Doing business in Central & Eastern Europe – the lowdown

doing business, central and eastern Europe

Last month I attended a masterclass called Business Culture Workshop: Central & Eastern Europe, hosted by the Department for International Trade. Aimed at SMEs in the West Midlands, it was an insightful event for Export Managers, European Sales Directors, Market Research Managers and Heads of Business Development.

Naturally, language and culture were on the agenda and how these factors, amongst others, impact the ways UK companies do business in Central and Eastern Europe. As we work with a plethora of companies that export to this region, I thought it would be useful to explore in more detail how to get business communications right.

Incidentally, you may find our guide to Languages in International Business useful. It’s a great starting point for any company looking to export to a new market. Download your copy here.

A brief guide to business communications in Central and Eastern Europe

Having a deeper cultural understanding of the people you plan to do business with builds trust and respect. It will also help you to navigate business etiquette, negotiating styles and other factors that might be different from how we do business in the UK. This will help you to be prepared and avoid any potentially awkward situations as a result of a lack of cultural awareness.

  1. Historical and cultural background

Grouping all Central and Eastern European countries together is quite problematic. However, they are united by one thing: they were all behind the Iron Curtain, so have experienced different economic growth to that of Western Europe.

To some extent, that’s where the similarities end. Countries in this region have their own languages, cultures, histories and ethnicities, so it’s imperative to get specific insights into each country you plan to do business with.

Of course, there are also day-to-day similarities. For instance, cuisines may differ between countries, but restaurant etiquette is very similar. Factors like punctuality, dress code and using formal titles are also viewed in the same way across the region.

It’s definitely worth digging a bit deeper to uncover those factors that might smooth your path to doing business successfully, or could hinder your prospects if you’re not aware of them.

There is plenty of information available about how these countries have developed economically, culturally and politically. It’s easy to find out about a country’s demographics, geography and history. But it’s also essential to understand less visible factors such as values, beliefs and attitudes to age, gender and social standing.

Just to give you an idea, for Czechs, the impact of losing their nobility in 1648 still resonates today. As a result, they resent power being imposed from the outside. Businesses wishing to work with trading partners in the Czech Republic should try to avoid being too autocratic and take a less hierarchical approach.

Given the wide geographical spread, another important distinction lies is linguistics. Most countries in Eastern Europe share the Slavic group of languages: Czech, Slovak, Polish and Bulgarian. But Latvian and Lithuanian, in contrast, belong to the Baltic group, and Romanian has Latin origins, like Italian and Spanish. Hungarian and Estonian languages belong to the Finno-Ugric group.

central and eastern europe

  1. Key considerations for intercultural communications

Once you have a better understanding of the culture of the people you want to do business with, explore how different things might affect intercultural communications:

Attitude to gender: when visiting Poland, women shouldn’t be surprised if older men kiss their hands. In the Czech Republic, women are treated very courteously and shouldn’t be addressed by their first name unless you’ve been invited to. While discrimination based on sexual orientation is forbidden in Bulgaria, the Bulgarians do have very conservative views on same-sex relationships, and there is no legal recognition of same-sex couples.

Attitude to risk: attitudes to risk and uncertainty vary between different countries and cultures. Czechs, for example, don’t like uncertainty and therefore prefer structure and careful planning to minimise risk.

Attitude to time: punctuality is important throughout Central and Eastern Europe, lateness is often regarded as a sign of unreliability.

Decision making: in countries like Poland, where companies have a strong respect for hierarchy and authority, decisions are made at the top. In this case, it’s often best to go straight to the top, where possible. In the Czech Republic, the opposite is true and don’t expect quick decisions, rushing into something is not their style.

Display of emotions: Romanians will often use emotions to manipulate a situation. However, in some countries, like Bulgaria, where people are quite reserved, displays of emotion might cause embarrassment. Also, in countries such as Slovakia and the Czech Republic, avoid mixing business with pleasure. Questions about personal subjects such as age, health and financial status should be avoided.

Leadership Styles: here’s a summary of the preferred leadership styles broken down by country, shared at the Department for International Trade event:

  • Poland: high power distance*, decisions are made at the top
  • Czech Republic: low power distance, they resent power from the outside
  • Hungary: individuals have a cynical attitude to leadership – it’s ‘a nation of individuals’
  • Bulgaria: low power distance where anyone can be a leader
  • Romania: autocratic but paternalistic, may use emotions as manipulation
  • Slovenia: low power distance and pragmatic
  • Slovakia: prefer an autocratic style as there can be a reluctance to take responsibility

Communication Styles: understanding how people in different countries generally communicate will help you tailor your approach to meetings, conversations and other business communications:

  • Hungary: can be unpredictable, everybody may talk at once
  • Czech Republic: rushing into a discussion is not their style, quick decisions are rare. In business, a direct “no” will often be replaced by an expression such as “it is difficult” to avoid confrontation and be polite
  • Slovakia: Slovaks avoid confrontation and have a tendency to vagueness
  • Bulgaria: quite reserved and dislike confrontation, difficult to read
  • Slovenia: not particularly talkative people
  • Poland: matter of fact, can be quite blunt in their comments
  • Romania: rarely answer questions with “yes” or “no”, so it’s best not to ask direct questions requiring affirmative or negative answers
  1. Regional meeting and negotiating styles throughout Central and Eastern Europe

Across all countries, a reasonably formal approach to meetings and negotiations is typical, especially for initial meetings. However, there are a few notable differences in styles between countries:

  • Poland: formal and it can take several meetings before a decision is made
  • Czech Republic: with a low tolerance of unstructured situations, Czechs like to take a forward-thinking and practical approach to doing business
  • Hungary: Hungarians like to mix business with pleasure, so expect to socialise regularly with business partners and contacts. Also, enter the spirit of the ‘coffee house’ culture – gossip a bit, where appropriate.
  • Bulgaria: listen to their complaints and challenges, but don’t offer advice or solutions. Instead, make it clear that you’re confident that they can find a resolution without your help.
  1. Different listening styles between cultures

Being aware of varying listening styles between cultures can help you to manage conflict and improve your negotiation techniques. The following graphic and information are based on the Lewis Model, a model of cultural classification:

doing business, central and eastern europe, listening styles

  • Hungary: Listening is problematic as Hungarians like to contribute the maximum rather than wait their turn. There is a rapid loss of interest if the conversation is not relevant.
  • Romania: Romanians are used to lengthy presentations, discussions and arguments, so if you’re too brief, you won’t make an impact. They are attentive, but suspicious listeners. If you say anything that strikes a discord, expect to be interrupted.
  • Slovenia: Interruptions are rare with a Slovenian audience. They are good listeners, remain attentive and will listen for information and sieve through facts carefully. However, in Yugoslav days they often felt tricked by Serbs and Croats, so are on their guard against loquacious or devious speakers. They dislike emotion or loudness and have a low tolerance for ambiguity or vagueness. They give little feedback.
  • Slovakia: They are good listeners and are unlikely to interrupt a foreigner, although they might interrupt other Slovaks. They often ask for information to be repeated, as they wish to avoid misunderstandings.
  • Poland: As is common in most former Communist countries, the Poles distrust official information so they may be sceptical of facts and statistics produced by government departments and institutions. They are courteous and listen without interruption, but are sensitive to anything that might be construed as an insult.
  • Czech Republic: Czechs think linearly so avoid digressing or talking in a roundabout way. They also don’t like ambiguity, so be straightforward and logical, and you’ll have an attentive audience.
  1. Ease of doing business parameters

The Ease of Doing Business is an index created by the World Bank Group, which is based on 10 subindices:

  1. Starting a business: procedures, time, cost, and minimum capital to open a new business
  2. Dealing with construction permits: procedures, time, and cost to build a warehouse
  3. Getting electricity: procedures, time, and cost required for a business to obtain a permanent electricity connection for a newly constructed warehouse
  4. Registering property: procedures, time, and cost to register commercial real estate
  5. Getting credit: strength of legal rights index, depth of credit information index
  6. Protecting investors: indices on the extent of disclosure, the extent of director liability, and ease of shareholder suits
  7. Paying taxes: number of taxes paid, hours per year spent preparing tax returns, and total tax payable as a share of gross profit
  8. Trading across borders: number of documents, cost, and time necessary to export and import
  9. Enforcing contracts: procedures, time, and cost to enforce a debt contract
  10. Resolving insolvency: time, cost, and recovery rate (%) under a bankruptcy proceeding

ease of doing business

A lower ranking value indicates a country is easier to do business with, typically simpler regulations for businesses and stronger protections of property rights. Key Central and Eastern European countries are currently ranked (out of 190 economies) as follows:

Bulgaria = 59

Czech Republic = 35

Hungary = 53

Poland = 33

Romania = 52

Slovenia = 40

Slovakia = 42

These countries all fall into the ‘very easy’ or ‘easy’ classification. For more information on how these countries scored for each subindex, download the Doing Business 2019 report.

Cultural taboos

As you delve deeper into a country’s culture, you are bound to discover a few customs and taboos that are different from those in the UK. For example, Poles do not say goodbye in doorways (or even shake hands through a doorway) as it is thought to bring bad luck. Also, if you want to give your host flowers, make sure it’s an odd number for good luck; not an even number, which represents death.

In Hungary, don’t refer to the country as being in Eastern Europe. Hungarians identify with Central Europe and tend to look down on their neighbours. So avoid comparing them with Romania or the Slavic countries.

Many people in Central and Eastern Europe are also sensitive about their Communist past and World War II. Anyone over 30 will have some memories of the Communist era, so it’s best to avoid talking about their past and Russia until you are clear on what their outlook is.

Finally, it’s also worthwhile learning a few key phrases, such as greetings and pleasantries. Many Central and Eastern Europeans speak English fluently, but you can make a good impression if you have a few words in their native language. This is a great way to start a business relationship and build respect and goodwill.

To make the most out of your present or future international business relationships, why not download our Translation Guide: Languages in International Business (click on the link below)? Or get in touch if you have any questions about doing business and language approach in Central and Eastern Europe.

* Power distance describes how people from different cultures view power relationships – superior/subordinate relationships. In cultures with a high power distance, individuals are very deferential to figures of authority and accept an unequal distribution of power. In cultures with a low power distance, individuals question authority and expect to participate in decisions that affect them.

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