In three years, two-thirds of the world's Internet users will be outside the United States. (You say: Mein Gott.) In three years, 36 percent of all Internet users will not want to use English. And they are up to 400 percent more likely to buy online from sites that support their language of choice. (You say: Mon Dieu.) In three years, Western Europe and Japan together will account for about 47 percent of the world's e-commerce revenue. In 1999, they accounted for 28 percent. (You say: Dios mio.) Are you ready?
Odds are you're not, according to International Data Corp. (IDC), the Framingham, Mass.-based research company (and sister company to CIO's publisher, CXO Media) that supplied the figures above. A recent IDC report found that fewer than half (45 percent) of U.S. companies have done anything to customise their websites for foreign users. The clarion call: U.S.-centric website complacency in the global Web era will increasingly cost in lost opportunities, according to the report. What kinds of opportunities? It calls world e-commerce revenue a US$1.6 trillion engine in 2003 (up from $130.5 billion in 1999), and that's a conservative figure.
With U.S. Internet growth slowing and worldwide adoption exploding, the mandate to go global is unmistakable. The era of the Americanised Internet is winding down. CIOs who understand the myriad technical and cultural issues have a head start on capturing new audiences and helping their businesses forge a worldwide brand that is consistent yet flexible.
The good news: Plenty of vendors can help you put the technology in place. The bad news: The technology is the least of your worries. In the global e-commerce era, there are plenty of brand-new ways to shoot yourself in le pied. The most important news for CIOs: The technological and cultural issues are often tightly intertwined. For the most part, you can avoid offending or alienating customers in other nations by putting the right people, processes and information systems in place.
Let's say your site features a JavaScript graphic of a cartoon character waving at the reader. You know, just...waving. Friendly gesture, right? Not in Greece. Not in Nigeria. In those nations, the palm-forward wave is a nasty gesture indeed. As is the thumbs-up signal (so common in U.S. product reviews) in Iran. Not to mention the thumb-and-index-finger "OK" sign, which is most definitely "not the OK sign in Brazil," according to Wei-Tai Kwok, president of DAE Interactive Marketing, a San Francisco-based full-service Web development company that specialises in helping U.S. companies build a global presence.
Colours, too, carry different meanings in different places. A few years ago, Kwok recalls, a large technology vendor was building a global website that was entirely black, a colour that connotes hipness and sophistication in the United States. When the site was unveiled, the vendor's webmaster told Kwok, "Hong Kong and China objected: Black, that means death, unlucky, morbid." DAE Interactive Marketing, like many similar agencies and services, performs a "cultural audit" on clients' sites to make sure innocent mistakes like these don't kill a company's global push.
To effectively address such issues, some businesses create a separate domain for each nation they serve. This decentralisation tends to push content control out to the countries or regions, ensuring a very "localised" feel but making it easier for various national operations to sing from their own hymnal, which can be a problem when headquarters is trying to build a single world brand.
Another approach, relatively rare but favoured by many experts, is to make "What country are you in?" the first question your website asks customers. "What we recommend is that you filter out the international audience very early in the process--'Click on this if you're from Spain,' for instance," Kwok says. "Then you can customise from there." German carmaker Audi uses this approach, which allows both centralised branding control and a high degree of localization--but often forces CIOs to rethink their legacy data-storage and content-control systems.
While such cultural issues are clearly important, most experts view them as a problem that has largely been solved: With the right mix of consulting expertise and local feedback, it's relatively easy to avoid these kinds of trip-ups. "This cultural stuff has all been sorted out very early," says Rob Cosinuke, president of the Boston office of Digitas, a marketing services company.
But there's culture and then there's culture intertwined with the use of technology. Hong Kong lacks any sort of ZIP code equivalent. "A guy in my office just moved here from Hong Kong," Kwok says. "The ZIP code field is a major annoyance to him. He gets all the way through an order, puts in his address, and since he doesn't put in a ZIP code, some systems ding him. Won't accept the order. He's taken to punching in 00000 and hoping for the best." Pointing out that China uses a six-digit geographic code while Great Britain and other nations use letters, Kwok advises that ZIP codes should be assigned a free-form field that accepts any input, rather than just five- or nine-digit U.S.-style codes. "The technology should be dumb enough not to be too smart," he says.
Or too U.S.-centric. The credit card is the linchpin of e-commerce in the United States. In many countries, this causes all sorts of payment trouble. Many Germans view plastic as a crutch for weaklings who can't control their finances; they far prefer direct bank-account debit. Mark Lancaster, CEO and chair of SDL International, a globalisation solutions provider based in Berkshire, England, points to currency and date formats as two obvious but easy-to-miss snags for global sites. "But the big one," Lancaster says, "is examples. Most e-commerce stuff is typically marketing oriented, and you know they really work hard to spin that stuff. But the right spin in the United States typically doesn't have the same impact elsewhere. There's a lot of baseball knowledge in the States; you might want to rethink that example in, say, the Netherlands."
"In Germany if you buy your first BMW when you're 16, you're going to be buried in a BMW when you're 90," says Josh McCarter, vice president of international development at Autobytel.com, an online car-buying and information site. Germans' near-fanatic brand loyalty is just one cultural challenge the Irvine, Calif.-based company faces as it builds a global presence. In its efforts to get over the hump, it relies on partnerships. Lots and lots of partnerships.
Autobytel will need all the help it can get. For starters, some experts see its very value proposition as a tricky sell in new markets. Adam J. Weiner, an analyst at Gomez Advisers in Lincoln, Mass., says, "It's got to be very tough for a company to go into an established retail and distribution system and say, 'We're better even though we don't make the cars, we don't service them, we don't own the brand, we don't own the experience.'" The company's biggest hurdle, though, may lie in the different ways cars are sold from country to country. In the United States, Autobytel and similar services have carved out workable, if uneasy, relationships with auto dealerships, which wield a great deal of power.
In Japan and most European nations, though, the manufacturers themselves hold the whip hand. And those manufacturers have not embraced Autobytel. Last summer, Volkswagen Group United Kingdom threatened to pull the franchises of U.K. Volkswagen dealers who participated with Autobytel for sales leads. Autobytel responded in published reports by ascribing the threat to a "lack of knowledge" and sniffing that "it's difficult for a large, entrenched entity to understand...that the consumer is driving the Internet."
Little came of the VW flap, but another cultural roadblock has definitely hurt Autobytel's overseas efforts. Presently, the European Union (EU) allows the auto industry a "block exemption" to competitive-trade rules. The block exemption lets carmakers run exclusive distribution chains, which prevents Internet services from listing their inventory on the Net and from buying new cars from dealerships. In other words, the block exemption utterly hobbles services like Autobytel, reducing them to information providers.
The block exemption expires in 2002, and it's up for EU review this year; as its fate goes, so may go the fate of Autobytel in Europe.
An optimistic McCarter shrugs off such regulatory problems. He says staffing up quickly is Autobytel's biggest problem in Europe. One major advantage to national or regional partnerships is that they offer a guide to help U.S.-based businesses deal with hiring worries, which can be major worries indeed. You think it's hard to fire a lousy employee in the United States? "In France when you hire someone, you hire them for life," McCarter sighs. In general, Autobytel has found that the "social laws are tough" in many European countries. For example, in Germany, McCarter says, workers give 90 to 180 days notice to their employer before leaving. Moreover, European online privacy laws--which are generally much stricter than those in the United States--force increased vigilance in safeguarding customer data.
As it pushes into Japan, Autobytel has teamed with six Japan-based corporations, hoping to tap into their expertise: E-solutions (an e-commerce business developer), Intec (a system integrator and network service provider), ITOCHU Project Management Corp. (an investor and business developer), Orient Corp. (financing), Recruit Co. (automotive publishing) and Trans Cosmos (network services).
It isn't easy to pull together so many players, but Autobytel is optimistic (see "Good Timing," Page 136). "We started two years ago, discussing expansion with [potential] international partners," McCarter says. "Initially, we were going to set up just one international company. But we found that if we did that without local strategic partners, which know the customs and have the contacts, it just wouldn't go."
In addition to Japan, Autobytel is in business in Australia, Belgium, Canada, Denmark, Finland, Luxembourg, Norway, Sweden, the Netherlands and the United Kingdom. It hopes to add France, Germany and Spain this year, McCarter says. In Europe, it would have been fairly hard to develop 15 partner companies from the United States, one for each nation Autobytel wants to operate in, he adds. "So we set up a holding company in Europe to administer licenses with our NOCs [national operating companies]. That is, we set up a regional company.
"You have to understand how cars are built and sold" in any market you enter, McCarter says. "In Japan, most vehicles are not on a dealer's lot; most people order their cars. So we needed more configurators. We needed to handle something like 5,000 possible configurations" of any given model. In the United States, while vast numbers of options are technically available, most vehicles are shipped to dealers with one of only a few option packages. Such a package might consist of air-conditioning, power windows and door locks, and an upgraded audio system. The dealer is the primary point of contact for the car buyer.
In Japan and most of Europe, by contrast, it's much more common for consumers to spec out a vehicle--choosing the CD player, for instance, while skipping the power windows and locks. This leads to a huge number of theoretically possible vehicles and commensurate business rules (if air-conditioning and automatic transmission but no metallic paint...).
Autobytel needed people on the ground to understand and surmount this difference. "This is where local partners come in," McCarter says. "We needed people who understand the Japanese auto business and the e-commerce business." Are such people easy to find? "Absolutely not," he says.
Hence Autobytel's partnership with Japanese automotive publisher Recruit Co. "We have a data architecture that we use globally," says Rick Cabral, vice president of enterprise architecture. "Then we use local partners that can provide data in terms of vehicles, data, pricing, options, dependencies and so on." In Japan that partner is Recruit. Cabral says the alternative--gathering this information nation by nation--would be unworkable.
In the United Kingdom, nearly 60 percent of all autos sold are company cars (called "business cars" there). Naturally, a business buying large numbers of cars for employees has different criteria than a consumer; economies of scale, in particular, factor in for the corporation. "So you almost need a twin-fold sales strategy," McCarter says--one for businesses, one for consumers.
Autobytel partnered with Inchcape, a large U.K. auto distributorship that actually owns 100 percent of Autobytel in England, to localise technology and business rules. With help from Inchcape, Autobytel was able to launch its business-car strategy, which was and is unique to the United Kingdom, only three months after the main U.K. site was running.
Cultural differences aren't faced only by fledgling e-businesses; established brick-and-mortar companies must deal with the same issues.
GE TradeWeb is a forms-based service that lets small businesses exchange business documents electronically with trading partners. The electronic data interchange service is a product from GE Global eXchange Services, part of General Electric's GE Information Services subsidiary in Gaithersburg, Md.
In most countries, GE TradeWeb features a typical "click-here" contract page. But guess what? "In Italy and Mexico, they don't view online contracts as legally binding," says Jeff Anderson, global product manager for GE TradeWeb. So in those countries, potential customers are instead shown a "please contact your local office" page. Once they make contact, that local office faxes them a contract. This cuts down on efficiency and speed, of course, but the law's the law.
Alison Kurlya, senior vice president and technology director at Digitas, says that "in Latin America they do a lot of business by phone calls." So a webpage that would be transaction-oriented in the United States might be a request for a fax in many European countries and a form that says, "When's the best time to call you?" in South America, Kurlya says.
Identifying such local information up front is vital in creating a site that builds a global brand yet flexes to accommodate local needs.
Doug Erwin was the senior architect of the team that developed GE TradeWeb (his title is now software tools architect). "Out of the box," he says, "we weren't a crack team of global software builders. Like most U.S. engineers, we broke all sorts of internationalisation rules and didn't even know it." What rules? "With our back-end processes, when we'd build data from a database, it'd be dynamically built when the user called it up," Erwin says. "As an international architect, you have to provide a distinct separation between the content and the executable. You can't have [user interface] output embedded within the executable code."
Erwin knew he had to come up to speed on global issues. To do so, he says, he turned to peers and industry groups for education. GE Information Services (now called GE Global eXchange Services) also formed a broad team to gather input up front. According to Erwin and Anderson, the team included all regions and departments that would be affected by globalisation of GE TradeWeb: client services, marketing, operations, engineering, customer service, support and billing. With this global team in place, Anderson says, "we got down to localising."
In Mexico, the GE TradeWeb team found that online billing--clearly a major benefit of any Internet-based trading system--was simply impracticable. There were just too many businesses with archaic systems. As a result, Anderson says, GE TradeWeb reluctantly adopted paper invoices in Mexico. Under this plan, customers receive bills the old-fashioned way, by regular mail from the office of their local GE TradeWeb partner. "That's very expensive," Anderson says. "We only offer it because it's really needed." To minimise the pain, GE TradeWeb offers only annual subscriptions to businesses that opt for paper invoices. Fewer invoices, less expense. (Customers receiving online bills get statements quarterly or monthly.) This willingness to sacrifice a key cost-saving component exemplifies the triage faced when a business goes global. Many experts advise a three-tier system in which content decisions can be handled at U.S. headquarters, regionally (for instance, in a Pan-Europe or Asia-Pacific office) or locally. The tricky part, according to Martha Ferro Geller, is figuring out what decisions get made where. Geller is vice president of globalisation strategy at GlobalSight Corp., a San Jose, Calif.-based software vendor whose flagship product, Ambassador, helps companies develop and maintain a multilocale, multilingual Web presence. GE TradeWeb is one client. "We advocate central control and local empowerment," Geller says. "It's the alignment of the two that's critical."
Experts say that critical branding decisions should be made centrally, decisions regarding such issues as trade shows and distributorships are best made at the regional level, and that locals, familiar with both the country and the business, must vet all information.
GE Global eXchange Services created a glossary of terms that needed to be consistent throughout GE TradeWeb's sites to avoid confusing users, then vetted each term in each country and language to be sure it made sense to local users. For instance, "a mailbox in the United States may be an inbox elsewhere," Anderson says.
The result of GE Information Systems' front-end work: A Web application that runs in four languages (with a fifth to be added soon), with all system management done at GE's Gaithersburg offices. "No mirrored sites and one code base that doesn't need to be recompiled," Erwin says. This single point of service eliminates myriad network management and monitoring headaches.
What do you do on the Web to cater to a global audience? Write us at letters@cio.com. Steve Ulfelder, a freelance writer in Southborough, Mass., can be reached at sulfelder@charter.net.
Cultural differences can hamstring a U.S.-based business when it expands abroad. But when a nation is ready for a sea change and the right business model comes along, everybody benefits. Autobytel.com has experienced such good fortune in Japan.
Traditionally, Japanese car salesmen have been roving consultants who visit customers regularly in their homes, building relationships with families that could span several generations. It's a touching counterpart to the U.S. car salesmen's piranha-like reputation, but it's bloody inefficient: Japanese salesmen each averaged three to four sales per month. Japanese automakers appeared to be stuck with this antiquated sales system. It's no secret that "in Japan, relationships are very important," says Diana Wilson-Todd, executive vice president for delivery at NOVO, a San Francisco-based company that helps companies build interactive relationships. (A former CIO at E-Trade Securities in Menlo Park, Calif., Wilson-Todd lived in Japan for eight years.) And the country's real estate prices made U.S.-style mega-dealerships an unlikely prospect.
But Autobytel has been welcomed by Japanese carmakers. Josh McCarter, Autobytel's vice president of international development, says Japanese Autobytel salesmen now average about 12 sales per month, matching their U.S. counterparts.
Why such an enthusiastic reception? Wilson-Todd has a theory: "The Japanese are big believers [that] you can break the rules if you're in a different context," she says. The Internet provides this context. "Since it's high-tech, they expect it to be different. In fact, if it's not, that's a problem." -S. Ulfelder Cultures. Currencies. Customs.
"In the United States," says Jim Rose, "you don't naturally think of things like that. If you're a business in Europe, believe me, you're used to thinking that way."
Rose makes a good witness, for two reasons. First, he's a U.S. native who's been living and doing business in Europe for seven years. Second, the company he's run as CEO since April 1999--QXL.com--is battling hammer and tongs with eBay to become the dominant online auctioneer in Europe. It's frequently mentioned as a non-U.S.-based e-business that has truly thrown a scare into its Yankee rival.
Rose is asked if European nations' close proximity has made it easier for QXL.com, which is based in London and has sites devoted to Denmark, France, Germany, Italy, the Netherlands, Norway, Poland and Spain, to go international. He believes it has, crediting a European mind-set that readily accepts cultural and linguistic differences. Essentially, Rose believes, many of the problems now faced by U.S. businesses are of their own U.S.-centric making.
Even the more progressive U.S. businesses seem to tolerate, rather than embrace, customs they come across in other countries. QXL.com, on the other hand, is taking each nation's best lessons and applying them everywhere.
For example, the company recently purchased Ricardo.de, a competitor based in Germany. "Ricardo has a lot of strength in 'live' auctions," Rose says. These pressure-packed, five- to seven-minute auctions are "very entertaining, very dynamic," he says. QXL.com plans to bring this popular feature available in Germany and France to other countries.
Another example: QXL.com seeks to capitalise on Scandinavian countries' early adoption of these wireless devices. Another recently purchased competitor, the Scandinavian Bidlet, offers advanced wireless access. QXL was planning this summer to allow cell phone users to make online bids.
Asked if QXL.com plans to expand beyond Europe, to regions in which it won't have a home-field advantage, Rose hedges. "We're contemplating it," he says. "It certainly matches our core competencies. But Europe's home." -S. Ulfelder
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