The Politics of Localization

Full credit to companies that have successfully localized their products around the world.  In a heavy-breathing article in today’s Financial Times, various pundits give companies credit for their deep insights into cultural differences around the world.  MacDonald’s somehow managed to figure out that Big Macs wouldn’t fly in India and that this vast country could accommodate regional preferences for lamb or vegetarian dishes.  Starbucks has deployed its immense resources to discover that the British like an Australian espresso-type drink called the “Flat White.”  Let’s assume they really tortured the metadata to get to that insight.

Forgive us for viewing these triumphs of cultural localization as relatively trivial.  For us, the real challenge is on the corporate and public affairs side, where the nuances of cultural and political history are often built upon centuries, if not millennia of enmities and where apparently innocuous matters are heavy with symbolism.  Especially in emerging markets, where business and political elites are strongly intertwined, understanding the family and ethnic backgrounds of  business partners can be crucial.  Labels such as liberal or conservative, free market oriented, or state capitalist are usually misleading overlays for much deeper economic and historical distinctions.  Recent news stories bring to light, for example, that the fundamental issue in Pakistan is not religious fundamentalism but that dynastic landowners don’t pay taxes.  Where true political power is concentrated  in China is a complex question and yet corporations routinely hire consultants for their apparent connections but who turn out to come from families on the “wrong side” of history.  In some countries, such as the Philippines, it’s which branch of a particular family you associate with that can spell the difference between success and failure.

As the ability of American and European business to use raw economic power to obtain results in emerging markets diminishes, it will be ever more important to understand the internal political and historical dynamics when entering a new market.  It’s not about global or local.  It’s about knowing where family, political and business networks intersect with history.

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