Doing Business in America

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October 14, 2014

October 2014,  Canada and the United States resemble each other closely: to the global family, the two are close cousins, if not siblings, sharing political and economic ties as well as similar laws in many areas. However, quite apart from our distinct spelling traditions, the course of political, social, and economic history in Canada and the U.S. has resulted in employment and labour relations, product and operational activities and many other activities that are rather different. These important differences are relevant to the significant flow of cross-border business, generally from south to north.

When you conduct business in the United States, keep these cultural values in mind:

If you are living and working in the United States with American colleagues, you might want to learn more about your own cultural values and the cultural values that determine the way that your American colleagues communicate and view the world. How would you answer this question?

"Success in life is determined by forces outside our control"

True or False

Loss of control is an important cultural dimension that can tell us a lot about the way that people view life, the way they communicate and what they consider important. In a culture where internal locus of control is a common value, like the US, many people believe that they are entirely in control of their own lives and their own success. External loss of control means that people believe that things outside of them control their lives such as a higher power, the environment or other people

Americans are raised from childhood to see themselves as distinct, separate individuals who create their own destinies and are responsible for their own lives. As such, they consider themselves accountable for their decisions. They view themselves as independent and self-reliant, and for this reason can appear self-centered to those from less individualistic cultures. As always, when we talk about culture, we have to be careful about stereotypes and generalizations. However, insight into this interesting cultural value can help professionals learn how to communicate with Americans. Only 36% of Americans believe that success in life is determined by something outside of their control(Germany 72%).

If you are from another country and you are working with American people, perhaps you have noticed these values in your American colleagues.

American people are often.

 goal oriented

 self-reliant

 individualistic

You will often hear in conversations and business happenings

 “Where there's a will, there's a way"

 "If you want something done right, do it yourself"

 "Nothing ventured, nothing gained" 1

Two Different Ways of Using Time:

Monochronic Cultures | One Thing at a Time: In a monochronic culture like the United States or countries in northern Europe, time is a commodity. We have expressions like "waste time" or "lose time" or "time is money". As you have probably already figured out, because time is such a commodity, showing up late, especially for a meeting or a dinner, usually comes across as very disrespectful. A monochronic culture functions on clock time. People like to focus on one thing at a time and are usually concerned with completing objectives in a systematic way. In a meeting, it's often important to stick to the plan or agenda and not to get "off track" by talking about unrelated topics.

Polychronic Cultures | Many Things at the Same Time: Polychronic cultures like southern Europe, Latin American countries and the Middle East, take a very different view towards time. People from these cultures often believe that time cannot be controlled and it is flexible. Days are planned based on events rather than the clock. For many people in these cultures, when one event is finished, it is time to start the next, regardless of what the clock says. In a business exchange in a polychronic culture, sticking to an agenda might not be very important. Instead, many tasks like building relationships, negotiating or problem solving can be accomplished at the same time.

Why Does It Matter?

We know that cultural differences and time are rooted in a deeper issue than simply being late or on time. But why is this knowledge really important if you are working with people from different cultures? Here are some scenarios where this knowledge could help:

Deadlines: What does a deadline really mean to you? Is it a promise that the work will be done by a certain time? Or is it a guess, an estimate, or maybe a hope that it will be done by a specific date? What happens if you and your manager have different assumptions about what " the project will be completed by April 16th" really means?. On time and complete are important to doing business in the USA. 2

Dining with Colleagues: In the US, business decisions are normally made during a meeting, at the workplace. In contrast, in some polychronic cultures, like Japan, the real business takes place over dinner and drinks, hours after the workday ends. Not knowing this and declining an offer from your Japanese colleagues to join them for dinner could cause you to lose a valuable opportunity to strengthen business relationships and get important things done.

Organizing and Planning a Meeting: If you have a more polychronic view toward time, you might be surprised when your American colleagues in New York or Boston ask you to plan the meeting and expect the meeting to follow the agenda without getting "off topic". California and Southwest are different as will be Atlanta and Miami. You will find Chicago different than New York

Some Meeting Observations

 Meetings generally start with little or no small talk.

 Americans may be blunt when countering ideas that others put forward, and interruptions may be common in an animated discussion. 

 When Americans say “Yes” or “No” they mean it. “Maybe” means “It might happen”; it does not mean “No”.

 American negotiators can become frustrated if too much time is devoted to relationship building rather than negotiating.

 Unlike many cultures where eloquence is important, Americans are more concerned with making their point.

 It may at times seem that lawyers run American negotiations. This is because there is strict government legislation concerning many facets of business. 

For the most part, Americans do not hesitate to ask direct questions. These are not meant to be offensive. Their reliance on speaking concisely and relying on facts can make American speech seem rude, aggressive, blunt or impatient to people from cultures that are more relationship-oriented. Since many Americans speak only English, they are not always sensitive to the challenges someone faces when communicating in a foreign language. Americans often used sporting analogies that are not easily understood.

 Loyalty from American businesspeople can be very fleeting. If a person needs something from someone else, they will be accessible and forthcoming. When the same person no longer needs anything from their counterpart, it’s quite normal to become unresponsive to communication, a 180-degree change of behavior in just twenty-four hours. Yet, if this person suddenly needs something again the next day, it’s not unusual for them to reach out very warmly and pretend they did not completely ignore their counterpart just the day before.

 Most industries in the U.S. have very clear, defined rules of conduct. It’s crucial to know how things work (even if you plan to break the rules). For example when selling to big retail chains, buyers decide by March what will be on their shelves the following year. If you approach them in April, you will not be considered. In other countries, these rules are not so rigid.

 Because the American system of business is so rigid, bending the rules and/or cutting corners are not recommended. Also, while it is a very rigid system, it is extremely pro-business and accommodating. Even if a law or regulation doesn’t make sense, it’s usually easier to work with these rules than try to go around them. Most Americans don’t question the rules or authority, while it’s much more common for foreign nationals to want to work outside the system if they think they know a better way.

 Doing business in America is easier than in other countries. Almost any business service imaginable already exists. It’s remarkably easy for startups to leverage this pro-business climate and appear like a mature, big business from day one. 3

 American employees subscribe to a “think inside the box” mentality – to do your job and not beyond that. This ethic has contributed greatly to the U.S.’ success. By ensuring that each employee does what they need to do – nothing more, nothing less – if the master plan was designed well, then everything will work as planned and scale correctly. By contrast, Europeans – especially those working for small companies – tend to work beyond what is required, because the work needs to get done. For many Americans, this “someone had to do it” concept is incomprehensible.

 American ‘consumers’ more than live up to that title. Foreign nationals doing business in the U.S. are often surprised by American consumers’ willingness to spend future income they haven’t yet earned, while saving little if nothing for the future.

 While the power of celebrity is felt around the world, in the U.S. it has unique and direct business implications. Companies able to score an important celebrity endorsement (e.g., appear on The Oprah Winfrey Show during its peak), could see their business change overnight. Outside the U.S., celebrity followings are not as passionate, markets are smaller and populations don’t have as intense a ‘consumer mentality.’

 Very often, business ventures get only one shot to succeed. “I don’t have,” and, “We can’t do that,” are unacceptable phrases in American business. Companies must deliver what’s been promised; if a major deadline or target is missed just once, sometimes that’s all it takes for major collaborators and partners to look elsewhere.

 America is all about the money. It’s not as if there are no other values, but money is the biggest value, and everything revolves around it.

Investment in the USA

The federal government allows investment in the U.S. consistent with the needs of the country. This attitude treats foreign capital on the same basis as U.S. capital. Any investment in the U.S should be made based on sound commercial practices, since there are no taxes or other special privileges given to foreign investors.

Investments by non-U.S. individuals or companies are limited in national security matters such as atomic energy and defense, communications, banking, and some other business areas. There are other restrictions: some states prohibit the sale of land (usually agricultural) to foreign investors; certain real estate managed by the federal government cannot be sold to foreigners; the sale of agricultural land to a foreigner must be reported to the Secretary of Agriculture. Legal counsel should review any proposed investment to be certain it is not restricted or limited by federal or state law.

A foreign business operating in the U.S. is entitled to obtain for itself the same federal government-sponsored assistance to business (such as programs of the Small Business Administration) that exists for domestic operators and the same basic tax treatment. Many state and local governments offer aggressive incentives to attract foreign businesses in their particular area. Such incentives commonly include income and real estate tax concessions, financing, and sometimes opportunities to purchase or lease operating facilities at greatly reduced prices.

Laboring Americans do not resent foreign ownership of businesses unless jobs are threatened. Conversely, if foreign investment creates jobs, foreigners are heartily welcomed. Some politicians occasionally express concern about foreign investments in the U.S., but investment restrictions on foreigners are not seriously contemplated.

Yes there are some different rules for hiring and firing which a labour lawyer can provide. You will find three levels of rules- Federal, State and local with considerable overlap. At first blush, the overlapping jurisdictions seem quite complicated. By contrast, legislative jurisdiction over employment and labour in Canada is simply divided between the provincial and federal governments, with each distinct in its own sphere. A significant majority of employers fall under provincial jurisdiction, with the federal government having jurisdiction over certain limited specific federal undertakings, including inter-provincial transportation, telecommunications and banking. There is no overlap between the two. Approximately 85-90% of Canadian employees work in provincially regulated employment. Not so south of the border! Employment and labour law at either provincial or federal levels is also governed by the common law in Canada, and, in the case of Québec, which is a civil law jurisdiction, the common law as codified in the Civil Code of Québec. Of the two countries, Canada is by far the more union-friendly. The average total unionization rate between 2006 and 2010 in the U.S. is 13.1%, compared to 31.5% for Canada.

Labour relations legislation in Canada generally reflects a pro-union bias. One important instance of this bias is with respect to successor rights. Under U.S. law, an acquiring employer does not necessarily inherit the predecessor collective agreement or its duty to bargain. In Canada, on a sale or transfer of a business, the default position is to assume the union has the right to carry over the collective agreement and the bargaining rights to the acquiring employer.

Further, unlike the limited interpretation of “freedom of association” found in the U.S. Bill of Rights, courts in Canada have interpreted its Charter of Rights and Freedoms to include protection for the right to join a union to bargain collectively, and a duty of employers to bargain in good faith.

Significantly, the American categories of “exempt” and “non-exempt” employees are not applicable in Canada. Salaried employees, as opposed to those on wages, are typically exempt from overtime pay in the U.S. There is no such distinction anywhere in Canada. Except for true executive or managerial employees in Canada, all other employees are entitled to overtime pay. Determining whether someone is truly a manager or an executive is based on an analysis of his or her actual job duties.

Employment at will!- Many Canadian employers are envious of the application of the American doctrine of “at will” employment, whereby American employers can terminate employees at will, subject to the terms of any written agreement, certain exceptions recognized in various states and so long as the termination does not violate anti-discrimination laws. Once again, any employer can expect a push back and potential threat of lawsuit if the employee feels unjustly treated. Employment litigation is a serious threat in the USA including all forms of class actions and awards are often extremely substantial.

American law recognizes the doctrine of “inevitable disclosure”, whereby an employer can use trade secret law to enjoin a former employee from working in a job that would inevitably result in the use of trade secrets. Canadian law does not recognize this doctrine.

Marketing and Selling

With a consumer population of over 316 million, the USA offers any organization a huge opportunity. However, the eco system is diverse and complicated. The East is different from the West – There are differences between doing business in the south, from Chicago and the northern states. In some channels, you can sell direct, while others will require agents, distributors and so forth to be successful. You should be seen as operating in the USA with at least an address (box number and location) and a USA based contact point (email and telephone number) This might all be rerouted to Canada , but you have to be seen as being there to serve. Buy America ebbs and flows!

If you think you can go back and forth, from Canada, carry on business and evade taxation (Federal/State/Personal) – think again. Before you start, ensure you meet all the rules to carry-on on business in the USA – legally. You do not want to be stopped at the border and not allowed to enter again.

In many regions and depending upon your products, you must be aware of the need for ethnic preference, sales and marketing material in other languages than English (Spanish, French, Polish and so forth). A call centre to provide service in Spanish. 

Know you customer needs and wishes – they are different by areas and countries (ice tea sells in the USA – Canada not so well)

Know that you will need to go to market experts – agents, retailers and influencers.

Look at your products – the packaging- the words and instructions - shipping containers and a host of variables.

Take a close look at your colours and graphics – they will vary by country and sometimes even regions. We learned many times that certain colors sold well on the East Coats and not the West. Are you willing to adjust your SKU’s to handle this? The automotive industry knows all about colour preference as well as those selling paint.

If you are selling food, you will find regional preference – even product sizes. While considering the presentation of your items consider the demographics. In Canada, you might not be able to deliver an item focused on the seniors’ market because of costing issues and lack of potential volume. In the USA, with as many seniors as the total population of Canada – another story!

If you would like other advice and information contact:

Robert Lane President

Robert H Lane and Associates Inc Business Advisors

416 910 1804 6



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