March 14, 2007
Think Global, Partner Local
Professor Pankaj Ghemawat of Harvard Business School poked a hole in the world-is-flat version of globalization in the current edition of Foreign Policy magazine. Ghemawat points out that “more than 90 percent of all phone calls, Web traffic, and investment is local,” and that most Web users chat with local friends or e-mail family rather than connect with someone overseas. “We’re more wired, but no more global.”
The preference for local, relevant content may account for the struggles US-based companies like Google, Yahoo, and eBay have faced in transplanting their success to emerging markets like Russia and China.
To win these markets, multinational tech companies are wisely experimenting with different business models – partnering with local competitors, surrendering overseas operations to local players, or signing up proven consumer champs like Pepsi and Procter and Gamble to find new advertising revenues.
There is a clear opportunity for SMB’s in developing countries to partner with multinational search and e-commerce companies to collect and deliver locally relevant content. Soon, it will be possible to identify a user’s location as soon as she logs on. The company with the strongest roster of local content providers will achieve the most business growth in that environment.
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