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December 11, 2009

Don't think local, think locale

Imagine yourself going to Japan to open a restaurant. Your market research says that your burgers are going to sell like hot cakes there, so you have planned a major investment there and drawn up plans for expansions. You land at the Narita airport and are absolutely clueless on how to get out of there. You look around and find that all directions and signs in Japanese. You try to ask for directions but all you get is blank stares because no one understands English. Somehow you manage to find your way out and get busy with your work. After a lot of hard work, you finally open your restaurant but you don’t find many people walking in. Your business goes dry and it’s difficult to survive with so much local competition around. What is really going wrong? Didn’t your market research say that you are bound to succeed?

This is a big dilemma for a lot of entrepreneurs when they try to enter emerging markets. You need to cross the language and cultural barrier in order to succeed beyond your neighborhood. If you open a restaurant in Japan, you have to ensure that your menu is customized for their tastes. You have to ensure that you have a menu in Japanese as well. All posters and signboards inside or outside your restaurant must be in Japanese, else how will the Japanese people know what you are trying to sell? Mc Donald’s sells their burgers in many countries, but they have customized their burgers according to their target market. While you may find a vegetarian burger in India, you will probably not find it in Japan. Instead they have a teriyaki chicken burger in Japan which they don’t sell in Canada. Over the years companies such a Mc Donald’s, Microsoft, Apple, IBM etc have realized the importance of customizing their offerings for the global markets.

Localization is critical when entering new markets. Localization is more than just translation of your user interfaces of help documents. It also takes into consideration the cultural, legal, regulation issues etc. It makes sense to invest in the global markets only when you foresee an ROI from the opportunity. So which are the emerging markets in 2009 and beyond? Which geographies should you target to increase your revenues? There are the most common questions which come up and firms like Forrester and Gartner have extensive market research data to answer all these questions. A research by Byte Level Research says that non-English speakers will represent 79% of all the internet users by 2010. So which language will dominate the internet in future? German is currently the most popular language on the internet, but Spanish is expected to overtake it and Chinese (simplified) is quickly gaining ground. According to the World Intellectual Property Organization (WIPO) and the International Telecommunications Union (ITU), Chinese will outrank English as the most-used language on the internet. Today the number of online users from China and Europe far exceed those from the United States.

The numbers don’t lie. All these statistics have been generated by collecting information and data from hundreds of small to medium to large corporations across the globe. Many companies are expanding their already established businesses, into other geographies. New players into the market are already making expansion plans into other geographies. According to a Byte Level Research done in 2007; on an average 80% of the companies interviewed, see their competitors taking their business global. It is imperative for them to be pro-active in such a scenario and make plans for going global themselves. It’s a case of ‘Go global or perish’. Intel generates around 70% of their revenues from outside the US. Microsoft makes around one third of their revenue from outside the US. Google had already reached the 50% mark by 2008. As I have mentioned in one of my previous blogs, it’s not enough being the best in your neighborhood anymore. Don’t think local, think locale…

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