Siah Hwee Ang is the BNZ chair of business in Asia at Victoria University. In an opinion piece, he says that more often than not, we hear of businesses blaming difficulties in international markets on cross-cultural differences. Cross-cultural challenges will not go away, so we have to accept these differences, and recognise how they impact on business transactions.
Proponents of globalisation want to believe that it is possible to achieve more standardised regulatory systems across the world.
Such systems will ensure that the boundary of operations is easily understood across borders.
Recent experience concerning our meat and kiwifruit exports to China was a painful reminder about paying attention to regulatory differences across countries.
In doing so, they will take out one of the many cross-border challenges that firms have to face during the course of internationalisation.
Regulatory challenges for New Zealand organisations
In recent times, however, the more explicit regulatory frameworks are presenting a greater challenge to New Zealand organisations doing business abroad.
Three major factors seem to be contributing.
The first revolves around comparing regulations.
To that end, some widely acknowledged indicators of regulation have been created. For example, the World Bank produces a large set of indicators on the ease of doing business in 189 economies.
Similarly, the International Monetary Fund produces all sorts of documentation relating to regulations.
Yet, despite the abundance of indicators available, it is hard for businesses to use the stand-alone figures, as the picture might change depending on their choice of indicators (although of course, broadly speaking, we expect developed economies to be more open than developing ones).
The second factor is the difference between the regulatory frameworks of two countries.
New Zealand's regulatory institutions set some expectations of our organisations as they trade but these expectations often only apply until the goods cross New Zealand borders.
By the time the goods reach their destination, another set of regulatory frameworks comes into play.
It is likely that a host country's regulatory framework is significantly different from the one in New Zealand. The onus is on businesses to perform due diligence on the regulatory framework of the destination country.
The third factor relates to the level of transparency in regulation in actual practice.
For example, if you spend enough time on the website of a foreign country's regulatory institution, you will probably find only limited materials. They are often written in local languages, with no English version available.
This presents uncertainties that we do not normally associate with regulations and is not often not taken into account as organisations make the dangerous assumption that the rest of the world is similar to them.
