For last few months news headlines have been filled with instances of business going bust and closing down operations in places which seemed to be the future growth engine. It seems globalization is no longer on top of agenda for any CEO. Instead consolidation or contraction is the IN thing. There is no dearth of reasons to blame for this change, few of these which meet the front page of business magazines are change in government policies, week currency, and unstable government. However one key reason which everyone is happy to ignore is, failure to LOCALIZE and according to me that is a key to success of any type of business entering a foreign land.
Let me give you an example from an industry which has been applied the principal of “Localization for Globalization”
Few days ago I was in India with a Chinese colleague. For dinner I decided to take him to an “Indian Chinese” restaurant, thinking he will find something of his taste there. After dinner he made a very interesting comment that the schezwan fried rice we had, nothing Chinese about it. It is not that Indian chefs no not know how to cook Chinese food, in-fact you will get a similar comment when you will take a Mexican to have quesadilla in Singapore or Indian to have Butter Chicken in UK.
What these restaurant chains have done is they have LOCALIZED the dishes to suit palate of places where they are. You cannot expect to succeed by serving spicy Hyderabad biryani in a place where people are used to eating salads and bread. Food industry has learned to ADAPT or in other words LOCALIZE to GLOBALIZE. Now let us go back to current trend of businesses exiting places which they considered promising just few months back.
Two most common mistake made by these businesses are –
- What works here will work there
- Everyone knows us
Before we get into depth of each, let me give you another example. Few years back I was in India and wanted to apply for a personal loan. I had heard about this international bank which had started operating in India. I called their office and asked them what I need to do to get a loan. The pleasantly sounding officer started giving me list of documents that I need (list seemed to be never ending), then I was asked to open a saving account with the bank and on top of that I was to travel 40 km to one of their branch to complete the formalities. Then I tried calling a local bank and I was told that their agent will come to my home on next day to provide details of the loan product and also take the required documents from me.
What do you think might have happened to the international bank I had called? The bank recently closed their operations in India and blamed it on market forces for this failure. However I think this international bank failed to LOCALIZE and that is what caused the failure. Not doing proper study of what product or service is available in local market and not appreciating what local wants is a perfect recipe of failure.
What works here will work there
No two markets are same, even if you are in business of selling apples. You cannot do apple to apple comparison when it comes to deciding what will work in each market. You cannot sit in London looking at Big Ben and decide how to sell a credit cards in New Delhi. What has worked in USA might not work in India, and what works in India might not work in Japan. You need someone on the ground to decide what and how to sell your product. Globalization is not just about selling products/services world over it is about studying the local market to decide what market wants and offering products to fulfil this need.
Everyone Knows Us
Tata is a household name in India, similarly Barclays is in UK, Walmart is in US but this does not mean that you are the centre of this world and everyone knows you. Establishing a name in foreign land is one of the biggest challenge and should be given highest priority in things to be done. Without building a trust around your brand you cannot convince people to buy your product. To build the trust businesses should remember that what worked in place A might not work in place B, so learning from local market again plays an important role.
If you don’t look at different markets through a different lens then you won’t be able to see what lies under the surface.Strength Weakness Opportunities andThreats are different for every market. Every new venture is a chance to learn and re-learn. Using same yardstick to measure success and failure in every market will end up shutting down business.
A note of caution is that it does not mean that businesses should not have any global strategy or global product line. What I want to allude to, is that we should be cautious before entering any market. Understanding wants and needs from local market are far more important than what we currently think they are. Also it does not mean that every market is always different, sometimes standardization is what local market require, a good example of standardization is Starbucks, go to any Starbucks in world and you will get the same taste of coffee. This is what one expect from Starbucks across the world but for majority of cases you need to LOCALIZE to GLOBALIZE.
