Doing Business in South Africa

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  • This will be the structure of presentation that will be followed.
  • South Africa, located at the southern tip of Africa is the 25th largest country in world in terms of GDP. It is a middle income country with per capita income of $10,200 (75th largest in the world). The South African Government is selected through a constitutional democracy and Mr. Jacob Zuma (shown in picture) is the current president of the rainbow nation.
  • South Africa lies at the Southern tip of Africa with a long coastline. During this time of the year, the climate will be moderate (15-19 o C) with a slight chance of rain. This provides a very pleasant weather for conducting business meetings. Due to absence of any major river or lakes, South Africa is semi-arid and suffers from severe water scarcity. Thus, people are very conscious about the water conservation efforts.
  • South Africa has a lot of cultural and ethnic diversity and it has given it the term ‘rainbow nation’. The major races are Africans, Whites, Colored and Asians. Even among these races, there is lots of ethnic diversity e.g. Zulu, Xhosa, Basotho, Bapedi etc. form Afrcan race. There are 11 official languages but Zulu, Xhosa, Afrikaans and English are the most spoken one. The commercial language is English and everyone has a working knowledge of the language. The major religion is Christianity with over 79% following the faith. However, there is significant following of other religions as well.
  • South Africa has one of the highest crime rates especially homicides and rapes in the world. South Africa also has the highest number of AIDS cases in the world. The main reason can be attributed to very high poverty and unemployment rate among the black community. From a business point of view, it is a very unsafe place for women. It is suggested that people should not take an offer of free rides by the cab drivers as it can turn into an ugly situation. Moreover, the use of protection can’t be overstated.
  • South Africa has seen more mass protests and strikes than any other country in the last few years. Troubled race relations, government policies on quota system, land reform, strong unions are some of the reasons for these strikes and protests. Low government spending on new power generation has also resulted in severe power shortage in the last few years. It can have a negative impact on the business as the company may not have a say over it and the production is hampered. It causes frequent interruptions to business.
  • Even after the end of apartheid, there are issues of hostile race relations between blacks and whites. The government’s policies in post apartheid regime like racial quotas and land reforms to redistribute land to blacks have been unpopular with the whites. From a business point of view, these issues should be avoided during conversation as people are very sensitive about these issues and it can turn sour.
  • South Africa prides on its ability to host major sporting events like the Cricket World Cup 2003, IPL 2009 and the upcoming FIFA world cup 2010. Being a sporting nation, this gives their public tremendous pride and satisfaction. It can be a good topic to bring up during conversation to get the client excited during the initial part of warming up to the clients.
  • (PDI stands for power distance index, IDV stands for individualism, MAS stands for masculinity, UAI stands for uncertainty avoidance index)As seen from the graph, power distance is slightly higher in South Africa as compared to Australia. There is variation between various races with Asians showing the highest power distance, then blacks and then whites. South Africa is still considered a patriarchal society and it is not uncommon for an adult to live with his parents especially in large Indian community in South Africa. This may amuse an Australian but it should be respected.
  • As seen in previous slide, South Africa is slightly less individualistic society as compared to Australia. In Asian and black communities especially, it is not uncommon to find close knit groups and people are expected to behave in certain ways which are acceptable in that group. This means team work is slightly more acceptable way of achieving the objectives in a work environment and an Australian will have to adjust to it.
  • South Africans show a higher emotional index as compared to the Australians which means they are more comfortable displaying their emotions in the open. This means that the work environment is more healthy as the feelings are not bottled up, but the emotions may come in the way of making a rational business decision. An Australian has to use better negotiation skills while dealing with South Africans so that the decisions are not affected by emotions.
  • South Africa shows slightly more particularism than Australia i.e. the focus during business exchanges should be on building the relationship with clients rather than signing the written contract. In South Africa, people in the same ethnic group are treated as same e.g. people may come from different parts of Asia, but they will be treated as an Asian only not as Indians, Chinese, Pakistanis etc. This shows that the particularistic nature of the South African society.
  • Afrikaans speaker tend to use slangs in English language and are not particular about grammatical correctness. E.g. an offer for braai is an offer for barbeque and should not be turned down, an offer for dagga is an offer for marijuana and can be refused. They also tend to get confused between ‘he’ and ‘she’ and are not particular about grammatical correctness. So, a person should not be offended when they refer to you as ‘she’ when you are in fact a male. Similarly, their grammar mistakes should be neglected during the business meetings.
  • A firm hand shake is the common mode of greeting. Women may just nod with a smile and we have to nod back with a smile to return the gesture. Before talking about business, it is important to engage in a personal conversation about client’s family, health or children. Otherwise, the person may viewed as ill mannered or uninterested
  • South African culture is influenced by a variety of cultures and hence it is home to very high cultural diversity. It is important to understand the cultural differences among Africans, Whites and Asians. The difference in their attitudes and interests have to be understood so as to behave accordingly. E.g. Soccer is more popular with blacks and cricket is more popular with Whites and Asians. It is also important not to compare various cities of South Africa as the people are very proud of their respective cities. Also, sensitive topics like race relations and politics should be avoided during conversation.
  • Even though English is used for business purposes, it is a good idea to translate the business presentation in Afrikaans especially in Afrikaans speaker dominated areas like Bloemfontein and Pretoria. It will show warmth and an understanding of their culture on your part. It is very important to build a long lasting relationship.
  • These are the works which were referred to.
  • Doing Business in South Africa

    1. 1. Doing Business in South Africa Presented by Name of the Author
    2. 2. Structure of Presentation • Brief Background of South Africa • Current issues and their impact on business • Cultural Background • Becoming culture smart
    3. 3. Brief Description • GDP – 25th largest • Middle income country
    4. 4. Brief Description: Geography Per capita water availability Moderate climate during June South Africa Egypt India China UK France Japan USA Russia Brazil Per Capita Renewable Water Resources 0 20 40 60 Water Scarcity
    5. 5. Brief Description: Demography South African population by race African White Colored 3% 9% • Lots of cultural diversity Asian • Major Languages – Zulu, Xhosa, Afrikaans, English 9% 79% • Major religion - Christianity
    6. 6. Current Issues • High crime rates especially murder and rape • High Poverty and unemployment among blacks’ community • Most AIDS cases
    7. 7. Current Issues • A culture of strikes and mass protests • Severe power shortage • Interruptions to business
    8. 8. Current Issues • Issues of race relations and quota regime • Avoid these issues during conversation
    9. 9. Current Issues • Prides on hosting major sporting events • Good way to warm up to the clients
    10. 10. Cultural Background • Power Distance • Little higher than Australia’s • Varies between various races • Still a patriarchal culture 90 80 70 60 50 40 30 20 10 0 South Africa Australia PDI IDV MAS UAI
    11. 11. Cultural Background • Individualism vs. Collectivism • Less individualism as compared to Australia • Closer knit groups, people show cultural traits • Team work over individual abilities
    12. 12. Cultural Background • Neutral vs. Emotional • Higher emotional index as compared to Australians • Healthy work environment • May affect rational business decisions
    13. 13. Cultural Background • Universalism vs. Particularism • More particularistic society than Australia • Focus on building relationships • People in same ethnic group treated as same
    14. 14. Be Culture Smart • Afrikaans speaker tend to use slangs in English • E.g. braai is for barbeque, dagga for marijuana
    15. 15. Be Culture Smart • Hand shake is the common mode of greeting • Women may nod with a smile • Talk about personal stuff before getting to business
    16. 16. Be Culture Smart • Differences in interests of different races • Don’t compare cities • Don’t talk about sensitive topics
    17. 17. Conclusion • Very multicultural society • Focus on culture specific interests • Avoid controversial topics • When in Rome, do as the Romans do • E.g. Business presentation can be translated in Afrikaans
    18. 18. References Cullen, J., & Parboteeah, K. (2008). Multinational Management - A strategic approach 4e. Southern Western College Publishing. Geert Hofstede™. (2009). Geert Hofstede™ Cultural Dimensions. Retrieved April 10, 2010, from Geert Hofstede Web site: http://www.geerthofstede.com/hofstede_south_africa.shtml Government of South Africa. (2009, August 11). About South Africa. Retrieved April 10, 2010, from South Africa Government Web site: http://www.info.gov.za/aboutsa/index.htm McSweeney, D. B. (2002). Hofstede's Model of National Cultural Differences and their consequences: A triumph of faith - A failure of analysis. Human Relations , 55-89. Reuters. (2008, September 23). Key issues in South Africa. Retrieved April 10, 2010, from IOL Web site: http://www.iol.co.za/index.php?click_id=13&set_id=1&art_id=nw2008092315 0258892C227992

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