As sure as there are water moccasins in the Okefenokee Swamp, more and more of you are going to be making your way into the international trading arena. It's inevitable. It's also inevitable that you'll make some mistakes along the way. And the most predictable is that you'll assume that the businesspeople you'll deal with in England, Japan, Germany -- wherever -- are just like the businesspeople you deal with here. Well, believe me, nothing could be further from the truth.
You'll find lots of differences; some matter and some don't. But the most critical custom to understand when you're a novice at this international game is how negotiations are carried out. The negotiating table, is, after all, the cradle of all business deals. And let me tell you, it's easy to be bamboozled. I should know, because I was.
Before I begin my story, I should point out that most foreign businessmen and women are not accustomed to dealing with anyone willing and able to make on-the-spot decisions and commitments, especially at first meetings. You might think that would be a disadvantage to them, but let me tell you how it works. There you are, the eager American entrepreneur, ready to wrap things up as quickly as possible. When you say something, it's a commitment. You don't have to check back with anybody about anything. But when they say something, it will -- at best -- be what they're going to recommend to their boss. At your next negotiating session -- and believe me, there will be another -- you begin having already made commitments, while they are agreed to nothing. So, right from the beginning, you are at a distinct disadvantage.
And take my word, you will never, ever close any deal with a foreign company at the first meeting, and in all probability, not the second or the third either. Unless you understand what's going on, you'll be making commitments at each session while they're making recommendations to their superiors, and you'll start off each succeeding round as the underdog.
At least that's what happened to me.
After my discharge as a pilot from the U.S. Air Force in 1953, I decided to remain in London. I had hung out my shingle as a manufacturer's representative and was damned near starving to death as I desperately tried to peddle a lot of "great ideas" to anyone who would listen. This story is about one of those ideas.
There were, at that time, about 46,000 Air Force personnel stationed in England. Add their dependents, and you could figure there were more than 60,000 Americans living in various parts of the country, all of whom were trying, sometimes not very successfully, to adjust to the English way of life. Some adjustments were harder to make than others. An example: for some strange and unaccountable reason, the British -- back when this story began -- used a kind of waxed paper for toilet tissue. Well, I hardly need explain what a terrible effect this small but important detail had on the daily lives of our fighting men and their families. Every time somebody went to the john, the morale of the whole Air Force command in England suffered another downward jolt. And this is but one of the thousands of examples of cultural differences faced by our troops living in England. It was just such differences that had convinced me that I should stay in England and go into the business of trying to provide solutions to consumer problems -- and even make a buck or two along the way. Eventually, as a matter of fact, I did take up the cause of toilet paper, but that story has nothing to do with my first unhappy exposure to negotiations abroad.
I had been stationed in England for two years, and knew that neither chocolate milk nor buttermilk was available anywhere. That, I thought, could be the opportunity I was looking for. So I got the name of one of the largest dairies in England and called the managing director. I soon found out that in England, nobody but God talks to a managing director. But after a lot of hassling, I did get through to his private secretary, who immediately recognized that I was a Yank, which, to judge by her attitude, was another word for "worm."
I explained to her my great idea of having the dairy appoint me its exclusive representative to sell chocolate milk and buttermilk -- which it would produce -- to the American forces stationed in England. When I finished, there was absolute silence on her end of the line.
"Hello, hello," I said. "Are you still there?"
"Rather," she replied in her very British voice. "I have no earthly idea what you are talking about, Mr. Wilson Harrell, but under no condition would our managing director have the faintest interest in discussing the matter with you."
My entrepreneurial balloon had been somewhat pricked, but I was not to be denied. "Thank you," I said, "for your intense interest. Perhaps you would be kind enough to transfer me to whomever you think would be interested in making your company millions of dollars."
She obviously didn't appreciate my humor because her previously cool voice now sounded as though she was breathing through icicles. "I doubt seriously that anyone here has even the slightest interest in your proposal, but I suggest you place your call again and ask for the secretary of the assistant export manager. Perhaps she could be of some assistance." The line went dead.
My first attempt to enter a commercial enterprise with a British company wasn't getting off to a good start, but I finally did get through to the assistant export manager. He listened very politely as I tried, with some difficulty, to explain to him my great idea, which also involved explaining to him just what chocolate milk and buttermilk were. He had never heard of either, but when I told him that there were more than 60,000 Americans living in England, all with their tongues hanging out, just waiting to buy millions of dollars' worth, he agreed to see me. I was elated and suggested that I come right over. He had a different idea.
"I shall be delighted to meet with you," he replied. "Shall we say, in a fortnight?" For the first time, I was introduced to a very meaningful word in British English. A fortnight, I would find, means two weeks. That seemed an eternity to me, since I was hot to trot. I was also broke. But I waited the fortnight.
When we did meet, it was very formal. First I cooled my heels in the reception area for almost an hour, which I later learned is the first step in the negotiating process in most foreign companies -- I was being conditioned. At last I was ushered into his office, and I explained in great detail my great idea. Their dairy would package eight-ounce cartons of chocolate milk and buttermilk. I would enter into a long-term agreement to be its exclusive representative to the U.S. military forces in England for a commission of 5% of sales.
When I finished my dissertation, he asked me a very profound question: "My God, do Americans really drink such concoctions?"
It took me a while to convince him that I was serious, and especially that Americans would drink the "congealed sour milk" the English gave their hogs. But before too long, he did begin to warm up to my proposal.
"Of course," he said, "I must refer your proposition to my immediate superior. However, before I do, may I suggest that 5% is slightly high. I recommend that I put in my report that your commission will be 4%, thus assuring your proposal a much better chance of favorable consideration."
I hesitated for only a moment. After all, what's 1%? I just wanted to get the ball rolling. "Agreed," I said. "Can I meet with your boss now?"
"Hardly," he said. "Ring me in a fortnight, and I shall have made the necessary arrangements." I called in a fortnight and found that, true to his word, the assistant export manager had arranged for me to meet with the export manager -- in a fortnight.
"In a fortnight?" I practically yelled. "What's wrong with today or tomorrow? I've already waited a whole month, and the only thing that has been accomplished so far is that I have lost 1% in commissions." He was unimpressed.
When I finally did meet with the export manager two weeks later, it was almost an exact repetition of my meeting with his assistant. I was informed that he was very interested in my great idea. He would be pleased to recommend to his immediate supervisor that the project be approved. Prior to making such a recommendation, however, he wanted my agreement that 4% was a bit much for a dairy product. He asked for my concurrence that his report should suggest a 3% commission. Well, what the hell, 3% is better than no percent, and, since they were at last all ready to go, I said, "OK, you've got a deal, draw up the agreement, and let's get going."
"Jolly good," he exclaimed. "I will prepare the papers and ring you up in a fortnight." He, too, was true to his word, and I was invited to another meeting, this time with the director of sales -- in a fortnight -- with another minor adjustment in the commission rate, which by now was down to 2%, and then another call and another fortnight and a final meeting with His Majesty the managing director, at which I suffered another "adjustment" of my commission.
By the time I signed the agreement, six months had elapsed and my commission was a lousy 1%. But the U.S. forces got their chocolate milk and buttermilk. And today, if you visit any dairy outlet in England, you will find both items for sale -- even the English have learned to like them. My idea was a great one. The only thing that wasn't so great was the way I was outnegotiated.
That was not the last time I negotiated with the English, but it was the last time I got taken. From then on, I suggested that I ring them in a fortnight, and I made it a policy at my second meeting to say, "After due consideration, I have determined that my commission will have to be 6% rather than 5%." I would then let them persuade me to reduce it back to 5%, which is the commission I received when I introduced soft toilet tissue to the English economy. But that's another story.