Do Global Before Global Does You

A few days ago I read an interesting article in Barron’s about the Chinese mobile app WeChat. https://www.barrons.com/articles/wechat-pay-chinas-popular-payment-tool-lands-in-u-s-1539699724. Short summary: millions of Chinese tourists wanting to spend money in the U.S. or Europe are often frustrated by the West’s old fashioned reliance on credit cards or (gasp) cash. In China, where the booming internet firm Tencent launched the social media WeChat app in 2011, 800 million people use the app as their primary means for paying for stuff. That is more than the combined population of the U.S. and Western Europe. To help out these globe-trotting spenders Tencent is now launching WeChat overseas. As is increasingly true in other areas of commerce, in digital payment systems parts of the Western world are now technologically out-of-date compared with many Asia-Pacific countries.

It is no secret that the world economy is no longer centered in the West. Surprisingly, many executives at large firms are still not opening their eyes, hearts, and minds to this reality. I believe companies, even relatively small firms, need to think – and act – more globally or run the risk having the globe roll over and flatten them. You need not be big to be global these days: I have a young French relative in her 20s based in Philadelphia with a tiny online jewelry business that uses suppliers from India and China and services customers in the U.S. and Europe.

I spent a couple of hours yesterday reviewing the most recent Fortune Global 500 list of the largest companies in the world by revenue https://fortune.com/global500/list/. Although the U.S. still has the most companies on the list (126 by my count), China now runs a close second with 110 firms… and this is increasing every year. Three of the top 5 firms are now Chinese, as are 20 of the Top 100. Firms from many other emerging markets are quickly moving onto and up the list, too.

In helping firms evaluate their globalization strategy, I like to ask executives three questions:

1. Do you match your customers’ footprint? To keep things simpler, let’s just focus on China for this question. Nearly all mid to large-sized manufacturing firms have been working in China for at least twenty years. In nearly all product categories China is the single largest market on earth. International firms are no longer just in the major cities of Beijing, Shanghai, and Guangzhou. Most are designing, sourcing, building, and selling products and services in the Tier 2 and Tier 3 cities. Service providers for such firms don’t need offices in every market their customers operate in, but they do need regional hubs to coordinate work in local languages and time zones.

2. Do you understand the context of your customers’ businesses? The world is a big place both from a population and cultural diversity perspective. Only ten percent of us are from mature economies in the West and Japan. Many otherwise sophisticated companies build strategy for Asia, Africa, and Latin America in meeting rooms in the U.S. and Europe... often with little input from their colleagues who live, work and breathe in these diverse markets and know what local customers need.  I've been in meetings with Asia-Pacific leadership teams that had no Asia-Pacific nationals on them! Better-run firms (and there are many) have globally diverse executive teams building strategy with perspective and data from all key regions and markets.

3. What is the cost of NOT being on the ground in key fast-growth markets? If you are not active in fast-growth markets you are probably ignoring the biggest competitive threats to your business. If you haven’t done so already, peruse this insightful report from BCG: https://www.bcg.com/en-gb/publications/collections/2018-global-challengers-digital-leapfrogs.aspx The authors lay out plenty of data that show how companies from fast-growing markets will be leading the Digital Age within the next five years.  If you don’t want to be blind-sided by a fast moving, technologically innovative competitor you have never heard of (as has happened in Western firms that produce everything from beverages to bicycles) you should pay attention to these quickly-evolving markets in Africa, Asia, the Middle East, and Latin America.

In summary, going global is challenging. Choosing to stay at home may be fatal. Going out, learning from failures and successes, and engaging with the world enables agile organizations to stand, balance, and move with the globe rather than being rolled over by it.

To understand more about how to benchmark the “globalness” your own team or organization, please contact David Everhart via LinkedIn.