Western Companies and Their Western Culture Essay

Published: 2020-04-22 08:06:56
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Category: Culture

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Wal-Mart is the largest corporation in the world, with stores in over 15 countries around the world. Wal-Marts success is due mostly to their ability to sell goods at low prices and their ability to create a friendly environment with their ten-foot attitude; meaning a salesperson who comes within 10 feet of a customer must look the person in the eye, greet the person, and ask if he or she needs help (Schaefer, 2009, p. 68). This cookie cutter style business has been very successful in the United States, but it has had many setbacks around the world.

Wal-Marts inability to adapt there business to the host nations culture has proven detrimental to their ability to spread to many countries around the world, like Germany and South Korea (Schaefer, 2009, p. 68). But Wal-Mart is not the only business that has taken this approach, eBay took the same approach when they entered the Chinese market and met with the same results. In 2004, eBay entered the Chinese marketplace with the intent of dominating internet auctions. They began an aggressive campaign designed to dominate the market place.

They signed exclusive advertising right with major portals Sina, Sohu, and Netease with the intent of blocking advertisements from their number one rival Taobao. They also injected over $100 million to build its China operation and began spreading ads on buses, subway platforms and anywhere else they could find (Wang, 2010, para 5). They took the same approach that they had taken in the United States, without taking into account the Chineses culture. Jack Ma, founder of Alibaba, was not ready to start losing customers to eBay. Ma who understood the Chinese culture, and their way of thinking launched Taobao.

Taobao, which means digging for treasure, was launched as a competing consumer-to consumer (C2C) auction site (Wang, 2010, para. 2). This site was launched to counter eBays online auctioning by offering free of charge to individuals buying and selling virtually any consumer goods, from cosmetics to electronic parts (Wang, 2010, para. 3). Ma also understanding that most small business owners would rather watch TV than actually log onto the internet, he began securing advertisements for TaoBao on major TV channels (Wang, 2010, para 6).

Ma also understood that most Chinese people preferred cell phone to computers, china had three hundred million cell phone users versus ninety million Internet users (Wang, 2010, para 9), so TaoBao offered instant messaging and voicemail to mobile phone to allow his buyers and sellers easier access. They also offered better terms for its consumers: it offered longer listing periods (fourteen days) and let customers extend for one more period automatically (Wang, 2010, para 8). EBay did not have this type of flexibility.

By March of 2006, Taobao proved that it was the dominate online auction site, by becoming the leader in Chinas consumer-to-consumer (C2C) market, with over 67% of users choosing TaoBao compared to eBays 29% (Wang, 2010, para 11). Later that year, Meg Whitman, eBays then CEO, flew to Shanghai to take part in a press conference to announce a new joint venture with Beijing-based Internet portal Tom Online, but it was really a formal announcement of eBays withdrawal from the online auction market in China (Wang, 2010, para 12).

Just like Wal-Mart in Germany, eBay failed to recognize that the Chinese market place and business culture were completely different from the United States. Both companies failed to take the drastic difference in culture into account when they tried to establish their companies. EBay brought in people from outside of China to head up their operations. Not only did they not understand the local culture, but they didnt even speak Chinese. They also failed to understand the market place and wasted tons of money on advertising in places where there main customers did not look.

Third and in my opinion the most important, eBay failed to adapt their product and services to the local customers. They tried to use the same global platform, which did not mesh with the local customers at all (Wang, 2010, para 14). In the end eBay, a multibillion dollar a year company took a backseat to a company with only $173 million in revenue and no experience in online auction business (Wang, 2010, para 12). Competing with and then beating eBay gave Ma tremendous confidence.

He later said eBay may be a shark in the ocean, but I am a crocodile in the Yangtze River. If we fight in the ocean, we lose”but if we fight in the river, we win (Wang, 2010, para 10). I think this statement sums up the overall attitude that is needed to succeed when venturing into new cultures. You have to understand you target audience, and be able to relate to them. You have to be flexible and adapt to the local culture. You have to be able to give the consumer not only what they want, but you have to give it to them how they want it.

References

http://blogs.forbes.com/china/2010/09/12/how-ebay-failed-in-china/

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