As I have discussed at great length in other articles, a company’s ability to produce locally focused products and services is often a key to its success. Multinationals know this, which is why for decades, global companies have worked to achieve a local feel in each of the markets they operate in – a phenomenon I like to refer to as global-localization. The hope is they will become the local pick or favorite, even amongst local companies.
McDonalds was one of the early pioneers as it ramped up its international expansion during that decade. In India, where cows are sacred, it sold hamburgers made with lamb and other non-beef products. In China and other Asian countries, McDonalds added rice to its menus. The restaurant chain worked hard to use local advertising, social media, and publicity outlets to encourage local receptivity toward its products.
However, even the most successful multinationals do not always realize when they are ruffling national feathers. Starbucks is a good example of how things can go wrong despite the fact it got so many things right when it entered China.
Starbucks understood that it would be more readily accepted if it adapted to the country’s teahouse culture, which has prevailed for thousands of years. The company realized that success was less about selling coffee than creating a comfortable “third place” as an alternative to home and work for a growing population of young entrepreneurs to frequent.
The Seattle-based company’s branding was also attentive to the most fundamental aspect of Chinese culture: the family. In fact, Starbucks built its entire Chinese presence around it. It welcomes employees’ parents (called “partners”) at annual Partner Family Forums where the company shares news about its operations and future plans.
It also launched other forums such as the Starbucks China Parent Care Program, which provides health insurance for the most elderly parents. This program is particularly liked, because it provides direct security to families. It is said to have done wonders for employee retention, which reduces recruitment and training costs.
It seemed this multinational was successfully presenting itself as a local, until it didn’t – because, ultimately, it wasn’t. Starbucks stumbled when it placed profit over place and opened a branch in China’s six-hundred-year-old Forbidden City. The local authorities had initially approved the outlet in addition to other vendors. But Starbucks ended up having to shut down its Forbidden City outlet down after local concerns about commercial activity at China’s most important cultural-heritage site gathered a head of steam – no pun intended.
One very important lesson for multinationals is to take heed of local activism. It can often be decisive in prompting a national push back against global companies. No amount of promotion or advertising or local accommodation will prevail if a society feels its cultural identity is being trampled over. In China’s case, the country had not only reached a level of development where there was a big enough middle class to care about issues such as heritage, but also one where the nation itself was starting to want to assert its cultural identity on the global stage.
In the end, no matter how close multi-nationals may get to the global-localization of their products – with the help of resources that provide insight for cultural preferences and priorities — there’s no replacement for the true understanding of cultural nuance that local/regional companies cater to. Learn more about how to harness or hone local expertise to help with your business success by checking out my website today!
