• “Translation is not enough”—Sapient Report
• “Although nearly three-quarters of online users worldwide will reside outside the US by 2005, only about one-third of leading US sites, roughly the same as a year ago, have made any efforts to target or accommodate foreign users. With a void in global outsourcing options, sites should consider a variety of business mechanisms, such as joint ventures and franchises, to push to market immediately.”—Jupiter Report on Globalization, October 2000.

Companies face challenges when seeking appropriate globalisation providers for international expansion. Possible providers include professional services firms, full-service translation companies, globalisation tools companies and traditional systems integrators. Almost all of the providers approach their clients’ globalisation problem by developing a strategy that drives the implementation by using a top-down approach of market opportunity studies, product localisation, distribution and customer care. These services have been practiced with moderate success, with numerous white papers and expert articles published on this subject and on the various practices of Business Globalisation. Many of the papers focus on the productivity benefits gained from the use of technologies which support the cultural adaptation process including translation, cultural convention, currency, payment systems, etc.

Would the efforts to globalise or localise the website/software/document/digital property for the clients result in business success?

Rather than merely offer help at a few points in the value chain, globalisation service providers must offer complete end-to-end value leading to business success for the client. For many localisation service providers, one of the most troubling aspects of the sales cycle in offering a point solution in this space is the difficulty in reaching the executive business decision makers. Service providers are generally locked into offering value to the Localisation Manager or the Technical Lead Manager, after the client has made the business decision to enter the International market. Clients view localisation as an ‘after-thought’ or that providers are forced to fill in forms to quote the best per-word translation rates. Often, providers must differentiate their offerings via technological product innovation or process innovation or a combination of both. For a very enlightening and insightful discussion on the difficulties of a technology-based selling approach, refer to Mark Homnack’s keynote article “The Future of Globalization Technology: Is it in the Graveyard?” in the December 2000 issue of LISA Newsletter.

Fast forwarding to 2001, the globalisation service industry is moving on to fill in the value proposition on the front-end by offering consultancy on business strategy in globalisation (visit the websites of many industry players such as Globalsight, Idiom, Uniscape, etc.). This industry trend is definitely a progressive step in offering end-to-end service, but current models still do not address the greatest challenge of business globalisation—the risk and the real costs of foreign market entry. Even as the more progressive service providers enhance their capabilities in offering business and strategy consultancy, the main approach for the industry as a whole remains to be a service-provider business model.

In today’s highly competitive and volatile business environment, a true end-to-end business globalisation provider should offer a full partnership approach—inclusive of sharing the cost of the localisation, developing the best distribution network in the target markets for the partner’s products or services, and overcoming the regulatory/entry barrier. Of course, in a full partnership, the profits from a successful business entry should be shared. Many successful multi-national companies have taken the approach of a joint venture with a local partner to enter foreign markets, and these arrangements generally offer a buy-back option by the multinational companies such as Volkswagen, Procter & Gamble and many other brick-and-mortar businesses have all utilised the JV approach with degrees of success to enter China. Of course, forming a joint venture takes enormous capital and time, both of which are scarce in Internet businesses, particularly after the April 2000 nasdaq meltdown. The economic slowdown is a primary concern for today’s business leaders. Many multinationals or aspiring multinational companies are deferring their global expansion plans, particularly in markets where the perceived cost of entry and the risk of failure are high. How do globalisation providers grow and continue to offer value in this tight-budget and risk-adverse environment?

I want to share our initial success in introducing an innovative “virtual joint venture approach” to market entry service. In particular, I will highlight our case as applied to China—the world’s fastest growing digital market and Asia’s largest online population outside of Japan.

We are now in the implementation phase of a joint localisation project with a leading global producer of early learning education multimedia titles to target the People’s Republic of China market. There are a number of key growth drivers that are creating new opportunities in the Chinese education market place. Our partner’s content library has many rich-media titles ranging from math and science education series to fairy tales and other multimedia interactive books. These titles have been very successful in our partner’s home country, and are distributed primarily via retail channels such as bookstores and software retail outlets. The titles are distributed in CD-ROM media packaged in boxes.

We started the project by giving a true and objective assessment of the partner’s product fit to the Chinese market. Because we are approaching this project with a share-risk/share-gain view, we gave a thorough review of the applicability of the titles to Chinese education audience, and also objectively reviewed the differentiation over existing Chinese titles in the market. We ranked and scored the content library on a number of criteria, ranging from Quality of Graphics Design to Suggested Market Potential. We even used test subjects, including school age children and education experts to sample the products

Jointly with our partner, we analyzed the results of the assessment and selected a subset of 19 CD-ROM multimedia education titles for localisation and distribution into China. The selection was based on the best fit (or lowest gap) amongst the factors of cost of localisation, degree of competitive strength, market potential, and sampling feedback. We then priced the entire cost of localisation, publication, regulatory fees, branding, promotions, and distributor margins to bring the titles to China and entered into a business agreement whereby the content partner would pay for only 50% of the cost. In return, upon successful distribution of the CD-ROMs to China, we would share 50% of the profit. One of the key factors for us to enter such an arrangement is the belief that the titles can be successful in China, and that we understand and have access to a substantial network of distribution channels which allows us to plan, control, and manage the localised product launch as if it were our own developed product titles. As a point of fact, our partnership approach is not just a superficial ‘discount’ on top of retail price. Our business agreement actually gives us the joint-rights to the localised titles. This gives us enormous leverage and upside incentive to make the localisation and distribution a financially rewarding project for both ourselves and for our partner company.

For a true partnership to work successfully, each party has to bring complementary and hard-to-acquire knowledge, assets, and skills to create value. In this case, our content producer partner has in-depth knowledge in education content creation and successful home market penetration of these products. They have a number of education specialists who worked hand-in-hand with multimedia technologists to create the strong portfolio of titles with universal appeal. Our contribution to this partnership is our knowledge of the China education market, our substantial investments made in developing a strong distribution channel, our ability to provide multimedia localisation services, and our willingness to approach this project with a true partnership mindset. This new approach to localisation will become the preferred business model for companies seeking service providers to help them enter international markets. It requires complementary skills from each party to forge a strong partnership in winning new territories. We are constantly seeking new business partners, as we believe this is the right formula for success in the new millennium.

The localised products will launch in the PRC in September 2001 in time for the new school term.

This article is excerpted from a full White Paper available from the author. Interested readers can obtain the full version by visiting http://www.8thnetwork.com or by faxing a request to +65 836 3977.

Virginia Cha holds the concurrent titles of Visiting Fellow of the Institute of Systems Science, National University of Singapore and Executive Vice President of The 8th Network Corporation (http://www.8thnetwork.com), a provider of China market entry services via its portfolio of internet and distribution companies in the PRC. Prior to her current appointments, Virginia was the founding CEO of Singapore’s leading multilingual software company Star+Globe Technologies Pte Ltd. Virginia has over 22 years of hi-tech, senior management experience including previous appointments at Kent Ridge Digital Labs in Singapore and Unisys Corporation in the United States. She sits on the advisory boards of many venture firms and is also a featured speaker at various international conferences. She was most recently featured as the lead speaker in MIT’s Sloan School of Management lecture series of “Women in Management”. Virginia is also the principle lecturer and creator of the “Power Entrepreneur” lecture series in Singapore (http://www.powerentrepreneur.com). Virginia has a Bachelor Degree in Computer Science from the University of Hawaii and started her career as an Operating Systems Programmer at Burroughs Corporation. Virginia lives in Singapore where she can raise her daughter to be an upstanding citizen. In her spare time, Virginia teaches step aerobics in International Fitness clubs throughout the Asia region.