Localization series NO. 2
In my previous article, I have a detailed explanation for the term “Localization”. To move on, I would like to express my humble understating and knowledge for the reasons for “Localization”. Certainly, there would be someone who disagrees with my points, I am happy to learn and listen. Here we go.
The only concern with localization, typically for the components which are made for the first time will be the quality and technological challenges. For instance, if a global car maker has establish a plant in China which uses some certain quality of components which are not available in China, while making such components in China through the ancillary may not match the quality of the component manufactured at the mother plant in the other country because of infrastructure or technological challenges. This is the reason because of which, some amount of components are usually imported to maintain the quality of the automobile high and large amount of the components are localized to keep the overall cost of automobile low and competitive.
There are several reasons why localization is more and more popular in our modern society. The following four reasons is a simple summary for it.
Firstly, Localization is a call for business development. It is true that many business sectors are highly characterized by nationality and regional property; therefore, the business should meet the demands of varied consumers which call for a localized strategy. For instance, the office software from Microsoft with the same content and functions shall use the native languages in different regions and countries. We may learn from another vivid example from a famous American company which follows the successful experience in America to promote the cake-making material in Japan, however, it turns out to be a disaster with loss of millions of US dollars. When people expose the reason, it indeed leads to a sea of shock. The basic reason is that the Japan family has no oven like American family does. Apparently, the failure of the company is that they do not take account of the consumers’ demands.
Secondly, Localization is a method to gain support in host countries. the reason for the development and support gained from local government of the multinational corporation lies in the good Corporate Image and Popularity to a great extent. The localization of staff, Corporate Culture, material and marketing etc is regarded as one standard to judge the benefit to China by Chinese government, enterprises and public. The actions that multinational corporation implement localized operation, invest in China and make use of human resource in China will do good to promote the popularity and the corporate image. For instance, Nokia Company employs many Chinese labors, invests in China land and meets the needs of consumers which lead to a high publicity in Telecommunication field. Nowadays, when people mention cell phones, the brand “Nokia” will pop out of people’s mind.
Thirdly, Chinese native culture takes count of it. The diversity in social culture, corporate culture and language is bound to fall down to Multinational Corporation which is ambitious to realize business worldwide. Those diversity will turn to be one big obstacle standing in the way for the corporation to enter into the local society. There are many benefits for localized operation and make use of Chinese human resources such as better adjust to environmental difference, avoid sharp culture conflicts, melt with local culture and accelerate the implementation of management innovation.
The Multinational Corporation will make good use of advantage gained from the production cost in Chinese market, human resource cost and low cost of manufacture which brings a saving in general cost and improve the total benefit. Hence, the multinational corporation will survive in the highly competitive market and obtain a large piece of market share.
Fourthly, Localization is required by the corporation to adapt to the market environment. Apparently, the market environment in the host country is varied from the counterpart in native country in the aspects like cultural environment, consumption concept, government laws, geographical and natural conditions, raw material supply, and market substitute. The multinational corporation has to agree with those differences in order to make profit and seek for development in a new environment.
Seen all the foreign companies’ experience, the most successful cases can be the localization strategy including relation localization, product localization, market localization, human resource localization and research localization.
More content to be continued in the next article.