If you're going to set up shop in a foreign country and hire locals, you have two options:
a) Learn about the local culture and try your damnedest to conform to their culture. This includes things like talking to other Americans who have started businesses there, reading as much as possible about the culture, finding a trusted local to serve as a de facto guide, and admitting that you don't know what you don't know.
b) Do things the exact way you would do them at home.
In your situation, you had a trusted local guide who was doing a fine job of running things. Then, you demoted her. When she complained about Joe's management style, you didn't take that as a hint, instead you carried on as you had before. In this case, option B cost significantly more time and money than option A would have.
International business is intensely hard and I'm not criticizing you. If you'd like to hear about my own sizable screwup, you can email me!