Much ado has been made over the Web's ability to give customers instant access to global markets. Launch a Web site and customers from Poughkeepsie to Phnom Penh can find your organisation and order your goods. Lynda Radosevich looks at the pitfalls of this new global trading phenomenon.
Despite the fact that US businesses crave attention from abroad, many are not equipped to greet their overseas visitors. In a survey conducted by Forrester Research, a remarkable 46 per cent of the interviewees said they turn away international orders because they do not have processes in place to fill them.
"It was a surprise how high that number was," says Michael Putnam, a Forrester analyst who conducted the research. "That's just money left on the table."
Obstacles to pocketing that money range from an inability to handle direct international orders, to language and cultural barriers that hinder basic communications, to varying stages of Internet adoption and infrastructure. Going global is not as straightforward as opening a virtual storefront on the Web.
Nevertheless, the Web's increasingly global reach can make the effort well worthwhile. Although the US once housed the vast majority of Internet users, as of March, only half of the estimated 160 million "Netizens" lived there, and non-US users were the faster-growing segment, according to numbers compiled by Nua, an Irish consulting firm.
The growth in the international Internet population means more potential business for US organisations, particularly from consumers who are eager to buy products they cannot obtain in their countries.
Although 24 per cent of Internet commerce was conducted outside the US in 1998, by 2002 that number will increase to 45 per cent, according to market researcher IDC.
The boost in global sales also means heightened competition from overseas. In some cases, going global via the Web is the antidote to going out of business.
For organisations that want to actively court international business, a key step after launching a Web site is preparing to handle international shipping. If the product is small enough to affordably send by air, organisations can outsource distribution to express shippers such as DHL Worldwide Express, Federal Express, and United Parcel Service.
For large items, shipping with a freight forwarder may make more sense.
In either case, organisations can get tangled in red tape while trying to comply with the destination country's import and tax regulations, which can be opaque, and with US export controls.
Some US export restrictions are obvious. Most people know that US organisations cannot sell to Cuba. But other rules are not so simple. Last November, for instance, the US Department of Commerce restricted exports to 300 Indian and Pakistani entities and subordinate entities believed to be involved in Indian or Pakistani nuclear programs.
"[The Department is] talking about any goods - clothes, pins, coffee mugs. In this case, our Government doesn't delineate what's restricted," says Larry Ferrere, vice president of marketing at Vastera (www.vastera.com), a US-based developer of international trade logistics software.
IBM got stung by US export laws in July 1998 when a district court judge fined IBM East Europe/Asia $US8.5 million for exporting computers to a Russian nuclear weapons laboratory, according to the Department of Commerce Bureau of Export Administration (www.bxa.doc.gov).
But US export laws are easy compared to dealing with the legal requirements, tariffs, and customs authorities in the 190 or so other nations of the world, according to experienced hands.
"In some Third World countries you have to get as many as 25 to 30 stamps from various customs officials before you can get a high-value package released," says Mike Drilling, vice president of gateway services at DHL (www.dhl.com).
Assistance is available, however. The express delivery and freight forwarding organisations can help organisations comply with import laws and tariffs - without assuming legal liability.
Another issue is setting up payment mechanisms. The high rate of stolen credit card number usage, particularly in Eastern Europe, adds risk to international credit card payments. Also, many Europeans prefer debit cards to credit cards, according to export consultants.
"People in America are far more willing to give out their credit card numbers than elsewhere," says James Finke, president of Interconsult, a US-based international trade consultancy.
There are no easy payment answers, but Forrester's Putnam says credit cards are the most expedient means of setting up international payments when organisations go global.
Even if organisations already have international distribution and payment processes in place, global e-commerce can present nasty channel conflicts, especially when a globalised site makes pricing disparities apparent.
"Once an organisation puts something up for sale on the Web, they have to say how much it costs. If people in Hong Kong see they can buy it in US dollars for less, that's an issue for large organisations," says Mary Cronin, a professor at Boston College's Carroll School of Management.
Businesses that sell intellectual goods and services, such as software or research, do not encounter shipping and logistics problems. The Web is the global distribution mechanism. But import/export laws and tariffs still apply, as the vociferous debate over the export of encryption technology illustrates.
Another aspect of going global is reworking Web sites to appeal to audiences in other countries. This entails adding information that offshore customers may need - such as the country code before the telephone number - and removing words, colours, and images that do not cross cultures well.
Organisations can never tell what will provoke controversy. Internet player Lycos, which launched a Korean version of its portal site last month, discovered that its golden retriever mascot did not work in Korea.
"We were hoping that the dog, which is very friendly looking, would be a worldwide symbol. But our senior management for Lycos Korea pointed out that in Korea, dogs have other connotations, namely food. It wasn't very popular in Europe, either," says Jeff Vander Clute, global operations manager at Lycos.
The following are other examples about which experienced international Web site developers warn.
The use of black in graphics and backgrounds is very popular in the US, but the colour has sinister connotations in Asia, Europe, and Latin America.
The thumbs-up sign and the waving hand (palm outward) are rude gestures in Latin America and the Middle East, respectively.
Showing a woman with exposed arms or legs is offensive in the Middle East.
Organisations that are a little further along in their global Web strategies translate versions of their sites into local languages and/or offer localised content. But translating can be politically tricky, especially because some countries use the same language with different conventions. For instance, using the traditional Chinese character set is necessary to reach the Taiwanese, but mainland Chinese prefer the simplified set of characters. Cisco found that the word for "router" was different in Spain than in Latin America.
"[The language] issue was heavily charged - Spain wanted the Spanish word [for router]; Latin Americans didn't even know the Spanish word," says Jorden Woods, CEO of Global Sight, the US software company that worked with Cisco on its globalisation project.
When hiring a localisation partner, look for one that employs native speakers who live in the targeted region, according to Lycos' Vander Clute. That way, the translators are attuned to nuances that may escape even fluent speakers living outside the country, he explained.
For organisations with international divisions, one critical decision is whether to manage content locally or centrally. Many international organisations got in trouble initially when their country divisions launched their own Web sites. The local sites used their own designs and often gave conflicting information.
Vendors are emerging with software that helps manage multilingual Web site development and workflow. Global Sight (www.global sight.com), for instance, produces multilingual content management software called Ambassador that includes a workflow engine, access control, design tools, and a mechanism for flowing translated information into predesigned Web pages.
However, with an entry price of about $US100,000, Ambassador is only for very large globalisation projects.
As in all great Web ventures, going global has its cadre of technical considerations. Most major Web servers now can handle double-byte encoding used to represent Chinese, Korean, and Japanese characters. But the interfaces to back-end systems and the back-end systems themselves are often still written using single-byte programming conventions.
That means they return corrupted results when they encounter double-byte characters, according to Tina Lieu, a project manager at Basis Technology (www.basitech.com), a localisation technology vendor.
One solution is to program all Web interfaces using Unicode, which offers a standard encoding scheme for single- and double-byte characters, according to Lieu.
Also, programmers should not hard-code fields such as telephone numbers and surnames, because the data varies in length from country to country, says Deborah Tyroler, a director at International Communications (www.intl.com), a US-based localisation firm.
Organisations going global also must consider how their Web sites will work in low-bandwidth countries such as China. Cisco helps overcome bandwidth limitations by letting visitors choose servers from the nearest region.
Organisations can also get geared up to handle requests for product information or orders via e-mail, rather than the Web, because this method does not require owning a PC and having a reliable telecommunications infrastructure.
A well-designed Web site can help market to a global audience. Once organisations have internationalised their sites, getting them to show up in local search engines is key to driving traffic. Using meta tags around translated keywords will help search engines find a site, Tyroler said.
Going global is not for the fainthearted. In fact, Forrester says organisations must sell $US1 million or 10 per cent of sales - whichever is larger - to cover the costs of internationalising a site and offering telephone support to customers outside the US.
But with growth in global trade showing no signs of waning, reaching out internationally via the Web should make good business sense.