end result further into the distance.
These top ten tips are not really in any particular order of importance. Don’t think that you can use this list as a shopping list from which you can buy some and ignore the others. All nine tips form a holistic whole. All are important.
Global Business culture runs China cultural awareness and strategy workshops for clients on a regular basis. Although our clients vary in size, sector and level of maturity in relation with regard to China, they all have one thing in common – they recognise that China is different and can be difficult if not approached in the right way.
If you would like to discuss how we might be able to help you with your China issues, please contact us for an initial conversation.