Doing Business in South Africa

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By Ludmila (Mila) Rusakova Golovine

As a continent, Africa may not be mentioned much in the media as a place to do business but there is one country within whose economy has maintained steady growth in the face of tremendous political and social change and that is South Africa.  South Africa currently occupies the status of the second largest economy in Africa behind only Nigeria.  It possesses 80 percent of the world’s platinum reserves and 11 percent of its gold reserves.  In 2011, South Africa formally joined the BRICS group comprising the top emerging economies in the world alongside Brazil, Russia, India, and China.  With its sound financial structures and myriad of business opportunities, this country is a very attractive place for entrepreneurs.  Nevertheless, success can only be achieved by those savvy enough to learn the proper business etiquette for this country.

It is important to note that South Africa is one of the most culturally diverse countries on Earth. In addition to the native black population which comprises many tribes and makes up the majority of the population, there are white South Africans of English and Dutch descent.  Moreover, successive waves of immigration over the years have led to sizeable communities of Indians, Chinese, and Malays.  Thus, many refer to South Africa as the “Rainbow Nation”.

Along with the cultural mosaic there is also a linguistic one.  The country currently has eleven official languages, namely:  Afrikaans, Ndebele, Northern Sotho, Southern Sotho, Swazi, Tsonga, Tswana, Venda, Xhosa, and Zulu. English is the last official language and is used as the language of administration. Therefore, it occupies a predominant position in the country’s communication. Importantly, business documentation does not require translation into all of the official languages.  English will suffice which will facilitate written business dealings.  For face-to-face communication, however, it will be necessary to find out if an interpreter will be needed.

As with most cultures, South Africans tend to deal only with those that they know and trust.  They are somewhat mistrustful of those who are unknown which can sometimes slow or even halt a potential business venture.  Very often, they will only work with someone new if a trusted associate vouches for them.  Consequently, when trying to launch a new venture in South Africa, it is imperative to find a local who can make the necessary introductions and confirmations that will allow the process to move forward.  A formal written introduction from a third party is also a good idea if possible.  This action will carry more weight than word of mouth.

Similarly, as with most cultures, the initial business contact should not focus on the actual deal.  As stated previously, South Africans like to do business only with those that they trust.  Therefore, it is necessary to be patient and let the conversation begin with topics such as family.  This will allow the South Africans to get to know you.  Once trust is established, the actual business venture may be discussed.

While most countries have only one communication style, South Africa has two. Depending on the ethnic group, both direct and indirect communication may be employed.  White South Africans prefer direct speaking.  They tend to negotiate in much the same way as Americans.  Their business culture is based on consensus and win-win negotiation.  Any vagueness is considered non-commitment.  Therefore, it is necessary to begin with a realistic figure when negotiating pricing.  As in American business, white South Africans do not like to haggle so it is imperative that flexibility be shown.  Furthermore, decisions are usually made by consultation with subordinates.

Consequently, they are made somewhat slower than in the US.  Here again, patience must be maintained. Black South Africans, on the other hand, are more diplomatic.  They employ indirect communication meaning that what is spoken is not always what is meant. Very often, they will not want to disappoint their counterpart so on occasion they will say “yes” to something merely because they do not wish to say “no.”  In these cases, body language and intonation must be analyzed to determine what the true answer is.

When interacting with South Africans, there are several important aspects to keep in mind.  It is important to maintain eye contact.  Otherwise, the South African will think that you are being evasive.  Similarly, you must never stand with your hands in your pockets when speaking with someone.  This action gives the impression that you are hiding something or being insincere.

While the ethnic diversity of South Africa can seem daunting, there are actually more similarities with American business culture than differences.  As long as you recognize the idiosyncrasies of the culture and display patience and openness, you will have no problem succeeding in South African business.

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As a graduate of the Wolff Center for Entrepreneurship at the University of Houston, Ludmila (Mila) Rusakova Golovine, Founder, CEO, and President of MasterWord Services, Inc., started her company with a vision of seamlessly connecting people across any language, any time, and any culture.  She can be reached by email at mgolovine@masterword.com, by phone at 281-589-0810, or visit her website at www.masterword.com.

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