Glocalizaion ― a key success factor for global companies
I received a wedding invitation a few days ago from an old acquaintance of mine inviting me to his daughter’s wedding. I got to thinking about the future of the young couple and what it takes to be happily married. For two different individuals to start a family, they need to know, understand and accept each other for who they are. In trying to make things work, it is sometimes necessary to put “our needs” before “mine.” If one tries to impose his or her way of doing things on the other, their marriage would stand a good chance of getting bumpy down the road.
The same is true for corporations. For sound business operation in different countries, businesses need to arm themselves with understanding and acceptance of the local culture. That is the notion of “glocalization,” an increasingly important principle for global corporate management.
Glocalization, a neologism combining globalization and localization, represents the management strategy of pursuing globalization and at the same time accommodating the local culture. While strategic directions and fundamental values remain unchanged, it allows for flexible adaptation of product features, marketing methods and organizational operation, helping to ensure better reception. The term could also imply that globalization in its true sense can only be achieved through effective integration of the local culture.
For McDonalds, one of the factors behind their successful worldwide operation is indeed glocalization. Under the motto “think globally, act locally,” they appealed to consumers around the world based on thorough analysis of local culinary traditions including vegetarian hamburgers for Indian diners who do not eat beef.
Coca Cola, since entering the Chinese market in 1979, has tried continuously to accommodate the local culture in all areas from product development to packaging, local supply of ingredients, employing local staff and CSR activities.
My company, Amway Korea, has also relied a great deal on glocalization strategies to build sound presence in the Korean market. We have been running CSR programs for children since 1991 when we first started our business. Starting from 1998, right after the Asian financial crisis, we started to implement an innovative glocalization strategy called, “one-for-one” program. In this program, every time a new product is launched by Amway headquarters, we couple it with a selected high quality product manufactured by a Korean company and sell them through Amway’s global distribution channel. It has given Korean companies access to domestic and overseas markets and helped them find export opportunities. Kidong Industry, a wire sponge manufacturer, and Cellbiotech, a bio-venture company specializing in probiotics, both partners of this program, currently enjoy over two million dollar export revenue annually.
Furthermore, under the Amway’s global development project, we launched in March last year aiming to discover promising technologies and materials, we are in the process of developing globally appealing products, with tangible outcomes expected to come out very soon. In addition, we established an Asian distribution hub center in Busan last year, which will hopefully contribute to the development of the Korean economy. All these efforts have been crucial for Amway Korea to gain trust from Korean consumers and achieve growth for the past 20 years.
There are counter-examples as well. France-based Carrefour is one of the world’s largest retail distributors in terms of corporate scale and financial resource, but they experienced a series of failures in Japan, Mexico and Korea, eventually withdrawing from these markets. Experts point to Carrefour’s management style which uniformly applies what they consider global standard across all markets with little consideration given to local characteristics.
Market represents a given environment where businesses engage in continuous interactions. At the center of the environment is consumers, and to approach them more intimately, businesses need to pay attention to even the most delicate details such as the cultural implications of colors, food, customs, numbers and words. Job creation, CSR programs and other financial and social contributions are also indispensible to gain consumer recognition as a company with values.
That is what glocalization is all about. As consumers become savvier, they look for values in addition to high quality products. Corporations must learn to be more sensitive to different cultures and preferences. That would be the secret of global companies that touch the heart of consumers across diverse markets around the world.