Over the past decade, rapid competitive growth has dramatically transformed the global business environment. This transformation continues today. The barriers to international trade and investment are tumbling. Commercial activity is booming, with major advancements in transportation and communications technologies. Global value chains are proliferating as major multinational companies invest in production facilities and form new partnerships with suppliers, producers and distributors across the world.
Moreover, China, India, Brazil and Russia have emerged as global trading powerhouses. With the resulting upswing in their economic fortunes, some three billion consumers have now entered the global marketplace. Meanwhile, traditional powers like the United States and the European Union are aggressively pursuing new global opportunities by taking steps to improve their competitiveness.
There is no doubt that Canada’s economy, Canadian jobs and our quality of life increasingly depend on the ability of Canadian businesses to compete effectively and capture opportunities in the wider global community.
Currently, however, Canadian companies continue to rely largely on markets in the United States for growth and expansion. More than three quarters of Canada’s exports are destined for the U.S., with about 8.5 percent bound for the European Union and 2.2 percent destined for Japan. Most Canadian companies have yet to make significant inroads into any of the huge emerging markets.
I certainly recognize that pursuing a more global strategy is not without risks. Different countries have different infrastructures, different political regimes and different laws governing intellectual property, labour issues and regulatory rules.
Mark Brown, vice president at Avatar Interactive here in London and an Ivey MBA graduate, just returned to Canada after 15 years in Asia, where he started up and managed three successful internet companies. He understands these differences in an up close and personal way. Equally important, he has seen how these differences affect business attitudes and approaches. Consider his insights into how Asia’s political environment has influenced business trust and how it compares with Canada:
Clearly, there can be widely different social and cultural norms among different countries. Your culture defines your fundamental beliefs about how the world works. It influences the way you interact, communicate and nurture relationships. To do business in a new country, you must understand the way its people think and the way they do business. Then you must adapt to those differences, which is never easy.
For example, let’s look at India in all its glorious complexity. In our business culture, we value confidence, are used to sharing our opinions and prefer to keep work and family life separate. By contrast, Indians think assertiveness is rude. They are used to working in hierarchal workplaces. They respect authority and are not likely to speak up when they disagree with a decision. Indians also enjoy entertaining. They will invite colleagues to their homes and expect them to graciously accept. They routinely indulge in personal chitchat. All this is very much a part of business in India.
Sometimes, these political, economic and cultural differences seem overwhelming. There are no simple answers or off-the-shelf solutions. What’s the best way to investigate these new opportunities? What are some of key factors to consider in cracking new and unfamiliar markets? And what practical steps can a company take to become more adept at developing global expansion strategies?
The first step in exploring a new market is, of course, to do your research. Visit the country where you want to do business. Talk to the people you meet there. Ask others about their experiences. And read all you can about the country’s history, its political bent and how business is conducted.
Ivey’s business cases are an excellent place to start your explorations. The Ivey case library has more than 2500 current business cases, with a full catalogue of about 6000 cases. Moreover, Ivey is the largest producer of Asian cases in the world. These cases, drawn from the experiences of real companies, are unbiased, factual and insightful. Designed to provide an in-depth look at real-world business issues, they are invaluable to business people interested in learning how other companies have tackled challenges. Also valuable are the numerous articles on Asian business in the Ivey Business Journal’s archives.
A second important step, as Mark Brown suggests, is to find “a trusted person to act as your ‘lieutenant’ – one who can guide your decision-making and help you navigate the social and business minefields. Once you have a trusted lieutenant, he or she can help you to figure out the right questions to ask so you get the right answers.”
Third, despite the differences in cultural norms and business practices, look for opportunities to adapt the approaches and strategies you know are effective in Canada to other markets. Mark Brown ran an internet-based company in China for five years, where the competition for talent was especially fierce. As he discovered, “other companies will ruthlessly poach talent if they think that will be an advantage when they’re entering a new market.”
Yet Mark uncovered a distinct advantage by applying what he knows from his experience with Canadian companies. To retain talent in his China operations, he ensured that project schedules would allow staff to go home by 6:00 in the evening – absolutely not the norm in the “sweatshop” business culture of the IT industry in China. A predictable work schedule provided his employees with the rare bonus of flexibility and choice. This bonus often trumped lures from competitors who offered higher salaries, but also 100-hour weeks.
Moreover, turnover was minimized, which increased project efficiency and fostered a more stable and enjoyable team environment. Surprisingly, it also led to a higher number of female workers. They appreciated the extra time for family commitments. As Mark says, “I found that a lot of women didn’t like the atmosphere in other companies. Plus our working hours were better. So I went through two years where we only lost one person that I didn’t want to lose. That was amazing for a company in China at that time.”
It’s time for more Canadian companies to step up their game in growing markets like Asia. With the right research, the right guidance from people with on-the-ground experience, and the ingenuity to translate what you already know into a unique competitive advantage, I know Canadian companies and their leaders can succeed. When there’s the will, the way forward is clear.