The Background Buzz Insider
March 9, 2011
What You Think You Know (about doing business internationally)
To succeed in emerging markets, toss out old assumptions
– and consider packing your bags.
With domestic demand sluggish at best, many are looking to overseas
markets for growth, and there is a marked tendency to put on rose-colored
glasses when doing so. Who isn't bedazzled by the growth stories
being reported from these developing countries? It's not just
that many of these countries survived the recession more or less
unscathed and are back on growth trajectories that most developed
markets can only dream of. According to many predictions, collectively
they may soon eclipse today's developed countries.
Many companies also assume that they only need two strategies,
one for home and one that lumps the rest of the world into a single
"international" group. On paper, having just one international
plan seems sensible, particularly from the standpoint of efficiency
and clarity. But it oversimplifies. Fast-moving multinationals,
figured that out years ago and now spend millions developing,
country by country, localized products, packaging, and prices
to gain market share in tough countries like India. "We've
learned that all of our customers are more different than similar,"
says Kyle Gendreau, of Samsonite.
is that emerging markets have, by now, modernized and globalized.
That's only partly true. Consider China. It has been nearly 10
years since it became a member of the World Trade Organization
and adopted a host of new laws and agreements that facilitate
more foreign investment. Those improvements, while critical, often
lull executives from developed countries into a false sense of
security, asserts Nandani Lynton, adjunct management professor
at China Europe International Business School in Shanghai. One
symptom of this tendency, Lynton says, is that executives "are
not asking the questions they need to ask to get beyond superficial
answers." For example, she says, "an executive will
ask, 'Can we buy this land?' and the answer will be, 'The land
is no problem.' What might not be mentioned is that you can't
get the title deed, or it might hinge on your partner's relationships
with government. If you don't keep asking questions, you'll never
The most important ingredient for success, he says, is to "stop
looking at emerging markets through the lens of developed markets.
That is a recipe for disaster."
To read more go to: http://www.cfo.com/article.cfm/14550798