One Huge American Company That Failed Miserably in China
Just because a company experiences wild success in the United States doesn’t necessarily mean said company has what it takes to thrive in a global sense. There are plenty of United States companies who tried to open up a business in another country and failed miserably.
Why do certain huge U.S. companies fail when they try to open up shop overseas? Many times it’s because they didn’t do sufficient research on the country they plan to do business in, resulting in a huge embarrassment.
Read on for a few companies that maybe overshot a little, overreaching their capabilities in trying to expand into global markets.
Home Depot Gets their Passport Revoked
Back in the late 90s China had a housing boom — Home Depot wanted to get in on the action. They watched closely as home ownership went from pretty much 0% to 70% — and that’s just in 15 years!
Sounds like a pretty straight-forward plan, right? Wrong. After Home Depot purchased a 12-store chain in China.
But the problems started to mount quickly. First, Home Depot realized the hard way that their Chinese vendors had no license — they could not sell their products in China; their Chinese vendors could only export. Big problem.
So let’s just say that Home Depot was at a disadvantage in having no supply chain. They then had to ship their Chinese products to the U.S., then ship them all the way back to themselves in China, which was counterproductive and hardly cost-effective.
When Home Depot finally found Chinese vendors licensed to sell products in China, they also discovered that they also gave these vendors their own selling rights within the stores. Even in the even that, say, there were 100 Home Depot staff workers in a large store, there could very well be 200 vendors hawking their own questionable products within the confines of Home Depot. Talk about ambience!
Home Depot ended up pulling out of China in September of 2012. Talk about failing to grasp local culture. When handling business overseas, one of the key aspects seems like it should be one of the most obvious: know who you’re working with.
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