Adjusting Your Product Pays Off
Neophytes in international business are often dismayed when they realize that their product, or how they sell their product, often needs to be changed to enter a new market. This can be anything from physical changes to meet another country’s product standards, to altering labels to meet legal requirements or cultural mores, to the mix of products you offer.
Get yours with Peking duck
Costco has gone through this in learning how to operate in Taiwan, according to the Wall Street Journal. Their stores in Taiwan look much the same as their U.S. warehouse stores. They sell many of the same products, but they have localized what’s on offer by adding many Taiwanese and other Asian products to their mix. “What we’ve done here is reflective of what we do in all of our international markets,” said Richard Chang, Costco’s Taiwan chief. “We want to make it as authentic as possible, but we also want to localize. It’s proven to be a successful combination.“ Indeed. Costco’s store in the Neihu district of Taipei is now the second most profitable Costco in the world (topped only by a Costco in Korea that has followed the same strategy). The six Costco stores in Taiwan are helped because they have no direct competition, with no other warehouse store chains having entered the market. But it is the mix of merchandise that makes the real difference.
Costco is seen as a U.S. store, so they bring in about 40% of their offerings from the United States. They even bring dough all the way from New York to make their bagels, selling 54,000 bagels every week in the Neihu store. But they also “localize” their American offerings. Steaks are thinly sliced, so that the beef is wok-ready. Fish are sold whole, not filleted, and Costco’s ready-made pizzas may have Peking Duck topping. Half liter milk cartons weren’t accepted in the market, but Costco discovered that they could sell milk if it was in giant 3.6 liter containers.
I saw K-Mart go part way in this direction with their stores in Singapore and Bratislava in the 1990s, but they didn’t go far enough and eventually sold out.
Japanese food product exporters are learning the localization lesson, too, according to the New York Times. Companies such as Yakult Honsha, Ezaki Glico and Ajinomoto are attacking foreign markets by altering their products to local tastes. These are lessons that were learned decades ago by Kraft or Nestlé or Procter & Gamble, but they are always being learned somewhere. If you have been to Japan or elsewhere in Asia, you have seen the ubiquitous “Pocky” chocolate-dipped cookies. But Ezaki Glico discovered that the cookies did better in Europe when they were re-branded as “Mikado” cookies. Simple fix, good sales. I got used to Yakult yogurt products when I lived in Asia, but the company found that sales rose in Mexico if they used a new “Sofyl” brand. Different name, same yogurt. Other Japanese food product companies are seeking to capitalize on Japan’s strengths with soy-based products, modifying products such as tofu to meet the tastes of other markets. And they are also making use of the world’s current infatuation with cute Japanese animal designs in their labeling.
It all goes to demonstrate that you can export your product, maintaining its identity while still localizing it to maximize sales. Go for it!
