The emerging data center market in Central and Eastern Europe is becoming increasingly attractive for investment, driven by fast-paced GDP growth, albeit from a lower starting point than the West, and a population early on its digitalization journey.

This is against a backdrop of a cost-effective, educated, and ambitious workforce, available land, and available and sustainable power opportunities. However, there are a number of cultural aspects to consider when doing business in the region, and understanding the broader context is key.

Not just one country

One of the biggest mistakes I see from Western companies is that there is a real tendency in the West to view these countries as just one region. This, of course, simplifies things, and there are some generalisations that can be drawn; however, each of these countries has its own personality, culture, and ways of doing business, and to ignore this is, at best, a missed opportunity.

In reality, this is a disparate group of countries that all offer different pros and cons for data centre investment.

The importance of historical context

What we are currently seeing is that each of these countries has been shaped by its different historical experiences.

During the creation of these modern countries, there was a long-lasting dependency on the four major players in the region – Prussia, the Ottoman Empire, Russia, and Austria-Hungary. 

For example, the Central European countries were greatly influenced by Prussian and Austro-Hungarian, whilst countries in the south, like Romania and the Balkans, were influenced by Russia and the Ottoman Empire. 

The late 19th and early 20th centuries were a period of dramatic transformation for these Empires, marked by war, revolution, and the rise of nationalism, ultimately leading to their fragmentation and the redrawing of the region. So, it is important to understand that the Central and Eastern European countries have only existed independently and more or less in their current shape since the 1890s.

Communism had a huge impact on most countries, which remained mainly agricultural despite some hasty investment in industry after the War. There has been a slowdown in investment in factories and infrastructure since the 1960s, and there are now signs of deterioration. The strong emphasis on education has resulted in a ‘brain drain’ with many younger people leaving to go to more developed countries with better opportunities. These are key challenges for the region that need to be addressed.

Working out our differences

As a result, these modern states, which are still relatively young – just 80-100 years old – value their history and their culture reflects this, so anyone doing business with them must respect this.

Whilst most Eastern European countries are growing faster than many Western European economies in relative terms, in many areas they are still behind. There is, for example, an outdated management style reminiscent of the UK’s 1960s top-down approach, which can be off-putting for Western companies due to cultural clashes around areas such as wellbeing and inclusivity.  Employees may wait for senior leaders to approve changes, so don’t be surprised if negotiations take extra time.

There can be a focus on previous successes and traditional methods alongside a reticence to embrace new thinking and implement new advanced technology. In some regions there is also a lack of drive for change and a ‘fatalistic’ approach is commonplace.

This is starting to change, albeit slowly, as people are increasingly influenced by travel and social media, although the latter can create a distorted view, but traditional family influences are still strong. This change is much more visible in cities with the gap between urban and rural communities widening.

On a day-to-day basis senior executives favour a down-to-earth style that is generally more formal than the West. Hierarchy and position are very important as is individual recognition and addressing the highest-ranking person in the room first, is seen as a sign of respect. Trust and personal connections often come before contracts or formal agreements and progress can be slow until trust is established; once it’s there, relationships can be long-term and loyal.

Central and Eastern Europe is a region driven by contradictions and opportunities but which has the potential to be a major player in the data centre industry. However, business culture plays a big role, and while some countries in the region have adopted global business practices, their approach to relationships, hierarchy, and communication may still reflect local traditions and history.

Understanding this and adapting your behavior should enable you to build trust faster, avoid misunderstandings, and improve your chances of closing deals and maintaining partnerships.