Why Global Expansion Is So Challenging

by | Aug 12, 2020

Going global is a challenge for any business. If you’re struggling with global expansion, you may be wondering if it’s even worth it. However, the question to ask is not Why is it so hard?, but rather, Why did we think it would be easy? The usual response to that question is Because we’ve done it before. But have you, really? 

Global Expansion

How Much Experience in Global Expansion Have You Really Had?

Yes, your company has achieved a certain level of success in your home market. You might have even gained a toehold in one or two overseas markets, making you feel confident enough to develop a transnational strategy to venture into numerous other markets that all behave differently. However, you’re likely underestimating how much you’ve learned from your limited experience. 

The Difficulty of Scaling Up

As you begin to scale across borders, you quickly realize that global expansion is harder than you had thought. The sheer complexity of focusing on a market entry strategy for many markets simultaneously is challenging. It’s not as simple as taking lessons from one market and applying them to another. Instead, you need to master the task of understand multiple markets simultaneously. 

Change Your Mindset

The biggest reason companies struggle with global expansion is ethnocentrism. The odds are that, while you’ve been growing your business, you’ve been focused on your reality, maybe in the belief that it’s the only reality that matters. However, there are many other local realities (i.e., cultures) existing all over the world.

It’s actually quite natural to think that others have a similar experience to yours. However, this belief can be attributed not to a superiority complex but rather to a lack of knowledge or, to put it another way, cultural ignorance. Therefore, if you’re involved in global expansion, your goal should be to work to understand local realities for customers in other markets. 

Proceed Gradually

You likely have a long road ahead of you before you can truly understand the cultural nuances pertaining to the local markets you wish to enter. This will take time. The best way to proceed is to commit to learning as much as possible about just one local market that is very different from your own. When you do this, you’ll come to realize that your local reality does not constitute the global default. Rather it’s just one of many different local realities all over the world. With this as your starting point, you’ll begin to realize that multiple local cultures exist. 

What Is a Culture?

Culture can be defined as the way of life of a people. Cultures vary not only from country to country but also often among demographic groups within a country. There could also be diverse cultural values and norms between generations, different socioeconomic groups, and even between men and women.

Cultural Preferences May Not Coincide With Ethnicity

 Many companies tend to overlook the demand for ethnic products that exist outside of the demographically-defined target group. Here are some examples: 

As a marketer, your primary takeaway is the need to avoid relying on simple assumptions about ethnic preferences. Instead, you must work to understand the true nature of demand across groups. This is especially the case in large metropolitan areas, which are increasingly becoming a blend of various cultures.

Intercultural Marketing

Successful intercultural marketing requires in-depth analysis across several key variables. For instance, different cultures vary in their receptiveness to marketing messages that are direct or indirect, rational or emotional, or explicit or implicit. Here are some examples:

  • Some groups respond better to messages that contain supporting information (e.g., the Germans and Americans). Preference for product information equates to higher education levels and is, therefore, more ingrained in developed countries in Europe and East Asia. 
  • Some cultures respond better to more creative and fantasy-like pitches (e.g., the French and Italians). 
  • People in France and Sweden are attracted to marketing messages with symbolic allusions. 
  • The Japanese are alienated by the hard sell and prefer indirect, soft-sell messages. They relate to content that stresses the family, respect for the elderly, and tradition. 
  • The Chinese and the Japanese are more receptive to products that equal status symbols. However, price still triumphs over brand name for the average consumer in East Asian countries.
  • Different cultures vary on the amount of information relating to price and warranty that consumers like. Korea emphasizes it the most; the Japanese, by contrast, seldom mention price.

What the Chinese Consumer Wants

The Chinese economy is on track to become the largest in the world. The middle class is growing rapidly, and these consumers respond best to soft-sell marketing that emphasizes collective rather than individualistic values. Large corporations like IKEA have been successful by adopting strategies that include the following:

  • Focusing on ways to synch the product with the local culture in the many regional Chinese sub-markets. 
  • Capitalizing on the Chinese consumer’s reliance first on TV and second on word-of-mouth for product selection. However, the Internet is exerting more and more influence. The average Chinese consumer is spending more time online researching product choices than is the case for the average Westerner.
  • Understanding that Chinese consumers are looking for products with aesthetic appeal, and there is a corresponding growing demand among the upwardly mobile Chinese for high quality, luxury goods.
  • Playing up to the Chinese view of shopping as entertainment and an enjoyable way to spend leisure time.

Final Thoughts

Different areas of the world have their own unique cultures that pose challenges for international marketers. Your potential global customers come with considerable cultural diversities in terms of languages, needs, habits, preferences, expectations, buying capacities, consumption patterns, and more. This is why, compared to your domestic market, effective global expansion it is much more difficult to achieve.

How Localize Can Help

Localize is a translation management service (TMS) that goes far beyond just translating your content into another language. Contact us to see how we can help make your global expansion plans a success.