It’s a small world. At least that’s what they say. Thanks to communications and transportation networks that have improved dramatically over the last 50 years, far-flung nations around the globe are now within reach. As a result, companies have jumped into international markets, outsourced operations to overseas manufacturers and suppliers, and established subsidiaries around the world.
E-business promises to further shrink the world as people everywhere research products on the Web, buy and sell products on e-commerce sites, and manage international supply chains with collaborative software and e-marketplaces.
But is e-business really up to the challenge of global trade and the diverse needs of international customers and trading partners? The simple answer is no. Technology may be making the world a lot smaller, but the world has become a lot more complicated in the process. Many obstacles exist to conducting international business over the Internet and most e-businesses aren’t prepared.
A morass of troubles
The most obvious barrier to international e-business is language. According to Forrester Research, 63 percent of all Fortune 100 Web sites are available only in English. And a joint study by IDC and WorldLingo, an online translation company, showed that almost 90 percent of the world’s top companies fail to respond adequately to e-mail messages sent in a foreign language.
Companies must brush up on their language skills if they hope to engage the growing number of people that use the Web internationally. IDC forecasts that 1 billion people will have access to the Web by 2005, but less than 25 percent of them will live in the United States and more than 70 percent will speak a language other than English. That’s a lot of business waiting to be tapped.
Language differences aren’t the only challenges for companies trying to provide Web sites that appeal to international customers and business partners. International e-businesses must also be able to exchange financial information in a variety of currencies and account for currency fluctuations among trading partners. Countries use different formats for weights, measures, dates, telephone numbers, addresses, and other common information.
Furthermore, cultural differences can mean that Web content that works for a domestic audience can be meaningless, and sometimes even offensive, to people in other parts of the world. For example, talking about a big success as a “home run” won’t mean much to citizens of countries unfamiliar with baseball.
It’s unlikely that a company will become a truly global e-business in a single step. There are several stages to overcoming regional differences in language, standards, and culture. Language translation is only the first step to making your e-business more useful to an international audience. Companies that take the more advanced step of localization provide a local version of their Web site that not only accommodates the language of a specific region, but also its standards and culture. The next step is internationalization, which provides an architecture that supports multiple localized versions of their Web sites. Globalization is the final step, whereby international processes are so thoroughly integrated that a company can collaborate and conduct transactions between any regions in which it conducts business. GlobalSight, Idiom,Lionbridge Technologies, SDL International, Welocalize, and WorldLingo are examples of vendors that can help e-businesses achieve various stages of globalization.
Global trade management
Another big problem area for e-business is global trade management. E-business systems must be able to comply with a variety of complex regulations to engage in global trade. Companies that can’t handle these regulations are leaving a lot of money on the table. Forrester estimates that 46 percent of international orders to U.S. e-commerce sites aren’t fulfilled because companies can’t handle the necessary procedures. And AMR Research found that $3 billion in U.S. import duty refunds go unclaimed each year by companies that don’t understand the trade laws.
What are some of those regulations? Customs requires that all imports be coded and categorized. Because codes vary among countries, codes must also be harmonized from country to country. Restricted-party screening regulations apply to products that can’t be imported or exported between specific countries for national security, health, and environmental reasons. In addition, countries and localities have different licensing requirements and charge different duties, value-added taxes, and fees. All of this amounts to a major content-management challenge.
Beyond these regulations exist many other financial and logistical considerations. International trade has complex processes for financing, risk management, and financial settlement. Financial institutions and software vendors are still ironing out the applications and services e-businesses require for automating international payments.
Global trade requires shipping goods across borders, yet many international shippers don’t have logistics software that provides the necessary visibility and flexibility to e-businesses that want to automate their global supply chains. (For more on supply-chain visibility, see my Oct. 31 column, “Bulletproof your supply chain.”) And many e-businesses don’t have e-procurement software that can analyze the total landed cost that is, all the costs of sourcing and shipping a product internationally, including customs management, tariffs, transportation, and cost of goods.
On top of all this, the terror attacks of Sept. 11 made it painfully clear that companies that manage international supply chains confront new risks. (For more, see my Oct. 10 column, “Sept. 11 attacks reveal supply-chain vulnerabilities.”)
Most enterprise applications are pretty weak when it comes to automating global trade management, according to Michael Bittner of AMR Research. “None of today’s packaged applications really offer multi-enterprise services and software that automate the transportation and e-logistics management needs of a global trading network,” he says. “Web-based buy- and sell-side applications fall well-short of providing automated global trade management.”
A number of technology companies can help e-businesses address some of the requirements of automating and managing global trade. These include Arzoon, Bolero.net, ClearCross, Nextlinks, Open Harbor (formerly myCustoms.com), Qiva, Vastera, and Xporta.
No one vendor handles all the requirements of automating global e-business, and some of these vendors have already begun to merge with or acquire other companies to provide more complete offerings. For example, Qiva, a company that sells transportation and supply-chain event-management software recently acquired Capstan to strengthen its ability to handle import and export compliance, landed cost calculations, and trade document generation.
Obviously, there’s a lot involved with being a truly global e-business. However, until companies and vendors seriously tackle the full spectrum of global trading requirements, they will only be talking the talk.
Have you encountered problems with getting your company prepared for global e-business? Contact us at Bilingual Resources Group, Inc.
Tel: (504) 253-0364
Toll Free: (877) 608-4594
Fax: (504) 910-8499