BtoB

Overseas expansion vital to build U.S. e-companies

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This issue of BtoB devotes extensive space to global issues, from our Special Report and carried throughout our standard departments.

The provincial bias of U.S. companies has been well documented. Case in point: Many of the U.S. Fortune 500 do not have corporate Web sites in any language other than English. To be sure, international business can be problematic, from obvious language and regulatory barriers to subtle cultural differences. And even a brand name mistranslated can produce a laughable disaster when makers of cars or soda carry campaigns designed for Americans into foreign lands.

Layer on top of this the recent shakeout among high-flying dot-coms and a general consensus that the U.S. economy is slowing, and you can bet that a first casualty of any cost cutting will be initiatives to "globalize" the business and, in particular, its Web strategy.

It doesn't help that domestic marketers timid about setting foot outside North America can trot out research indicating their home region will enjoy e-commerce dominance for years to come. According to a Forrester Research Inc. report, North American e-commerce will reach $3.2 trillion in 2004.

But focusing on that number misses the larger point: The same report predicts Asia Pacific will hit $1.6 trillion by 2004, followed by $1.5 trillion for Western Europe, $81 billion for Latin America, and $68.6 billion for the rest of the world. Indeed, Forrester believes that some Asian-Pacific and Western European countries will enter a period of what it calls "hypergrowth" during the next two years.

U.S. businesses with b-to-b exchanges or sophisticated online distribution networks need to press their advantage now, before the rest of the world catches up.

Some U.S. companies understand this reality. Take advertising networks such as Engage Inc. and 24/7 Media Inc., which are both pressing hard on their international expansions even as they suffer through corporate restructurings and layoffs. These companies are betting that the future belongs to providers who can offer integrated, global products. Also watch for the growing importance of cross-border b-to-b marketplaces, which will offer services such as language translation, logistics and insurance to help midsize companies operate more easily on a global playing field.

But as our lead story by reporter Philip B. Clark also makes clear, the single most effective strategy for going global is to go local. That is, hiring in-country staff or partnering with existing local players who already know the cultural and operational landscape. "Gone are the days when U.S. companies filled international branches with star American employees," Clark writes.

The inevitable conclusion is that international expansion is not a luxury U.S. companies can push off until the next economic expansion. Rather, it should be-it must be-a fundamental part of any b-to-b Internet strategy.

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