Deadly Sins of International Business Blog

The times when Western hotel chains where the ones expanding in Asia seem to be over. As the International Herald Tribune reports, the latest trend is Asian hotel chains opening hotels in European locations. Raffles will open the Royal Monceau in Paris, where both Peninsula and Shangri-La Hotels will also be opening new properties soon. In addition, Shangri-La is looking into further projects in London, Moscow and Vienna. Banyan Tree will open hotels on Korfu and Santorini islands in Greece, while Six Sense is looking into the island of Milos. Given the growth prospects in Asia, the stagnating market in Europe and the increasing pressure hotel chains find themselves under, their moves seem counterintuitive at first sight. Considering, however, that an ever more affluent group of Asian tourists is and will be visiting Europe, their plans make perfect sense. Ultimately, these hotels will eat into the market share of European and American hotel chains. Will there be difficulties connected to the entry of these hotels into Europe? I am sorry to say, but I doubt it.

Something may have gotten past me, but does Chrysler really have a lot of wiggle room for experiments on their customers? It’s recent commercial for the Chrysler 300 features former Soviet leader Mikhail Gorbachev, former Polish leader Lech Walensa and is a call for freedom for Burma’s Aung San Suu Kyi. The commercial is an adaption of what Fiat’s ad agency Armando Testa has done in Europe for its Lancia brand. While the commercial is edgy even for the European market, it may fly there. As noble as the cause is, there is serious reason to believe that it is a total waste of advertising dollars in the US market. Many Americans either won’t know who Aung San Suu Kyi is or they couldn’t care less. Some may not even recognize Walensa or Gorbachev. It may even hurt Chrysler in some Asian markets that take a more authoritarian stance at opposition leaders. What was Chrysler thinking? Or was it Fiat that was doing the thinking? Watch it here: http://www.youtube.com/watch?v=ftJ9nTBDx2E

I am sure many of you know this website already. I had forgotten about it until I arrived in Beijing on December 8th. The humour of www.engrish.com can be a little borderline (who am I with my Germanic English to judge other people…?), but by and large it’s still funny. Check out the sections which have photos of products from Asia.

Chinese media has recently reported that Wal-Mart may add yet another country to it’s growing list of international failures. In 2008 Wal-Mart has 208 stores throughout China. Within the past 12 years of trying, Wal-Mart has not only failed to become profitable, but it even had to accept a loss in market share.  According to data from the Chinese Department of Trade, it has dropped from rank 17 in 2004/2005 to rank 30 this year. Before the background of previous failures, e. g. the one in Germany, it’s time to think about the reasons for Wal-Mart’s repeated problems in foreign markets. Could it be that their business model doesn’t fly in other countries? Is Wal-Mart entering the wrong markets?

I just found an older, but still good article about some interesting cases of failure of American firms in Japan: Knight, Gary A. (1995), International Marketing Blunders by American firms in Japan – Some Lessons for Management, Journal of International Marketing, Vol. 3, No. 4, 107-129. Knight writes about well known brands’ failures, including the big three US automotive manufacturers, Avon Cosmetics or Betty Crocker. It’s a well written piece which should be appealing to both academics and practicioners. What amazes me most about these companies’ blunders is the fact that we’re dealing with companies here which have all the human and financial resources needed to do things right. And yet, they ignore some of the basics. Many times it’s general knowledge about cultures (including, in the case of Japan, the status orientation or the collectivistic attitudes) which could be easily picked up and integrated into corporate strategies for market entry. So the question is, why don’t they do things properly and continue to fail in international markets?

A short while ago, PepsiCo announced that it would invest $500 million in India over the next three years. While PepsiCo has been very successful in India with sales exceeding $1 billion a few years ago, this major investment is definitely a case to watch for everyone interested in international business. Let’s wish them well.