The political cries of the protectionist movement are stirring up threats of global trade wars. Along with major shifts in consumer behaviors, global companies are scrambling to rethink their globalization strategy. When the dust settles, businesses may have to rework their localization approaches to succeed in new international markets.

However, it is worthwhile to define the globalization strategy that was once the hallmark of businesses.

Beginning in the Early 1990s

Liberalization in many regions of the world contributed to the rapid growth of a global economy. Simultaneously, corporations jumped on the opportunity to capitalize on this new unified world. The vision of one market inspired companies to expand their business by using two main practices: mass-market production and economies of scale.

• Mass-Market Production is the manufacturing of standardized products in large quantities, frequently using an assembly line or automation technology.
• Economies of Scale refers to the reduced cost per unit as a result of an increase in total output of a product.

However, these companies are now caught in the midst of trade wars and mounting tariffs. The one-size-fits-all strategy that established their global presence is now more unworkable than ever before. In the following section, we will take a look at the financial implications of the trade wars on global companies, specifically on the US-China trade war.

The US-China Trade Wars

Recently, the US hit China with a $200 billion tariff on Chinese-made goods. China retaliated with a tariff on $60 billion worth of US imports. If you are a US company with operations in China, what does this mean for you? Consider the following.

Percentages of All Goods Imported into the US from China

• 41% of Apparel
• 72% of Footwear
• 84% of Travel Goods

The proposed tariffs on those goods would cost American consumers nearly $6 billion a year. If a US company sells their products in China, the price will be artificially inflated. As such, many global companies may considering exploring new markets while continuing their current operations in regions affected by trade wars.

Time to Think Differently

At this moment, nearly 90% of major global companies are on the move to shake up their strategies in new markets, which means the localization industry will continue to play a major role! Two-fifths of these companies are hiring local talents or setting up production facilities in said markets, and another one-third of these companies are localizing their product design, marketing, R&D, and more. While this process may be long and tedious, localization companies, such as CSOFT, are already prepared to assist companies with their globalization needs. With CSOFT’s extensive network of in-country linguists, your products can be localized and enjoyed as you intended.

Questions?

Curious about globalization, or the services CSOFT can offer?

Give us a call at +1-415-889-8989 in North America, +86-10-5736-6000 in Europe and Asia, or contact us here.

Author: Kai Chao, Marketing Associate, San Francisco