Internationalisation is a complex word to say, as complex as the processes it implies. Yet, becoming international today is essential.
The main drivers are political (is it possible to invest or trade in that country?), technological (in communication and transport), social (the convergence of consumer needs) and competitive (when you are global it is important to keep your edge).
But as in any business process, the starting points are a need with its solution, a demand and a supply, unencumbered by geographical logic.
What can China teach us?
The need to internationalise one’s business can arise from the need to support the company through foreign sales, from a saturated domestic market, from a drop in local demand, from excess production capacity or from the need to acquire new resources.
Certainly China can teach us to interface with the concept of distance, which according to Ghemawat has four dimensions: cultural, administrative, geographical, and economic.
- Culture is a veiled decision maker everywhere.
When approaching the foreign interlocutor, there will always be an invisible one: his culture. Knowing its nuances, together with the local language and business etiquette, is like recommending oneself: you start the business contact with quality assumptions, effective in every negotiation.
Or, let’s imagine we need to find a B2B distributor to sell food: the company’s surveys of consumption habits in that area will also lead to ultimate success, as the cultural matrix can interfere in purchasing choices.
- Global management implies strategic assets, both tangible and intangible. An example?
Intellectual Property. A delicate and central point between legislation and business, it is one of the intangible assets and one of the greatest fears of SMEs or large companies wishing to do business in China, although the situation has now improved thanks to the recent 2020 law on foreign direct investment.
“The reason for this is fundamentally linked to its dynamic nature: from being a legal tool to a business vehicle, protecting intellectual rights means promoting and preserving the value of one’s entrepreneurship,” explains Combattelli in Business and Justice, What China can teach us. Other intangible assets include trademarks or patents, which can be filed with the relevant local offices – also in the local language – in order to protect their value and know-how.
- Geographical distance encompasses different conditions: from being physically remote, to lack of adequate connections (e.g. transport and communication) to differences in climate and time zones.
Did you know, for example, that China imports wine from Australia because of geographical proximity? So being an excellent Italian or French producer may not be enough.
Today there is a solution for realising an entrepreneurial project by exploiting new resources: in the ecosystem in which a company like Matchplat operates, it is possible to internationalise, for example, cutting the costs and time that this distance entails thanks to innovative technologies.
It is important to understand that technology does not want to replace human relations, but rather to support them in order to avoid risks, wrong investments and waste of time.
Other means widely used for business development purposes are trade fairs: realities put to the test by the health emergency and, as always, a source of significant business expenditure for results that do not always meet expectations.
This is sometimes combined with new placements in the company: doing research to develop a business requires a number of cross-cutting skills, such as analytical, linguistic and economic approach.
- Economically, it must be taken into account that not everyone in the world has the same resources at their disposal, and this affects production processes.
One only has to think of the current boycott in China against some global clothing brands, which are facing considerable difficulties: on the one hand, attacks from Chinese consumers on the basis of patriotic motives, and on the other hand, the need to protect their image in the West, where campaigns for conscientious sourcing of cotton have long been promoted.
What steps can I take to establish a presence in other countries?
A first step to internationalisation is selling abroad.
According to the Uppsala model, the internationalisation process involves four operational steps in the so-called establishment chain. Exporting a product is the first step and involves lower costs than investing directly in the foreign country or setting up a company.
As with sales in the domestic market, it is necessary to build a relationship of trust with prospects who are geographically distant and who can now be reached by strategically exploiting resources, the right information and the best technologies.
In conclusion, becoming international through a process that gradually reduces risk requires:
- Technology and information: doing adequate research, containing costs and exploiting technological potential (start a market exploration and analysis phase, or gather the best advice, remotely). In the meantime, it is useful to assess internally how to structure communication and, if necessary, logistical technologies;
- A concrete approach: it is about taking the first steps in the desired area, allocating the right investment. In China, for example, considering the subject of law is fundamental to establishing one’s presence, but the importance of receiving the right fiscal and legal support applies to every country. Human resources – new or future – can then be dedicated to the result of the first exploration phase;
- Result analysis and strategy: a useful timing must be established to study the first market responses. The aim is to encourage the necessary adaptations to maximise the effectiveness of the subsequent strategies, once the early stage is over.
Business e giustizia. Cosa può insegnarci la Cina, Vanessa Combattelli, Intermedia Edizioni, 2021
Distance Still Matters: The Hard Reality of Global Expansion, Pankaj Ghemawat, Harvard Business Review,
H&M responds to a firestorm in China over Xinjiang cotton, Elizabeth Paton, New York Times, March 31,
Brescia, 01/04/2021, pag. 9 (https://brescia.corriere.it/notizie/economia/21_aprile_02/con-l-intelligenza-artificiale-matchplat-nuovi-clienti-le-pmi-9790cc36-9381-11eb-a162-c78b02fef827.shtml)