Often it is said that due to globalization, American companies will enter countries and create conditions in which local businesses cannot survive. This is not always true. Recently Wal-Mart pulled out of Germany since they could not adapt to German shopping habits and make profits in the eight years they were there. Now from China comes the story of online bookseller Dangdang.com, which is giving Amazon.com a run for their money.
Equally critical to success, analysts and executives say, is the ability of domestic companies to understand and adapt to some of the other peculiarities of China’s market. Ms. Yu says Dangdang had to make adjustments to the model pioneered by Amazon.com and others. For example, the vast majority of Dangdang’s Chinese buyers of books pay cash on delivery — a result of the fact that credit cards still are relatively uncommon in China.
Dangdang faltered early because of a failure to recognize the uniqueness of China’s market. Ms. Yu, a longtime credit-card user from her years in New York, felt they were essential to selling products online. But credit-card use in China was paltry, meaning many prospective customers couldn’t pay. “We didn’t get much business,” Ms. Yu says now.
So Dangdang switched to two other payment methods: cash on delivery and postal money orders. Now, only about 15% of Dangdang’s transactions are paid for with credit cards.
“Don’t try to change consumer behavior,” Ms. Yu says she learned from that experience. “If consumers don’t want to pay with credit cards, then ask them how they want to pay. If they want to pay cash, then figure out a way to get their cash.”[China’s Web Retailers Beat U.S. Rivals At Their Own Game(subscription reqd)]
One thought on “Surviving in a Globalized World”
Globalization is a word with many different meanings and therefore subject to various interpretations.
I think Microsoft got it right many years ago (I think it was them) when they said “Think Local, But Act Global.” Consequently their strategy has been to think from a local perspective wherever they have gone and established their operations. Many other IT companies are following the same strategy since the local markets requirements are often very different.
In the case of Wal-mart in Germany…they misread the cultural and consumer habit tea leaves of that country. At least that is what various analysis of Wal-mart’s failure in Germany appear to underscore.