What is the business culture in Nicaragua?

In one word, doing business in Nicaragua is "frustrating." You have to exhibit an extreme amount of patience if you’re doing business in Nicaragua. In Latin America, if I have an 11:00 meeting, it might mean 11:00, 11:30 or 11:45 and chances are we will not go immediately to the meat of the matter. Chances are we will have a coffee, a meal, or a lunch and it will not last for only 15 minutes; it will last for 2 hours. There is an old saying, “Mañana” which...

In one word, doing business in Nicaragua is "frustrating." You have to exhibit an extreme amount of patience if you’re doing business in Nicaragua. In Latin America, if I have an 11:00 meeting, it might mean 11:00, 11:30 or 11:45 and chances are we will not go immediately to the meat of the matter. Chances are we will have a coffee, a meal, or a lunch and it will not last for only 15 minutes; it will last for 2 hours. There is an old saying, “Mañana” which literally means “tomorrow” but in this culture what Mañana means is “It’s not going to happen today”. It’s not going to happen tomorrow, either, but it just means it’s not going to happen today. So if you ask “Are you going to do this; are we going to have a meeting?” the other person may respond by saying, “Mañana”, which literally means “tomorrow”, but they don’t really mean “tomorrow”. What they really mean is that they do not know for certain when it will happen or when it will get done, but it certainly will not get done today.
 
How they treat time is different here in Nicaragua. We live by the clock in the US but we do not live that way here in Nicaragua. So doing business here was frustrating for expats until we learn that an 11:00 AM meeting (for example) does not necessarily mean it will start at 11:00 AM. It could start at noon today or tomorrow. So as long as you have patience and flexibility and as long as you understand the culture, frustration will not set in. But your initial feeling will be frustration because things do not happen in a timely fashion. Things do not happen when you want them to. They happen when they happen and that is something that a lot of people cannot get used to, especially when you come from a corporate world and you have meetings scheduled at 9:00 AM and again at 10:00 AM and another one at 11:00 AM, then you break for lunch, and then you have another meeting at 1:00 PM and 2:00 PM. We cannot live like that here in Nicaragua. You cannot operate on that system here.
 
Therefore, one phrase to describe doing business in Nicaragua is “initially frustrating”.
 
Also, you have to be careful when doing cross-cultural business transactions. I do not think this is specific only to Nicaragua and Costa Rica. I have been taught that the best model for a business transaction is “win-win”. If we both win and shake hands and win, everyone is happy. That is not the norm here. I am not saying that someone is trying to stab you in the back, just that business here does not always adhere to the win-win strategy. A lot of times, business here is “win-lose.” In order for me to win, you have to lose. So negotiations are different. It is not always about, “do we both win?”, it is usually, “I am winning and I am happy and if you are losing, I am happy.” So you have to be careful because you are not playing by the same rules and you are not playing on the same battlefield and it is not always a win-win situation. Many local business people do not necessarily feel that to conclude a business transaction, both parties have to win. The win-win situation is not in their vocabulary. In my business dealings, in the world I come from, it should be a win-win situation but that is not always the case here.
 
In the US, it would occur to you that, if you have a long-term business relationship with someone, it may hurt that relationship if one of the parties felt like they “lost” in the last transaction.  That does not occur to a lot of people in Nicaragua. That is another difference here in Nicaragua, and it may or may not be cultural.  It could result from past experiences or the nature of the concept of the rich versus the poor, I am not sure why.
 
In my description of Nicaraguan business transactions, I am not talking about the nature of business transactions between the president of Exxon Mobile with the president of Nicaraguan National Bank. When I say business transactions, as an expat, it’s between you and the guy who is cleaning your pool, you and the guy you are buying your car from, you and the person you are buying vegetables from on the street. Their lives are so revolved around day-to-day issues that the concept of “long-term” does not exist for them. For the president of Exxon Mobile with the president of Nicaraguan National Bank, yes, they would tend to think more long-term about business transactions and business relationships.  But how many presidents of Exxon Mobile are actually in my community? Not too many.
 
So when I am talking business, I am talking about the average person dealing with the guy who is painting his house, repairing his roof, fixing his faucet, delivering his milk. These people live on such a day-to-day existence that to think “I need to not extort twice the value of my vegetables from this person today so that he buys vegetables from me for the next 20 years and buys vegetables from my children when my children takes over my business” does not occur to them. Life is in the “immediate “lane” here.
 
They think something like this: What is it that I need today? If I am going to sell my bananas on the street to a local for a penny and an American walks by and he will pay a quarter, I am going to charge the American the quarter and even though he is paying 25 times the price I charge a local, he still thinks that he is paying a good price for the banana because a banana in the US is a dollar. My banana is worth a penny and I am charging the Gringo 25 cents, the Gringo is going to pay it and he loves paying that amount because he is still paying one quarter of what he was paying in the States but he is paying 25 times more than his Nicaraguan neighbor and that is ok for both parties.
 
It’s OK with the Gringo because he is still getting a good deal but the person selling the bananas is not thinking 20 years down the line. He is thinking about today. He is thinking “What can I bring my family by the end of the day? If I can sell a banana to the Gringo for a quarter that I usually take a penny for, I will take it and I am going to win. The Gringo is going to lose.” But the Gringo is still happy even though he knows that he paid a quarter for a banana that is worth a penny to the Nicaraguan. So the Gringo will not lose sleep over it.  The Gringo eventually knows that he got taken advantage of but he feels that it is for a good cause. And to him, it’s OK to pay more for the banana because he can afford it and the poor Nicaraguan street seller needs the extra cash, even though it’s not a win-win situation if you would look purely at the business ethics of it. It’s not a long-term strategy and it may not even be sustainable, but it exists. We all accept the Nicaraguan price and Gringo price in a business transaction. We still pay a lot less than what we would pay for the same thing in the US but we’re probably paying up to 25 times more for something in Nicaragua than a Nicaraguan because the Nicaraguans know we have the money to pay for it, we know we can pay for it, and the price is still less than what we pay for it in the States. It is not a win-win situation but we have learned to accept the win-lose situation.
 
Here’s an example: Every Saturday morning, I walk to the park on my way to the bank and I get my shoes shined, normally for 20 cordoba, which is US 75 cents. I always tip 10 cordoba, so I pay 30 cordoba in total, which is about $1.10. Every one in town knows that a shoe shine is 20 cordoba. I go to the same man every week for two years. Last week, I went to his shoe shining stall, and I sat down and said “Good morning” and he says “Good morning” and he shines my shoes. When he’s done, he says “$3.” I said, “$3? I get my shoes shined from you every week for the last 2 years for 20 Cordoba.” He starts to smile and laugh. I ended up paying $2.50 for my shoes, which is twice what I would normally pay. Now, I am not going to go back to him or I am going to go back to him and ask how much is the shoe shine ahead of time, and when he comes back down to his normal price, I’ll continue getting my shoes shined from him. He is not thinking of the win-win situation. He might be thinking, “Oh here’s an American.” Or maybe he didn’t recognize me because he is old and may have poor eyesight, or maybe I was dressed differently that day. He didn’t recognize me as the usual Saturday 10 o’clock client and he tried to get three and a half times what he normally charges, if I am silly enough to pay for it (even though a shoe shine in the US may be $7 to $10). So to me, $3 is still half the price or less than what I would pay in the US, but it’s 4 times the price of my standard shoe shine in Nicaragua. In this situation, the man shining my shoes is a businessman as am I. It was not a win-win situation and he tried to get more from me because of who I am, an “estrangero” (stranger or tourist), or a Gringo. So you constantly want to be on guard so as not to be over-charged.
 
The same type of situation is common with taxi drivers.  When a Gringo gets in their cab, they will say, “OK, that’s $5.” A 20-minute cab ride in New York City for $20 is cheap but in reality, that cab ride in Nicaragua should be $.50. I know many Gringos who paid $5 for a $.50 cab ride and we all laugh about it.
 
It is the same thing in Nicaragua when dealing with other business transactions such as buying houses or dealing with contractors. In addition, this does not happen only in Nicaragua. I have lived in Costa Rica and they have what we call “the Gringo price.” There is a “local price” and a “Gringo price” for almost everything. The good news is that, in Costa Rica, the Gringo price is still a little cheaper than what we will pay in the States, anyway. We are not complaining about it. You just have to be aware. Most of us are OK with that. There are times when we blow our tops and say, “Wait a minute, I know you only charge $1 for that.  Why are you charging me $4?”. Then the seller gets a big smile on his face as if to say something like, “Well, I tried!” If you tell him that you would only pay 80 cordoba then he would just laugh it off and agree.
 
You don’t have to pay the Gringo price if you don’t want to. You can walk away at any time. If you bargain hard enough, you will pay the local price. That sounds easy but many expats do not understand how to do that because when we see a price, we think that that price is the same for everybody. In Nicaragua, the general thinking is, “How can I get as much as I can for what I sell for today? If this guy finds out that he paid more and he doesn’t come back, I wouldn’t care.” It is not always a win-win situation. Nevertheless, they are thinking that you will come back because that is just how things are. You always take a shot at people and if it does not work, there are no hard feelings. You just move on.