Three years ago, John Hancock found himself stranded at the Hong Kong-China border with three colleagues. The taxi driver had made them leave his cab and get into another car. Unable to understand the drivers, they thought they were about to be robbed. Today this scenario would be unthinkable for Hancock who, unscathed but shaken by the episode, threw himself into the task of learning Mandarin.

Aided by his linguistic skills, he has since set out to build solid business links in China, a country with huge business potential but comparatively few English speakers. Knowledge of Mandarin is a must, believes Hancock, who adds: "Never assume they understand you because, invariably, they don't."

As it turned out, the imagined robbery was a routine handover of passengers from a Hong Kong-licensed cab to a China-licensed one. But without a shared language it took a desperate call to Hancock's agent in Hong Kong to clear matters up. "I decided there and then I would learn Chinese," he says.

Brits are not exactly chart-toppers when it comes to their foreign language abilities. It was only last year that the UK moved from the bottom of the European Union's language league table to its current rank at second from last.

In business we don't fare much better. A 2004 British Chambers of Commerce (BCC) survey of 1,000 exporters found that 80 per cent of export managers couldn't competently conduct a business meeting in even one foreign language. And one in five reported losing business due to linguistic incompetence.

A more recent survey, by the National Centre for Languages (CILT), compared UK companies with their French and German counterparts and found that they were the most complacent about the need for language skills, the least likely to use the customers' language and the least responsive to the needs of their international partners.

With English assumed to be the lingua franca, it is easy to believe that foreign languages don't matter to business. But only six per cent of the world's population are native English speakers and 75 per cent speak no English at all. "Languages matter hugely to UK businesses," says Isabella Moore, director of CILT. "You can get by in English to a certain extent, but if you want to get repeat orders and develop a relationship, then you need to know the language of the country with which you're doing business."

Andrew Cahn, chief executive of UK Trade and Invest (UKTI), agrees: "The British are at an advantage by having the global language of business, the language of science and the language of finance. But, in a way, it gives us false comfort as it leads us to assume that people are more familiar with English than they really are." That assumption, when false, can be a big obstacle to clinching a deal.

"In specific markets, in specific sectors and on specific occasions, languages are all-important," he says. Among emerging markets, he highlights Brazil, China and Russia as countries where knowing the native language has added importance. China is a particular case in point. "Quite a lot of people speak English, but get below the top layer and it's a different story," he says.

British businesses have had little success in Brazil, by far the biggest market in South America. Says Cahn: "In Brazil, British exporters have performed less strongly than European counterparts and I put that, at least in part, down to the linguistic challenge." And in Russia, business links are built on personal relationships—not the easiest thing to establish via a translator. "Although many Russians speak English, it is a market where personal contact makes a big difference, and having some linguistic skills there helps a lot," says Cahn.

Hancock, the managing director of Petlife International, which makes bedding for pets, had never thought he would need to learn Mandarin. But after his border experience, he was in no doubt. "I like China and I like the Chinese, but it's a total change from what you expect," he says. Much like the language: "It's so difficult," admits Hancock. "One word said four different ways can mean four different things, so you might end up calling your mum a horse."

Apart from the positive surprise factor when he gets involved in a conversation in China, Hancock believes he sends a strong signal to potential business partners that he takes an interest in their language and in their culture. "If you go out for a meal, you can join in the conversation and you can have a bit of fun. They will have a laugh at your expense, but it doesn't matter because it is the building of relationships that matters," he says.

Hancock is certain that China is going to be a huge market for Petlife. "There are more and more pets in Asia, and particularly in China. And more people can now afford to keep pets, so the relationships we are building are going to be crucial for the business and they wouldn't happen without the language," he says.

According to Richard Scase, business strategist, forecaster and author of Global Remix, The Fight for Competitive Advantage, Hancock has done the right thing. "China will take up more of our share of exports and what will limit our future opportunities is our understanding of Mandarin," he says.

In the next 20 years, China will become, by far, the biggest economy in the world, accounting for 30 per cent of world trade. According to Scase, businesses need to act soon to avoid losing out on the opportunities in this huge market. "It's an urgent issue because it is only by understanding a language that you can really get into a conversation and acquire trust and confidence in a business relationship," he says.

Speaking the customers' language closer to home also makes good business sense. Especially when, like Hugh Morgan-Williams, chairman of Canford Audio in Newcastle, the first foray into languages brings a 35 per cent increase in sales. The company decided to produce its catalogue in French and was overwhelmed by the response. "After that experience, we adopted a policy of having five core languages: Dutch, French, German, Italian and Spanish. We found that it became so much easier to generate  sales in those countries," he says. Today, linguistic skills are responsible for about £1.5 to £2m of Canford's £16m annual turnover.

Morgan-Williams dismisses the notion that English is the global language of business. "English is a language of business, but just one of a handful. I may be able to negotiate a contract in English but, in order to implement the contract, you need to have language skills further down the organisation," he says.

People are often more comfortable speaking in their own language, he says, even if they can speak English. "We are always looking to export to other areas and if we need new language skills then we will make sure we have them in the business," says Morgan-Williams. "That is just the way we operate and it has proved a very effective model."

At Canford, staff are paid an extra £1,000 for each foreign language they speak and although, previously, the company has employed natives of the country it trades in, at the moment most staff are British.

But Morgan-Williams is pessimistic about the future workforce's linguistic skills—in 2004, the government controversially made foreign languages optional at secondary level. As he sees it: "British children are at a disadvantage. We're condemning two or three generations to poor employment prospects by not having better and more comprehensive language teaching in schools. It's terribly sad."

It's not all bad news though. In February this year, education secretary Alan Johnson said secondary schools will be allowed to teach Mandarin, Urdu or Arabic instead of EU languages from 2008 as part of proposals to update the curriculum. He said it was right to add languages which might be economically useful or help community cohesion.

And according to Richard Scase, the languages we (and our children) will need to learn in the future are Spanish and Chinese: "If you don't have some knowledge of these languages, you risk missing out."

But you don't need to be fluent to succeed, says Eric Donjon, sales manager at battery components manufacturer Entek International, and 2005 winner of the North East Regional Language Network's Export Communicator award. To him, breaking the ice is the name of the game: "You pick up words here and there and you make a fool of yourself, but so what? Just a few words is good enough to break the ice," he says.

At Entek, the company's website is available in English, Japanese, Mandarin, Russian and Spanish. Donjon insists that the costly and laborious exercise of translating the website has contributed hugely to the bottom line. "The impact has been absolutely amazing," he says.

Russia is Entek's biggest market and Donjon has resurrected the Russian he was taught 15 years ago. More than linguistic skills, he places great value on cultural awareness. In Russia, as in China, particular social traditions are embedded in any business relationship. "Russians just won't do business with you unless you have drunk vodka together-it seems to be a rite of initiation," he says.

Crossing both the language and the cultural divides in one hit seems to be the ideal route to winning new business in emerging markets that are increasingly calling the shots. And the message that is coming through is that if your company is not willing to invest in linguistics, your competitors probably are.

Further information

• UK Trade and Invest, in association with the British Chambers of Commerce, offers an Export Communication Review. Consultants spend a day with a company, identifying language and cultural issues and suggesting how the company can improve. 

• Regional Languages Networks, part of the National Centre for Languages, promotes language skills in the local business community, with some funding available for companies wishing to improve their linguistic skills.

www.chamberonline.co.uk
www.cilt.org.uk
www.uktradeinvest.gov.uk