Mistakes Companies Make While Expanding Overseas

By Salvador Ordorica, CEO of The Spanish Group LLC, a first-class international translation service that translates over 90 languages.

For a small to medium-sized business, going from a local or regional brand to an international one can be highly rewarding, as well as lucrative. Overseas expansion is often one of the best ways to ensure you have the room to continue managed and consistent growth, especially once you have found that gaining more ground within your domestic market is becoming increasingly difficult. Moving into a new region also allows you to enhance your profitability and diversify your customer base, reinforcing your bottom line against sudden and unforeseen events.

While there is a considerable number of upsides to increasing your market share in other countries, it can also be a process rife with difficulties and challenges few entrepreneurs are ready to face. More often than not, brands will spend significant sums attempting to expand into new markets only to find that they have either miscalculated the demand, their messaging or the general complexity of working within a new culture.

To help you decide if overseas expansion is the right move for your company, I want to lay out the three most common mistakes I see other entrepreneurs make when trying to move into a new country.

1. Lacking Cultural Research

Business moves faster today than at any point in history, and it can be a real struggle to keep pace with competitors year after year. However, the constant breakneck pace we are at has led to many companies making poorly thought-out expansions into overseas markets. If you plan to offer goods or services in a new region, you need to take the time to properly understand the market. Conduct as much research as possible and ensure that every subculture you plan to interact with is given its own SWOT (strengths, weaknesses, opportunities and threats) analysis. Just because something worked in the North-Eastern United States, it doesn’t mean that it will function the same in Vietnam (or even other regions in the U.S.) the same way.

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Even large corporations aren’t immune to making this simple mistake. A good example is when Home Depot attempted to expand into China. In 2006, Home Depot assumed that the growing middle-class and homeownership rates in China made it a perfect fit for their DIY brand. However, Home Depot failed to account for the ways people in China shopped, the reasons they were buying homes and the overall lack of DIY culture. Home Depot was out of China entirely within six years, failing to gain even the tiniest foothold.

You have to look past the numbers and avoid making assumptions. The more you can consult cultural experts and get opinions from those actually on the ground in those countries, the more sure you can be about your product’s viability.

2. Localizing Services After An Expansion

Another mistake I often see being made is that a company waits until after launching in a new region before they realize their product is not correctly localized. To tie in with the first point, you need to do a lot of research, which will often include seeing just how your product is perceived and used. In many cases, a company will assume just because they have translated the basics of a product, it is now “localized” to the new region; sometimes, they haven’t even gotten that far.

The truth is that proper localization of a product or service is more than simply translating the instructions. The colors, tones, metaphors and a dozen other minute aspects of a product or service will likely read and be understood differently in a new cultural context.

The pitfalls of rushing localization are encapsulated in the slogan Electrolux used for their vacuums when they brought them into the United States. They took the time to translate all of their messaging, but they didn’t take the time to consult with cultural experts or do proper focus groups. Needless to say, their slogan at launch, “Nothing sucks like an Electrolux,” didn’t go over too well with American audiences.

Make sure you have tested a product with the target market and fully adopted their language (slang and all) before you attempt to launch.

3. Being Too Rigid In Their Sales Channels And Marketing Methods

Very often, companies forget that the way people in other countries like to be sold to, and the ways in which they shop, can often be the difference between your success and failure. The culture of a country can significantly affect the way in which people prefer to buy products. For example, it is often stated that in most Asian countries, you will tend to do better by introducing your products through local partners and storefronts that consumers already trust. Shopping habits are also beginning to diverge. People will tend to buy from online marketplaces in the U.S. and China, but in France and Italy, consumers will often buy directly from a retailer website. Make sure you understand your target market and their buying habits before you commit to a strategy.

The same goes for the way you reach customers. If you advertise over social media, you should learn what apps are commonly used by your target market and understand how to be adept at their use. If you plan to expand into Thailand, you will want to learn to promote your brand online. If you are trying to find customers in France, Yubo may be a better option.

Do Your Research And Be Ready To Adapt

The theme here is that you need to take the time to do your research properly. Don’t make assumptions, and be sure to use cultural experts with real-world experience in the market you are hoping to enter. The more effort you make in fully integrating your services to your new region, the more likely your chances for success are.

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