‘…Starbucks in Beijing’s Forbidden City is brewing a storm in China, with outraged local media reporting that 70 percent of people would rather not sip the American chain’s frappuccinos in the footsteps of the Son of Heaven.’ Sounds like an article of just a few months back and a recent issue – Starbucks and the controversy in the Forbidden City that led them closing that store a few months back. But in fact, this article is from CNN report of 2000 ‘Starbucks brews storm in China’s Forbidden City’. Seven years later the issue blew up again and forced Starbucks to close the store. In the intervening seven years, Starbucks remained in the Forbidden City and had a very low-key approach in this location. There was no branding on the outside of the store, but once you got inside, you knew you are in Starbucks.
The easy way out was for Starbucks to close the store and expand to other locations. One store won’t damage their business – not with over 12,000 stores globally. But what did they do wrong? The mere presence of Starbucks in the Forbidden City was seen as an insult to Chinese culture and history. It was not about what they were doing or not doing. Everyone agreed that they were a good company, doing good things. But they are not Chinese. Similarly, in many places in Africa, people are starting to complain that Chinese companies are exploiting them and not respecting their culture and history. But don’t think that this just occurs in the developing world or in emerging markets. Remember the US stopping a certain Middle East company investing in the ports in the US a few months ago? This is one of the key challenges facing companies in a globalized world. How do you become local and global while expanding your market?
Are you a multinational or a US/UK/Chinese (fill in whatever country might be disliked in the marketplace) company that operates globally? Too often companies claim to be multinational, but they are driven by the culture of their origin. Very, very few companies are actually MULTInational in the way they operate and are managed. To become multinational they need to ensure that both the ‘numbers’ and the people make sense. It is fine to say that 90% of the people in their African/Asian/etc. offices are from the host country, but this still leaves two questions: (1) the 10% left – are they mostly senior management, and how senior are they? (2) Is the head office comprised of mainly western (mostly white males) or do they reflect where they operate?
How do you bring these cultural influences together to make your company truly MULTInational? It may require melding the Western model, which is largely focused on the individual with say an African or Confucianism culture of East Asia. What is the best way to manage the company, and interact with employees, communities and customers? At the moment, companies are not asking these questions as they think ‘diversity’ is a numbers game about ethnicity and not the way you do business. Until we start seeing ourselves as global AND local in the way we run our business, the idea of being a Chinese company, an American company, or an Arab company will continue to divide businesses and customers.