The importance of keeping the lines of communication with one’s business partner cannot be overemphasized. Both our domestic partnerships and especially our foreign partnerships are premised extensively of the degree and quality of the relationship that the parties have assumed. A relationship can only survive if the parties involved maintain a line of communications. This concept becomes even more relevant when the partnership entails an international agreement where the enhanced distance between the partners will exacerbate the need to keep in touch. An executive can only keep on top of things if they are in contact with their partners because otherwise, how are they going to know what’s going on?
Secondly, the line of communications needs to be a two way process and should flow back and forth. It happens that too many international negotiators do not take the time, and dismiss the need to include some frank discussion in how the two parties will maintain contact with each other. They assume wrongly that the communication process will evolve all in its own sweet time. The time to discuss the line of communications is when the venture is being negotiated. They should not consider the issue later, and after the fact, when serious problems suddenly arise and challenge the viability and the stability of the joint venture. The other problem occurs when the two parties neglect to keep in touch with each and simply allow their interest in their agreement to ‘wither on the vine’, while the agreement simply falls apart due to a genuine lack of interest.
Many joint ventures have collapsed or gradually fell apart needlessly due to a lack of communications between the parties involved. International agreements are especially prone to dissolution when the partners fail to maintain a respectable level of contact.
Take the case that occurred between one particular U.S. company and their Japanese partner for example. The agreement that they signed stipulated that the Japanese company would supply the manufacturing, management, and marketing components of the deal, while the American company would supply the technology.
The American representative, who was based in Hong Kong, met with their Japanese counterparts only once every three months where all aspects of the operation would be discussed.
In between these quarterly visits, the two parties exchanged communications through written correspondence and infrequent phone calls. To the Japanese partner, this periodic though infrequent contact signalled that the American partner was not overly committed to the relationship. Needless to say, the Japanese commitment to the partnership began to dwindle as well. As time progressed, the U.S. company’s strategy altered as they began to concentrate on a smaller product line. The American company never bothered to advise their Japanese partner of the change in their strategy. Also, due to this smaller line, there was the additional fiasco in that the Japanese company was not going to be receiving the technology it had negotiated with the American firm.
The Japanese took a dim view of what they now perceived as an agreement that was signed in ‘bad faith’. The Japanese became bitter as the relationship soured and ended in arbitration. What was the result the arbitration? The partnership was dissolved.
This illustrates the importance and need for communications. The American firm should have appraised their counterpart about the change in their strategy, but the Japanese should perhaps have communicated their displeasure earlier, rather than allowing their disgruntlement to fester. Never dismiss the importance and impact that a good line of communications can have on your business relationships, whether it be a domestic or a foreign relationship.
