3 Steps to a Successful International Expansion Follow these strategies if you are trying to scale outside of the U.S.
By Rashan Dixon
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Business is booming. You're hiring like crazy, beating quarterly projections and winning the public relations game at every opportunity. But what happens when it's time to expand beyond the confines of your home country and start dipping a toe into the international market?
What works on your home shores may fail across the world, sometimes with disastrous results. Apple learned this firsthand in 2016 when its iPhone 7 release slogan had an unfortunate association when translated to Cantonese. Then there's Walmart, which closed down operations in Germany in 2006 with $1 billion in losses after the front-door greeters and friendly staff clashed with the social etiquette of the locals.
According to research published by the Harvard Business Review, many international expansions can take a full decade to see even a 1 percent return on investment. Is there a way to buck that trend and make a truly successful transition? The answer is yes, so long as you understand the local culture before you begin.
Related: Tips and Tools Your Startup Can Use to Maximize Your International Business
New Worlds, New Rules
Whether expanding your business organically or through mergers and acquisitions, the key to a successful international expansion is adapting to — and integrating into — the local culture. No matter which method you apply, you have to find ways to take on a new customer base and tailor messages, payment methods and sales cycles to a foreign audience. Just as with a new audience at home, this requires a complete end-to-end understanding of the customer journey.
Only now, you have the added complications of language and cultural barriers, on top of new legal systems to contend with. There's also the fairly important question of how your business will handle foreign currencies. Put all of these together, and the potential pitfalls seem limitless. But with the proper understanding of the culture you're looking to do business with, no barrier is insurmountable, and the potential benefits are massive.
Just look at Dunkin', which maintains more than 3,200 international stores in 36 countries by catering to local tastes, such as dry pork and seaweed donuts in China. Taking that a step further, Nike has evolved to include massive degrees of customization for its product line, allowing customers across the world to add their own cultural flair.
Looking to steer your company into international markets? Here are the keys to ensuring your business's cultural adaptation is successful.
1. Hire locally
Overseas hiring is a tricky proposition under the best of circumstances, yet the people you hire have the potential to massively impact your expansion's success. Try implementing an on-site hiring team in the region that understands the cultural differences at play.
"Make sure every hire is aware of your company's best practices, especially when they're different than the cultural norms," advises Matthew Debbage, CEO of Creditsafe USA and COO for the Creditsafe Group, in a blog post for Tweak Your Biz. "You can then ensure that you have a local team that's working in sync with you instead of at odds with your goals."
By following this advice, you increase the likelihood that your launch in the new country will go smoothly.
Related: 4 Factors for Hiring Overseas Employees
2. Partner proactively
Partnering with organizations that are already familiar with the region can help you cut through red tape faster and navigate the business landscape. Think of these partners as mapmakers. Because these organizations have been there before you and found success, they can help you find a clear path forward.
Back in 2009, Cisco announced an expansion of its partnership with Japanese company Fujitsu as part of an effort to bring unified communications to the country. Pairing Cisco's track record of technology development with Fujitsu's knowledge of products and local business helped both to collaborate easily and bring swift change to the Japanese communications market.
3. Remodel culturally
Different markets often require different business models to succeed. While scouting locations and considering new hires, re-examine your operational framework to ensure it meshes with the cultural and economic realities of the places where you wish to land. As a guidepost, consider how Starbucks navigated its expansion into China.
Taking the Starbucks brand global didn't mean that the coffee giant stuck to a lineup of uniform global products. Instead, market researcher Gigi DeVault describes how "Starbucks created extensive consumer taste profile analyses that are sufficiently agile to enable them to change with the market and to create an attractive East meets West product mix." The company even adopted ancient tea house practices that are intrinsic to Chinese culture.
Related: How Your Global Business Can Meld Your Company's Culture With Local Culture
Success on your home soil does not automatically translate to success overseas. A successful international expansion requires the right plan, the right operations and the right people to ensure local culture is given the respect it deserves.
