There are major barriers carriers will face as they try to unlock the potential of more than 1.2 billion people living and working in China, a global powerhouse. And while these barriers will all but stop even the most tenacious players, there are three that will stop them dead in their tracks.
As companies attempt to enter the Chinese market, the first and largest barrier is the language. Imagine your claims associate trying to get the details of an accident from the various parties involved and not being fluent in Chinese — it just wouldn’t be possible. All verbal and written communications would need to be in Mandarin, which would further be complicated by more than 20 dialects. Even if these problems were solved, capturing pertinent data in your systems presents a challenge, as Mandarin takes years to master.
The claims organization faces the second major barrier. The practices in China will be quite challenging due to the nature of settlement procedures used here. If you are involved in an accident, the transaction is often settled on-site, in real time. Wouldn’t that create some workflow issues?
For a new CEO, first impressions matter. Early in his tenure as president and chief executive of the Volkswagen Group of America, Stefan Jacoby got an angry letter from a VW dealer in California, declining his invitation to attend Jacoby’s first all-hands dealer meeting. Jacoby was about to become the most recent in a long line of Germans bearing promises.
Jacoby has had to labor to absorb a lot of lessons since arriving in his adopted country in 2007. Another early one came from Jill Bratina, his new head of corporate communications. “He kept asking me why I was so thirsty all the time,” says Bratina, who is rarely seen without a big bottle of water in hand or jammed into a cup holder in her car. “I’m not thirsty, exactly — I just like to make sure I have water available.” All the time. Who doesn’t? Well, Germans evidently. For Americans, who spend so much time sitting in traffic, their cars are extensions of their offices and family rooms. In the absence of an autobahn, comfort and convenience — and cup holders — can be more important than torque.
Volkswagen, originally a beloved, albeit quirky, counterculture brand, has never seemed to fully grasp the American market. When Jacoby took over the U.S. operation in 2007, Volkswagen (including Audi) was clinging to a 2% share of the U.S. market, down from 7% during its Beetle heyday in the 1970s. (VW is now at nearly 2.9% — a significant increase, but slightly less than Hyundai’s market-share jump from 2.9% to 4.3% during the same period.) The dealer network was in disrepair, fatigued by shipment delays, product complaints, and a confusing and occasionally short-lived parade of brands. The German reputation for design and engineering excellence sometimes came across to distributors as arrogance: You will accept the perfect cars we give you, not the rolling living rooms you ask for. Except the cars weren’t always perfect, especially for Americans. “Inconsistent reliability has haunted VW for decades and their understanding of the expectations of the American public has never quite been there,” says Lindland. “There is always a sort of cock-their-ears-and-do-the-puppy-look when we talk to them about the American market.”
Jacoby, now 51 and a veteran of challenging international assignments, insists he is listening. He tells charming tales of past culture shocks, first as the dreamy and unfocused youngest son of a World War II air-force general growing up in postwar Germany, then working for Volkswagen in Japan and China, and for the Japanese company Mitsubishi in Europe. He has learned to watch first, then act. “It was clear we were not understanding of our customers,” Jacoby says. “We needed to change our style in the U.S., as we are a very stubborn bureaucratic German company — and German management — to some extent. I am here to listen.”
People in Europe and Asia buy consumer goods, drink cafe lattes and dine on burgers. So why is it so hard for U.S. companies to expand overseas? Wal-Mart Stores (WMT), Starbucks (SBUX) and McDonald’s (MCD) and many American-based players ran into growing pains, missteps and outright failures when opening outlets abroad.
Mastering cultural differences and understanding European, Asian or Latin American customers affect bottom-line results. The companies that make the cultural adjustments thrive, and the inflexible retailers either adapt or fail.
“Americans think if they are well-intentioned and go overseas or anywhere, they’ll be successful. Being well-intentioned isn’t enough,” said Charlene Solomon, a management consultant who co-wrote “Managing Across Cultures” with Michael S. Schell. She says businesspeople need to understand cultural differences and pinpoint what global customers want from their product.
For John Tolva, IBM’s Chicago-based director of citizenship and technology, the value of his four-week assignment to Ghana last year really hit him during a game of Scrabble by candlelight.
He and teammates from India, Germany, Brazil, and other countries had agreed on an unorthodox rule: You could use any language you knew. “That’s when I understood what a globally integrated enterprise looks like,” he says.
He and the others were forced to ask “what connects us,” since it obviously wasn’t language or culture. The real connection, Tolva says, is “the values that IBM has instilled in us. It’s a professional code that isn’t written down — but it’s there.”
One of India’s highest courts has banned foreign law firms from all forms of practice in India, a major victory for a trade group of Indian lawyers and a defeat for firms that opened liaison offices in India during a brief window in the 1990s.
Representatives of the three firms immediately affected by the Bombay High Court ruling - Ashurst, White & Case and Chadbourne & Parke - have confirmed the nature of the decision and said they are reviewing its implications.
Only Ashurst still has an open liaison office in India, and the firm’s website specifies that the office does not provide legal advice. White & Case conducts much of its India practice from offices in Singapore.
The Bombay High Court’s ruling quashes the optimism some legal observers felt in May, when India’s voters re-elected Prime Minister Manmohan Singh, a proponent of liberalising the country’s economy. Foreign law firms have been banned in India since a 1995 high court ruling that closed the brief window during which the three firms named above opened their liaison offices.
PepsiCo’s Indra K. Nooyi is on a new realisation about the land of her birth as she leads the board of her global food and beverage empire at a meeting in Mumbai this week.
“We feel that solutions which have been devised by us around the world, cannot be imposed here. The company needs to find unique solutions for India,” Nooyi, chairman and CEO of PepsiCo told a news conference in Delhi.
PepsiCo’s brands such as Lays are already being complemented by local tags like Kurkure and lemon drink Nimbooz in a market in which its mainstay business, soft drinks, has faced a tough battle with traditional rival Coca Cola, which made waves in the rural hinterland with its Rs. 5-rupee bottle that attracted attention.
For Coca-Cola, which entered India in 1993, four years after its rival, sales volumes have grown for more than three years.
Nooyi said PepsiCo plans to customise its food and beverage products to suit the requirements of the Indian market.
Atul Singh, president and CEO of Coca Cola India said he would not discuss strategy. Coke has introduced local products such as Aam Panna as it eyes an investment plan of $250 million for India.
“We do not devise our marketing strategies according to any company’s plans. We continuously evaluate our options and our products are a result of continuous research initiatives,” said Singh.
PepsiCo’s three-day board meeting, scheduled to begin on Wednesday, is also aimed at creating awareness about India’s culture and product needs.
It’s rare that a $100 billion business can be marginalized, but such is the case with the international arm of Wal-Mart Stores (WMT). As a stand-alone company, it would rank among the top five global retailers. Inside the $401 billion retail giant, though, the business has traditionally received short shrift. Its Bentonville (Ark.) headquarters is underwhelming—a drab, largely windowless, one-story structure named after Bill Mitchell, a former Walmart executive whom nobody seems to remember.
Since venturing into Mexico in 1991, Walmart International has grown haphazardly. During the 1990s the retailer exported its big-box, low-price model. While that strategy worked in North America, the results were so bad in Germany and Korea that Walmart withdrew from those countries in 2006. In response, Michael T. Duke, the former international chief and current CEO, gave local managers more autonomy while instituting more stringent financial goals for each region.
The results are mixed: International sales rose 11.5% in the second quarter (before the impact of exchange rate fluctuations), while U.S. sales barely budged. But over the past few years, operating profit margins have declined on the international side, which now has 3,805 stores operating under 53 distinct banners in 15 markets. As international chief C. Douglas McMillon says, Walmart is “progressing from being a domestic company with an international division to being a global company.”
Exactly a year after Nomura made its successful lunge for Lehman Brothers, the official line in Tokyo is that the merger is running like clockwork.
One or two oddments, though, are still getting lost in translation, despite the availability of native English speakers ready to take a glance over any important company circulars. A recent e-mail politely reminded staff in Nomura’s Tokyo headquarters that “gay colour nail polish and manicure” fell outside the company’s dress code.
The trading floor was also left baffled by guidelines on the correct type of trousers: “Wear the one gives to the ankle to the height of pants.”
Internally, everyone is convinced that the word “gay” was intended in its purely original sense of cheerful and bright. The problem is that many of the electronic Japanese-to-English dictionaries on sale in Japan are occasionally woefully behind the times on the more common usage of some English words. The Japanese compiler of the memo appears to have innocently typed the Japanese word hadena (gaudy) into one such machine and received the translation “gay”.
A blockbuster sci-fi movie which caricatures Nigerians as gangsters and cannibals and a Sony PlayStation advert which implies they are fraudsters have infuriated a government battling to improve the country’s image.
South African film “District 9,” which has topped the UK box office for two straight weeks and ranked in the top 10 in North America, is an allegory on segregation and xenophobia, with alien life forms cooped up in a township set in Johannesburg.
None of the groups shown comes out particularly well, but the Nigerians are portrayed as gangsters, cannibals, pimps and prostitutes, while their leader’s name is pronounced Obasanjo — the same as that of Nigeria’s former president.
Facebook is the biggest social network in the world, so it may come as a surprise to some that up until early 2008, it didn’t offer any localized versions of the site at all. The company managed to jumpstart its international presence with an application fittingly called Translations, which took the time-consuming and costly task of translating the site and crowd-sourced it, asking the network’s millions of users to lend a hand.
The process proved to be very efficient: Facebook launched a Spanish site in Feburary 2008, only a few weeks after unveiling the app, and by June it had support for 16 more languages. It’s now up to over 60, including right-to-left reading languages like Hebrew. And now, Facebook is trying to patent the process that helped turn it into an international goliath.
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