The title of this article was taken from the book, The Art of War, written by Sun Tzu, a brilliant Chinese military strategist (circa 500 BC). The advice is clear. When considering entry into foreign markets or new segments, the potential seems to be excellent and the obstacles small or easily overcome. Only upon closer examination and actual experience does a more realistic picture emerge. The commonly used phrase of, “The grass always appears greener on the other side,” is another way of expressing this issue. Combining this phrase with Sun Tzu’s military focus, the result could be stated as, “The grass may be greener, but it may also be filled with land mines.”
We often experience the advantage of hiring local guides when we visit a new city or region. Whether it is a local, personal contact or a professional guide, the insight that they can provide helps us discover new and exciting things, while avoiding pitfalls that we would discover only after making some innocent missteps. The opening of the Chinese market several decades ago, and the rush of many foreign companies to enter it on their own without the benefit of local business partners (guides), proved to be disastrous for most companies. Companies continue to make this mistake in other foreign markets and even when entering or focusing on different segments of existing markets. Only recently have companies begun to focus, for example, on differences between Baby Boomers, Generation X, Generation Y (Millennials), and Generation Z (Boomlets) in the United States and other Western countries.
Research conducted through Internet searches is analogous to observing the greener pastures from a distance. The true nature of local markets, personnel preferences, mores, norms, and environmental conditions may not be apparent from the two dimensional view of a computer screen. Local guides can fill in the huge gaps existent between long-distance viewing and actual immersion. Even local immersion may not be enough. Consider a visitor from another country visiting the US by spending time in New York City and Washington DC. Their impressions would be entirely different if they had only visited the West Coast and the Grand Canyon instead. Their impressions certainly would not be wrong, but their likely generalizations about the entire US would be flawed.
Great care needs to be taken in selecting and following the advice of a local guide. Their experience, motivation, loyalty, and even their ethics may not be in alignment with the company. As an example of the ease in which a company can fall into a trap, consider a non-US company attempting to establish a foothold in the US. Based upon a stellar reputation, they engage a native US citizen that has lived in Manhattan all their lives. They could certainly provide insight into market conditions of Manhattan, New York, but what about Manhattan, Kansas or Manhattan, Montana? We can immediately see the potential misguided advice that could occur. In reverse, US companies commonly lump Asian countries together with Europe (East and West) and the Middle East. Recent events have highlighted the dramatic differences in these areas, but still may not sensitize us enough to the differences that can be found within various regions of each of these countries.
Local guides that have a clear understanding of the company’s goals and their local markets need to be more than in-country guides. They also need to be heavily engaged in the fundamental strategy of approaching the market early enough that the unique requirements that are certainly present, but may not be obvious, are considered. Without them, land mines will only be encountered after they have exploded.