By Nigel Hollis
1st Dec 2008
Global expansion might seem far less esoteric and dangerous than default credit swaps, but it's still risky. Why? Because local consumers may want local brands more than yours.
I'm a sucker for Pixar's computer-animated movies, but only recently caught up with this past summer's hit, WALL.E. Why did I bother renting it now, some five months after its release? Well, given all the news from the financial markets (and, well, just about everywhere else), can you think of a better time for a cheery, family-friendly, robot love story with a happy ending? I thought the film would be a great, if temporary, distraction from the manifold inconveniences of living in the present.
Too bad the movie only made me worry about the future instead. (Given the shape our fair planet's in by the year 2815, I believe that triggering such concern was, actually, much of the filmmakers' intent.) The computer-generated, yet all-too-real, vision of a world devastated by excessive consumption is bad enough, but what about the obese, oblivious and grotesquely pampered humans happily living on the spaceship Axiom? (In the film, passengers are celebrating the 700th anniversary of its original five-year mission designed to "temporarily" remove all humans from a polluted terra firma.) Are we really destined to become baby-faced look-alikes content to watch videos and be fed through a straw?
I hope not. But here's another worry: Could a global brand like the movie's Buy N Large megastore chain—the brand directly responsible for the toxic mountains of trash that poor WALL.E is charged with cleaning up—ever acquire so much power that it literally dominates the planet? Ten or 20 years ago, such a question might have seemed ludicrous, but with Wal-Mart having recently opened stores in India (albeit under the name "Easy Day") it doesn't seem so crazy anymore, does it?
Still, I don't think we're headed for that kind of dystopian future. The power of Buy N Large might have a seductive appeal for marketers of global brands, but any aspirations they have to wield such power will, I submit, remain dissatisfied. Back in 1983, Ted Levitt (the Harvard economist credited for coining the term "globalization") said that the world was becoming "irrevocably homogenized." He was wrong. As standards of living rise, consumers' tastes and desires will not converge. Instead, for every shift toward globalization, I believe there will be an opposing trend toward localization.
What evidence do I have to support this view? Plenty. First, consider the example of language, rise and fall of which is directly related to the rise and fall of the culture it represents. Despite the growth of English as the international business language, there's a demonstrable revival of indigenous languages within countries whose economies are developing. Due to the wide distribution of American popular culture (including its brands), non-English-speaking peoples continue to be exposed to English. Yet, according to the nonprofit, U.K.-based educational advocacy group The British Council, the number of people who will learn English as a second language will start to level off in 2030. Meanwhile, the Welsh language is the subject of renewed interest as a result of the rise of Welsh nationalism. The Maori language is thriving in New Zealand; Catalan is enjoying a resurgence in Catalonia, Spain. Even in Hawaii—part of our own soil—there's a revival of the Hawaiian tongue.
Second, consider the spheres of news and information. Amid all the talk of how the communications technology has brought foreign lands to our virtual doorsteps, the fact remains that much of the content we receive on a daily basis is not global at all, but local. Back in the early 1980s when Levitt wrote about impending globalization, there were 50 dominant media corporations. Today there are five. Obviously, media companies have consolidated—but the Web has democratized communication, not homogenized it. Since 2002, Technorati has indexed 133 million blogs in 81 different languages. What's more, the vast majority of these blogs are focused on people's daily lives rather than world events.
The diverging trends of globalization versus localization are not isolated examples. We see a parallel trend in politics, in retailing and—lest we forget—in marketing.
Look at McDonald's. With 31,900 locations in 118 countries, the fast food giant boasts that it serves 50 million people every day. But when McDonald's enters a new country, it actually creates an opportunity for resident competitors to highlight their uniquely local offerings. In Japan, MOS Burger, a chain begun in 1972, offers a teriyaki chicken burger and a rice burger, popular and wholly local responses to the Quarter Pounder with Cheese. In Mexico, the local taquerías are still going strong. In fact, this year, when my firm asked a sample group of Mexicans what brand name they'd be willing to tattoo on their bodies, they mentioned their local taco joints more than all fast food chains combined.
To be successful on the global stage, it's no longer good enough to enter new markets with a promise of a better product and the implicit allure of an American lifestyle. Local companies are strengthening their own brands and, contrary to many people's expectations, higher incomes do not lead inevitably toward more homogenous tastes. If anything, higher disposable incomes allow people to indulge in local goods as well as international ones. And in some countries, local brands may be preferred.
The disappearance of long-standing financial brands like Bear Stearns and Lehman Brothers is a salutary reminder that the unmitigated pursuit of profit can sometimes undermine both business and brand. While extending a brand's global footprint may seem far less esoteric and dangerous than default credit swaps it is still fraught with risk. As Wal-Mart found out when it was forced to withdraw from Germany in 2006, success on one continent does not guarantee it on another. And increasingly, globalization is likely to become even more difficult. Global brands now run the risk of being seen as bland and nondescript compared to local brands, which do not need to adopt a one-size-fits-all positioning. Marketers will be forced to decide whether their brands have what it takes to transcend culture or if their best bet is to firmly embed them in its local culture.
The future is not going to be one ruled by global brands like Buy N Large. I just wish I could also say we won't need robots like WALL.E to clean up the mess we're making.