Business beyond borders calls for local nous

As companies venture abroad to offset shrinking domestic returns, Jason Hesse learns that awareness of local business customs can go a long way

The cost to household brand names of not getting – and applying – local knowledge is immeasurable. Yet major brands continue to fail overseas because they do not have sufficient customer insight to make their brands work outside their domestic territories.

And it is not just about product adaptation – like McDonald’s launching vegan menus in India – but service adjustments too. Walmart introduced “greeters” in its German stores, which severely undermined its business there.

Poor localisation results not just in abandoned customers, but in vanishing customer loyalty, corporate reputations, disengaged distributed channels and a low chance of recovery. However, with the UK economy in the doldrums, an increasing number of firms are ploughing ahead with plans to internationalise their businesses.

Kim Hayward, international advisory partner at accountancy group BDO, says while companies are keen to pursue growth overseas because of the turbulent conditions at home, some lack the required awareness to address the real challenges involved. He explains: “Those investing abroad for the first time seem to lack the confidence and knowledge they need to operate overseas – they need to take things one step at a time.”

One company well versed in moving into new markets is Regus, the office space provider, which was established in 1989 by entrepreneur Mark Dixon. Today, it operates more than 1,000 business centres across 95 countries.

The trick to brands succeeding in foreign environments is to be multi-local rather than global

Celia Donne, Regus vice president for global operations, describes the company’s strategy as taking the “McDonald’s” approach, giving its offices a consistent look and feel, rather than a unique style for each country.

“We want our customers to feel at home, no matter which Regus centre they go to,” she says. Regus Business Centres follow a standard template for desk layouts and the style of the offices but, crucially, the company adapts to cultural differences in each country.

“You do have to look at each location separately. For example, in Asian countries, we staff our centres with many more people than elsewhere. The business culture in Asia expects there to be someone to open the door for you, to offer you tea and to offer you support, which is totally different to the self-service culture here in the UK and America,” says Ms Donne.

It goes without saying that language can be major a barrier to companies expanding into foreign markets, but is this a particularly British problem?

Suzannah Hutton, a language and culture adviser to UK Trade & Investment (UKTI) thinks so. “As an island of English speakers, who tend not to be particularly confident at learning and speaking other languages, it does throw people in a way that it might not throw the Dutch or Germans,” she says.

This is echoed by research, conducted by Regus, which found that, when setting up international operations, only 35 per cent of UK firms require managers to be fluent in the local language, compared to 45 per cent of French firms and 57 per cent of German companies.

From a marketing perspective, the trick to brands succeeding in foreign environments is to be multi-local rather than global, says Chris Talago, general manager of Waggener Edstrom Europe.

“There are no successful global expansion campaigns – just multi-local ones. Each country has a different culture and language. Even among English-speaking countries, cultural references vary. Americans, British, Canadians, Australians all require their own local cultural adaptation,” he says.

This is particularly salient when developing marketing campaigns. Mr Talago says that, while the idea of developing a single global campaign is seductive because it is cheaper, quicker or easier, it can easily end up becoming irrelevant to the local market.

“Consumers now expect and demand a personal connection with the products and services they buy,” he says. “If that isn’t personalised or localised, it makes them less willing to engage and the campaign will be less effective.”

DO’S AND DON’TS

Blunders abroad

In Muslim countries, never show the soles of your shoes – this is most relevant to men who cross their legs.

In China, never finish your food – your host will continue to fill your plate until you are full as a sign of being a good host.

In Bulgaria, meetings can be very confusing as shaking your head – usually meaning “no” – means “I’m listening”.

In Hungary, apricot brandy (known as Pálinka) is often served in business meetings – it is considered rude if you don’t drink it.

In Japan, present your business card, holding it with both hands, to the most senior member of the Japanese party first, bowing slightly.