The Importance of Localization in Global Business Expansion

(SGI) - In a recently published book titled "Global Class," Klaus Wehage, often referred to as the "Silicon Valley ambassador," highlights a common mistake made by businesses when aiming to enter the international market. He emphasizes the need to view international expansion not merely as a goal but as a process that should include a crucial "localization" stage.

The Importance of Localization in Global Business Expansion

Wehage draws on extensive research, including over a year of interviews with more than 400 businesses, including 250 of the world's fastest-growing large businesses, to provide insights in his book. The material is categorized into three parts, corresponding to the major strategies of the global expansion process: innovation, scale growth, and empowerment. Through this, he identifies common pitfalls during global expansion.

JOURNALIST: - Sir, could you provide a specific example?

KLAUS WEHAGE: - Certainly. One prominent example is the case of the Walmart supermarket chain, highly successful in the US but facing significant failure in Germany. Despite its extensive operations and success in the US, Walmart struggled to compete with German retailers, especially after acquiring Wertkauf and Interspar, the two largest retailers in Germany. The failure stemmed from Walmart's inability to establish strong relationships with German suppliers, neglecting the localization of products and corporate culture to suit the German market. Deeper analysis revealed that Walmart's failure resulted from a lack of thorough understanding of German shopping and living habits.

Firstly, Walmart's prepackaged meats, top-sellers in the US, were disliked by Germans, who preferred fresh meat from local butchers and were uninterested in unfamiliar Walmart-branded products. Secondly, Walmart's customer service approach, involving close guidance and detailed product advice, clashed with the German preference for a more independent and private shopping experience. The continuous introduction and advertising of products by staff were perceived as bothersome and intrusive.

In summary, Walmart attempted to impose an "American style" in the German market, disregarding cultural nuances, local consumer behavior, and existing competition. This misstep led to Walmart selling 85 retail stores to German competitor Metro at a loss of USD 1 billion.

The lesson from this example underscores the significance of thorough localization efforts when expanding globally, recognizing and adapting to the cultural and consumer nuances of each market.

- With more than 10 years of companionship and contact with Vietnamese businesses, what is your opinion about the Vietnamese market and businesses, sir?

- In 2012, during my market research for Carlsberg beer in Vietnam, I identified a common issue prevalent among Vietnamese companies entering the international market – a lack of a comprehensive "program framework." Recognizing this, I conducted surveys and research across various companies to develop a "management framework" not only tailored for Vietnamese businesses but also adaptable for companies worldwide seeking international expansion.

To create a book with specific models, I embarked on research across different markets and businesses. Interestingly, when posing similar questions, businesses from diverse regions provided remarkably similar answers. This pattern suggested a common set of challenges and "holes" in the global expansion strategies of businesses.

The governance framework developed through this process has proven highly applicable and valuable for Vietnamese businesses. Looking ahead, I envision these models being integrated into university curricula, allowing students to acquire insights and support their future entrepreneurial endeavors. This educational initiative could significantly benefit the Vietnamese market, fostering a generation of business leaders equipped with strategic tools for successful global expansion.

- Sir, Vietnam is currently considered to have a rapidly increasing speed and trend of startups. Dubbed the "Silicon Valley ambassador," what do you think about startups in Vietnam today?

- Vietnam is currently witnessing a surge in startup entrepreneurs, reflecting a vibrant ecosystem. However, to establish a successful business and emerge as a global entrepreneur, cultivating the right mindset is paramount. A startup mindset embodies agility, fostering attitudes conducive to a collaborative work environment with respect for colleagues, customers, and products. This mindset is crucial for navigating the customer development process, adjusting work methods, aligning with cultural considerations, and market orientation.

Furthermore, startups demand qualities such as steadfastness, perseverance, leveraging all available abilities, overcoming obstacles, and an unwavering commitment to never giving up. Being "comfortable with ambiguity" is essential, encouraging individuals to give their best even in uncertain situations. Equally important is "being willing to accept failure," a willingness to take risks as a learning opportunity. Ultimately, startups should prioritize creative solutions and maintain a customer development mindset.

I believe that Vietnam's technology and agriculture sectors offer abundant potential and opportunities for startups, particularly those eyeing the international market. The golden population structure in Vietnam further supports these endeavors.

- Thank you very much.

Các tin khác