Expand Globally, Hire Locally.
Published September 07, 2021 By Fernanda Cardoso
The path to expansion in global markets is littered with potholes and land mines. The potholes are easy to see and can usually be avoided or at least mitigated with proper planning. The land mines are more evasive and can blow a hole in your project without warning. Logistics, manufacturing, quality control, installation and project management are all elements of a project that even with the best of planning can still go awry. But other considerations – like language, culture and the way business is conducted in a foreign country – are areas that can surprise even the most seasoned development team.
There is no silver bullet to avoiding the challenges that come with global expansion, but there is one sure way to minimize the risk, meet your desired goals and save time and money: hire locally.
When expanding into Mexico in particular, brands usually enter the market in one of two ways. The first and seemingly most effective is to have an agreement with a department store for sales space on their floor. The second, and on its face, riskier, is to open their own store location. In each scenario there are pros and cons. You give up something to get something.
In the first scenario, the brand is offered space from the larger store. This means all of the processes and decisions are facilitated by the store. Easier? Yes. But, in this instance the brand must play a subordinate role to the store. They typically will rely on the store to choose the manufacturing options, losing the ability to build their own relationship with the manufacturers of their fixtures. This applies to all of the elements involved in the certification of their brands. The brand becomes a step removed from the decision-making process. They must trust the store, who is possibly opening many other shops within their space, to handle the details. They may eliminate some of the risk of “going it alone”, but the costs can escalate, and the vision can be compromised with no one on the ground to intervene.
In this case, the simple act of hiring a local brand representative can be a game changer. This representative can protect a brand’s interest by questioning and evaluating, offering value engineering options, and possibly even more importantly, understanding and translating the culture.
The other scenario is, of course, for the brand to open its own space. This comes with a host of opportunities for failure if there is not someone on the ground that knows the ins and outs of doing business in the country. This includes language, culture, working requirements, material and manufacturing options, the permitting process and so much more. While the brand has eliminated the department store and pulled the decision-making closer to its vest, it must be sure it still has local and knowledgeable eyes on what is happening with the project. Going it alone is not a good option.
In my experience, regardless of which way a retailer decides to enter the country, there are a few important ways hiring local can smooth the path while saving time and money.
Language can be a barrier that often hinders execution. Having allies who can handle the language can help avoid problems stemming from miscommunication before they happen.
In Mexico, we have a word that we use a lot, “ahorita”. This basically is the same as saying in English “in no time.” But in practice this can be translated into one second, one hour, one day, one month or one year. You have to know the culture and the people to be able to really know how much time we are talking about! Understanding local crews and their customary working conditions and expectations is important if you want to get the maximum output from them.
- Supplier Relationships:
Local companies know the various suppliers and their capabilities. Their knowledge of the community of manufacturers, material providers, fabricators and installers can save a company a tremendous amount of time, money and headaches. By assisting in selecting these suppliers, the opportunity to offer value engineering to the process can be a huge bonus to the bottom line. Assisting in finding local materials that meet brand requirements can save a lot of money while keeping the brand’s look and feel intact.
- Business Experience and Knowledge:
Knowledge of the guidelines to install – whether inside or outside of a department store – and the different rules and procedures involved in building a commercial space is something gained through years of working within these parameters. Companies avoid a lot of pitfalls by doing it right the first time. Using a local project management firm can save a tremendous amount of back and forth.
As in any business, having the right contacts is essential. Working with a local project management firm makes the permitting process more efficient. The system in place in many countries, and municipalities within those countries is much different than in others. Knowing who to talk to and how to talk to them goes a long way in expediting what can be an arduous, frustrating and sometimes seemingly random process.
Whether you are a retailer, restaurant, hotel or any other commercial business planning to expand into a foreign market, these reasons and more make it worth using local talent for everything from design to project management and all of the elements in between. Knowing who the trustworthy players are in any country where you have no experience requires a bit of research. Look for an agency trusted by both local businesses and global entities. Using a company that designs, builds and manages projects for a variety of brands both inside and outside of the country assures you that they have the experience to guide you through the process and ultimately toward success.