According to a global report out today, almost half of executives (49%) admit that communication misunderstandings and messages lost in translation have stood in the way of major international business deals and resulted in significant losses for their company. Brazilian and Chinese companies have been affected even more so with 74% and 61% respectively reporting financial losses as a result of failed cross-border transactions. This is of concern given many businesses are looking to new markets to unlock opportunities and grow their companies overseas.


The report, based on a global survey of 572 senior executives from private and public sector organisations worldwide and a series of in-depth interviews, was carried out by the Economist Intelligence Unit (EIU) and sponsored by EF Education First (EF). It reveals that almost two thirds of those surveyed (64%) think differences in language and culture have made it difficult to gain a foothold in foreign markets. And an overwhelming majority of executives believe that if cross-border communication were to improve at their company, then profits (89%), revenue (89%) and market share (86%) would each increase significantly.


However, despite the realisation that cross-border communications skills are inextricably linked to their company’s financial health, a significant proportion of companies are not taking sufficient action to address the root causes of misunderstandings. Almost half (47%) say their companies do not offer enough training to hone their employees’ language and communication skills, and two fifths (40%) believe there is not enough emphasis placed on recruiting or selecting people who are suited to cross-cultural environments. Linguistic diversity is considered by some margin to be a greater problem in Latin America and Southern Europe than elsewhere. For example, 38% in Brazil and 40% in Spain believe the language barrier to be a significant hindrance to effective cross-border relations.


Commenting on the findings, Andy Bailey, Chief Marketing Officer, EF Corporate Language Learning Solutions said: “The boundaries between old and new economies are increasingly blurred, and those same economies are evermore entwined and interdependent. Today’s businesses leaders need to ensure their employees are equipped with the right skills to communicate across borders effectively and efficiently”.   He continued, “Newer economies will fail on their internationalization plans, and older economies, who are already struggling, will find it almost impossible to regain their competitive foothold if businesses do not devote the appropriate time and resources into improving the international language skills of their key staff. It has never been so critical as it is today”.


The report also highlighted the pivotal role of English language in international business expansion, with the majority of executives emphasising the need for their employees to be proficient in English in order to compete on a global scale. According to the survey, English is the language that most executives (68%) think employees will need to know in order for their companies to grow successfully outside their home markets, followed by Mandarin (8%) and Spanish (6%).


Interestingly, the gap between current usage and the desired level of proficiency in English is greatest in China, showing the country’s increasingly external-facing business outlook. Only 9% of Chinese executives said that half their workforce now uses a foreign language in their job, but 86% also said their employees will need to know English if their companies are to carry out their international strategies successfully.