One of the major factors driving the global economy of the nineties was the collapse of communism in the late eighties. Instead of a world divided into armed camps, everybody was suddenly in the same boat.
Instead of trading insults, the major countries of the globe started to trade products and services.
But what caused the fall of communism? In our opinion, it wasn’t the massive military buildup in the West, although that might have been necessary for defensive purposes. In our opinion, it was television.
If you visited the USSR before its fall, you know that the population was under intense publicity pressure to believe that everything was superior in the Union of Socialist Soviet Republics. Free health care, jobs for all, housing for everybody.
To the outsider, it wasn’t true. There were a lot of rubles, but nothing to buy, as one look at the mostly empty shelves in the stores would have told you. Not to mention the long line whenever a store got a shipment of a desirable item.
Soviet authorities, of course, blocked Western newspapers and magazines from crossing their borders, but they couldn’t block Western television signals.
Television brought truth to the Soviet people. When they were able to see the profusion of goods and services in the Western countries, they lost their faith in communism.
“The medium is the message” is the famous dictum of Marshall McLuhan. If you define “message” simply as “content” or “information,” McLuhan pointed out, you miss one of the most important features of any medium: its power to change the course and functioning of human relations and activities.
The message of the television medium was “capitalism.” As long as the Soviet Union was infiltrated by television signals from the West, there was no way to keep communism alive. It had to give way to a market-driven economy based on a free-enterprise system. TV literally helped change the course of human history.
What is the “message” of the Internet medium? We believe the message is “globalism.” Ultimately, the Internet will drive the citizens of the world into one interconnected global economy. “The global village,” in Marshall McLuhan’s vocabulary.
It may well be that the biggest trend of the twenty-first century will turn out to be globalism. What the Internet hath wrought is the global village. The medium, after all, is the message.
America, with 59 percent of all homes connected, is the dominant dog in Internet usage. Thirty-six percent of the world’s Internet population lives in the United States. But there are other countries where Internet usage is actually higher. Canada has 60 percent of all homes connected. Sweden has 65 percent. If our domestic experience is any guide, usage should explode in every developed country of the world. When that happens, the world will become one big global marketplace.
The potential is awesome. America is by far the largest economy in the world with the greatest output of goods and services and the highest standard of living. Yet the United States accounts for less than 5 percent of the world’s population, a percentage that declines annually.
If you’re a businessperson in America, where does the real opportunity lie? In the domestic market or in the 95 percent of the world that doesn’t live in one of the fifty states?
Obviously the global market is going to be far more important than the domestic market to the success of almost every American company. It won’t happen overnight, but it will happen.
There’s a long way to go. Currently the United States exports only 11 percent of its gross domestic product. (It also exports capital to other countries, where the money is used to build plants, distribution systems, and most important of all, brands.)
What makes the American economic system so globally powerful is not the physical products or the plants or the systems, it’s the brands themselves: Microsoft, Intel, Dell, Cisco, Coca-Cola, Hertz. These and other American brands dominate a host of categories on the worldwide scene.
This is not a one-way street, however. The Internet is not just an opportunity to export American brands and American cultures overseas. The opposite is also likely to happen. It’s already happened in many categories.
America has always been a melting pot for people, but it has also become a melting pot for products from around the world. With the rise of the Internet, that trend is going to accelerate. The medium is the message.
Many Websites here in America already do a considerable amount of business outside the United States. With the purchase of two European competitors, Amazon.com has become the leading online bookseller in the UK and Germany. Sales outside the United States currently account for 22 percent of Amazon’s sales.
This is a drop in the bucket. The potential is much, much greater. What the postal service did for the Sears, Roebuck catalog, the Internet will do for the American business community. Or, for that matter, any business operating in any country anywhere in the world. The Internet turns the world into one giant shopping mall.
But like in any shopping mall, you can’t win with just a better product or service. You need a better brand.
The long-term winners on the Internet will be those brands that can transcend borders. This is another knock on generic names.
What does Furniture.com mean in South America? It certainly doesn’t mean muebles, the Spanish word for furniture. Or mobiliário, the Portuguese word for the same thing.
Amazon.com means books in virtually every country of the world. But Books.com means books only in the 6 percent of the world where English is the native language.
As the world moves toward a global marketplace, won’t companies need to get rid of their national identities and move toward brands with global identities?
Not necessarily. Every brand, including global brands, needs to come from somewhere. In other words, even a global brand needs a national identity.
Like a person, every brand needs to come from somewhere. No matter where the brand is made, marketed, or sold.
A Nissan made in America by American workers is still a Japanese brand of automobile. A Nike made in Malaysia by Malaysian workers is still an American athletic-shoe brand.
What’s more important, the product or the brand? The fact that a product can maintain a national identity when the product in question has never set foot in that country should tell you that the brand is more important.
Global brand builders should keep in mind that national identity is a two-edged sword. It can help or hurt your brand, depending upon the category.
American personal computers (built in Asia or with Asian parts) are powerful brands on the global marketplace. American automobiles, no matter where they are built, are mediocre brands everywhere except in America.
What the global market is telling us is that Americans know how to build computers but don’t know how to build cars. Is it true? It doesn’t matter. When it comes to building brands, perception is more important than reality.
It’s hard enough to change the perception of a company. It’s impossible for one company to change the perception of a country. When you launch your Internet brand, you should try to match your product or service with your country’s perception.
At least that’s the theory. In practice it’s different. Knowing something about government regulations for wine in France, we would probably choose Chile or Australia instead.
Don’t overlook the less developed countries of the world. These nations represent tremendous opportunities for global brand builders wherever they are located. In the less developed countries, retail margins are often higher, fewer products are available, and even fewer products are on display.
For people in some of these countries, many Internet sites will look like the Sears, Roebuck catalog at Wal-Mart prices.
Is it unfair to take advantage of people in developing nations? If offering a better selection of better products at lower prices is unfair, then we don’t know the meaning of the word.
Shipping the products (or perhaps we should say “flying” the products) isn’t going to be the problem you might think it is. The postal service will airmail a copy of the book you are reading to an address in Europe for less than $10, which is about the retail margin of this book in a domestic bookstore. And costs are bound to come down dramatically as globalism catches fire and demand for air shipments soars.
One real barrier to globalism is red tape—taxes, duties, customs forms, and paperwork in general. These are the things that are going to clog up the system and slow it down. But you can’t stop progress. In time, the paper barriers will come down, too.
Another barrier to globalism is language. The first decision a global brand builder must make is the language question. Do you use English, or do you translate your site into various different languages? Do you set up totally different sites for different countries? Yahoo! launched Yahoo! en Español in 1998 and Yahoo! Brazil in 1999. Today Yahoo! has twenty-three different country sites.
The translation problem can be daunting. How many different languages and/or countries sites should you develop? There are literally thousands of languages in use by the 6 billion people in the world. If you count only the languages used by a significant number of people (say a million or more), there are still 220 different languages. To be a truly global brand, you would need Websites in a substantial percentage of those 220 languages.
Complicating this decision is the long-term trend toward English as the second language of the world. In many countries, English is already the language of business.
(The Scandinavian region of a European company, for example, will inevitably hold its meetings in English. Representatives from Norway, Sweden, Finland, and Denmark may not understand one another when they speak their native languages, but they all know English.)
In the long term you are likely to find successful examples of both single-language and multiple-language sites. Either strategy can work. It all depends upon the type of product or the type of service offered.
For high-tech products and services or for brands appealing to the high-end segment of the market, the single-language strategy might be best. Cisco.com is an example.
For low-tech products and services or for brands appealing to the mainstream market, a multiple-language strategy might be best. Yahoo! en Español is an example.
(While the thinking at Yahoo! is sound, one part of its strategy is flawed. The line extension name creates the impression that Yahoo! en Español is not an authentic brand. Rather, it’s a gringo brand in disguise.)
Keep in mind, however, a basic tenet of marketing: There is never only one way to do anything. Most people prefer brands, but there is still a market for private labels. Most people prefer specialty stores, but there still is a market for department stores. Most people prefer caffeinated cola, regular beer, and coffee, but there is still a market for decaffeinated cola, light beer, and tea.
Whichever language decision you make, you can be sure there will be at least one competitor going in the opposite direction. So be it. You can’t appeal to everyone. There is never only one way to do anything.
If you must err, however, err on the side of an English-only site. It will seem more upscale and chic. Time will also be on your side. Every day more than ten thousand people in non-English-speaking countries learn to speak the English language. Furthermore, English is the language of more than 80 percent of the information stored on computers.
There is also a worldwide trend toward the use of English-sounding brand names, even when those brands are sold primarily in non-English-speaking countries.
Take a walk down the main shopping street of almost any major city in the world. A substantial number of locally owned stores selling locally made goods mostly to local people will have English names.
In Copenhagen, for example, we noticed that about half the stores on the main shopping street use English names. Some of these are franchise operations like McDonald’s, Subway, and Athlete’s Foot. But most are locally owned stores with names like Inspiration, Planet Football, and London House.
In a Tel Aviv mall, we noticed five stores in a row with the following names: Gold Shop, Happy Tie, Happytime, Royalty, and Make Up Forever.
The trend to English names will obviously benefit all U.S. brands. Before you decide to go with a multiple-language approach, ask yourself whether this trend will make a single-language (English) approach your best overall choice for the future.
Some people think that globalism will be more of a cultural problem than a language problem. That you have to adapt your product or service to the cultures of the countries you are going to sell in. We disagree.
How did Coca-Cola, McDonald’s, Levi Strauss, and Subway adapt their brands to local cultural standards? They didn’t, and they greatly benefited because they didn’t.
The medium is the message. And the message is the homogenization of cultures around the world. That’s what globalism is all about. That’s neither good nor bad. That’s a fact.
When StarMedia was trying to raise capital to launch the first global Internet portal in Spanish and Portuguese, the company got the usual arguments.
“Latinos like to have personal contact with each other. Nobody’s going to chat online. People want to talk on the phone. Latin Americans are so different from each other, no Argentine will ever want to talk to somebody from Peru.”
StarMedia, of course, became a roaring success. Latinos did learn to chat online. People are more alike than different, even though the culture crowd likes to pretend otherwise.
Globalism has benefited from a number of technological developments, notably the jet plane and the facsimile machine. But these developments pale in comparison with the changes the Internet will bring.
So fasten your seat belts and get ready for the ride of your life.