Around The World In 80 Ways

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March 22, 2001 (10:05 AM EST)

The Internet has been called a global village that lets even the smallest company trade internationally. But even multinationals find that extending their e-businesses abroad is fraught with obstacles.

U.S. companies aren't just eager to sell globally online to expand their customer base. They also can scan overseas markets for cheaper supplies. And tapping a more diverse set of buyers and suppliers may help them weather the economic downturn that's hitting businesses so hard in the United States.

"Very rarely does the whole world economy falter all at once," said AMR Research analyst John Fontanella. "Companies want to be in many different markets at the same time. As economies revive, they can ride that upward, and any downturns can be offset by being in multiple markets."

Understanding the needs of customers in foreign markets is the top obstacle for companies extending their e-business globally, cited by 76 percent of respondents to an InternetWeek magazine survey of 100 IT professionals. Other obstacles include cultural differences (72 percent), legal or regulatory restrictions (72 percent), language differences (68 percent), tax code differences (63 percent) and handling multiple currencies (60 percent).

Software vendors are stepping in with products designed to make global e-business easier. Among the tools used by the companies surveyed by InternetWeek: currency conversion (52 percent), language translation (46 percent), Web server/disk mirroring (39 percent), online customs forms processing (38 percent), tariff calculation/global shipping cost calculation (31 percent) and comprehensive "globalization" packages (8 percent).

While language differences have always been a challenge for multinationals, translating constantly changing information on websites and electronic supply chains makes global commerce ever more complex. Apple Computer, for example, is using content management software from Sentius Corp., called RichLink, which translates more than 200 documents a day into seven languages.

Apple, which operates an extranet that provides sales tools and data about products, pricing and inventory to its U.S. sales force and resellers, is expanding the network into Europe and Asia. So translating the content into multiple languages quickly and accurately is critical.

"If we don't get detailed information to the people selling the product in their language, we'll lose sales," said Henry Kim, senior manager of sales communications at Apple. "Customers will get frustrated and go somewhere else."

Apple is looking to Web initiatives to maintain its high international sales growth: 38 percent in Europe and 57 percent in Japan last year.

Apple's focus outside North America makes sense. While North America is expected to account for half of the $6.8 trillion in online sales in 2004, according to Forrester Research, online sales in the Asia-Pacific region are projected to rise to $1.6 trillion from $53.7 billion in 2000 and sales in Western Europe will grow to $1.5 trillion from $87.4 billion in 2000.

Hewlett-Packard is using new software to improve its service offerings to customers around the globe. HP's IT Resource Center, which provides online support to IT professionals using its and other vendors' products, is running translation software from Uniscape Inc. to automatically update tech support and other files in seven languages.

The Web software, called Gnet, identifies documents that need translating, compares files against a database and finds all content that had been previously "localized" or translated. This eliminates redundant translation, said Alison Toon, global localization program manager of HP's IT Resource Center.

Before using Gnet, HP translated files manually. Toon said the software has allowed HP to update a greater volume of files in a shorter period of time, though she said it's difficult to specify how much time was saved because HP now processes multiple files simultaneously. This does, however, ensure HP gets updated information to customers on the most timely basis possible.

Last year, 64 percent of Internet users were outside the United States; that proportion is expected to rise to 71 percent by 2004, according to research company IDC.

To capitalize on the diverse international mix of Web users, sites must support not only the languages of partners and customers, they also must cater to the cultures and preferences in various localities. Janet Wejman, CIO at Continental Airlines, compares the need to customize global e-business sites with the airline's efforts to localize its flights.

"When we fly to a particular country, we make sure the aircraft follows the customs of the land we're flying to," Wejman said. "The language, meals, everything is adapted to the country. The same applies to a website."

Tickets must be priced in the local currency and the preferred wording must be used. There are even language differences between countries in which English is the primary language.

"The U.K. and Canada use different words for different things than we do," Wejman said. "In Australia, they use 'postal code' instead of 'zip code.' The point is to know and understand the customer and what their interests and preferences are."

Continental has begun selling tickets over sites for Canadian and British customers. It plans to expand online sales to South America and Asia this year and will have worldwide online ticketing in 12 to 18 months, Wejman said.

Bill Seltzer, executive vice president and CIO of Office Depot Inc., agrees that companies must keep foreign customers' preferences in mind when planning Web strategy. "On the sites for Israel and Japan, copy must read from right to left," Seltzer said. "And the What's Hot section varies from country to country."

The office-products retailer, which operates a dozen country-specific websites and plans to add up to four more this year, consults with local merchants to determine the best design for a site. If a site aimed at foreign markets is designed with U.S. customers in mind, it won't attract and retain business, Seltzer said.

With the creation of multiple versions of websites and portals comes managing and maintaining fast-changing site content. Eastman Chemical Co., which plans to launch 15 versions of its Eastman.com site for different countries over the next year, expects site maintenance to be key to attracting and keeping overseas customers and trading partners. It won't be easy.

"Our corporate site has 6,500 pages, and to keep up with the changes that we'll need to make to the different versions could be a maintenance nightmare," said Toni Corwin, Web globalization manager.

To help manage the sites, Eastman Chemical is installing Web software called Worldserver from Idiom Technologies Inc. Whenever changes are made to documents on the main corporate site, the application automatically locates similar documents on other Eastman Chemical sites so technicians can determine if those documents also need to be updated.

Hewlett-Packard, despite being a multinational company and one of the earliest corporate Web users, has struggled to roll out websites for foreign countries. Initially, the launch and management of global websites was decentralized. HP operations in different countries were responsible for creating and maintaining sites and there was no central control over content or how the company's brands were represented.

While HP wanted sites to appeal to individual countries, many lacked consistency and some didn't appear to have any affiliation with HP, said Tom Harms, Americas operations manager for HP.com information and management. "If you went from the France site to the Belgium site, there was a completely different look and feel," he said. "Users told us they wanted a more consistent experience."

The company is overhauling its Web content strategy, standardizing all sites worldwide under a centralized architecture to ensure they have a similar look and functionality, Harms said. HP is using GlobalSight's System3, software that automates development and maintenance of websites for multiple countries. System3, which GlobalSight offers as a hosted service, uses Java and XML to transfer data from HP's main site to other sites.

HP is piloting the system for European sites, plans to roll it out to other regions and hopes to eventually run System3 applications on its own HP/UX servers.

Standardizing the sites doesn't mean they will no longer be tailored for individual countries or support local preferences, Harms said. "To create personalization, you must be able to manage the content more efficiently," he said. "Centralized management will help that."

Once they've tailored their websites to address the preferences and customs in the countries they serve, companies also need to be aware of legal and regulatory issues that could also be an impediment to e-business. When Eastman Chemical launched a B2B site for the Chinese market, it learned that the government required companies to submit records of chat-room communications. Conversations deemed to be "subversive" or political in nature are barred.

"We'd need to have some type of moderator who would monitor all the conversations" because of that requirement, Corwin said. "We knew it wouldn't be possible to do that. We have to look for alternatives so our customers can exchange information with each other." The company will likely post answers to commonly asked questions on its sites, she said.

As Eastman Chemical launches additional foreign websites, Corwin anticipates other legal and regulatory limitations. Countries have different rules about where customer data can be transferred, for instance, and some also restrict the way users' behavior is tracked when they visit a site.

Software and service providers are developing products to help companies sort through such issues. Application service provider ClearCross is collecting and updating billions of documents on international regulations and making them available to customers online.

Healthy Discounts.com, which sells vitamin supplements over the Web in 17 countries and operates an online exchange for supplement providers, uses the ClearCross database to ensure it's complying with cross-border trade regulations.

"You have to know what the regulations are and how strict countries are about enforcing them," said Mariano Ferrari, CEO of Healthy Discounts. "A customer could order 35 items, and if one of them is not approved for sale in that country, they could kick back the whole order. And we would have to pay the freight charge."

Using ClearCross, Healthy Discounts processes orders to customers in foreign countries in minutes, Ferrari said, compared with the two to four hours it took previously.

Calculating the costs of delivering goods overseas is another obstacle to global e-businesses. With domestic shipments, companies can calculate the "landed cost" -- total cost from origin to destination -- by checking with a shipping company. International shipments involve customs tariffs and delivery fees that frequently change.

The ClearCross service helps companies calculate true shipping costs, including value-added taxes, freight and handling fees, which can vary greatly from country to country. Before using the ClearCross service, Healthy Discounts had to calculate taxes, duties and shipping fees on each order, Ferrari said. And every country has different fee structures.

Oracle, which draws 43 percent of its revenue from outside North America and expects to get a growing share of its e-business sales outside the United States, has struggled with customs regulations.

"Customs is always fluid. It's based on draconian rules that not a lot of people understand," said Lou Ventino, vice president of global trade compliance at the software company. "But you need to understand it to do business in other countries."

Oracle relies on outsourcing partners to supply current data on international customs duties, tax codes and total shipping costs, which it integrates with its Oracle 11i ERP applications to eliminate the need to manually check every order against the appropriate rules, Ventino said.

Another global e-business challenge that companies are using technology to address is currency conversion. Avnet Inc. can handle all major currencies and conversions on the back end, but the electronics distributor is looking into Web applications from several vendors that will let customers trade in their preferred currency regardless of which Avnet site they visit.

"Today we do business in a specific currency depending on the site," said Lori Hartman, executive vice president of e-business. "So if you buy from the German site you pay in euros, and if you buy from the U.S. site, you pay in U.S. dollars."

Avnet is currently linking an SAP e-business platform that runs in 60 countries to its global website, said Greg Monte, senior vice president of Internet business development. The sites the company is connecting provide everything from brochureware to full-blown e-commerce functions.

Ideally, Hartman said, Avnet sites would be equipped to determine which currency a customer prefers to trade in, and automatically bill the customer in that currency. The company is evaluating some front-end tools that could be linked to its SAP financial applications, Hartman said, though she declines to specify those apps.

In addition to managing the financial aspects of global trade, companies have concerns about order management and fulfillment, distribution and logistics. RiversideWorld Inc., which distributes Christian literature, videos and gifts to about 300 stores, began selling on the Web in 1998 and has found that delivering goods to overseas consumers and stores is difficult.

"We don't know exactly when a delivery will get to its destination. It can take three months," said Heath Hill, director of Internet operations and store services. RiversideWorld opted against using postal services for overseas shipments because many foreign, government-operated services are unreliable.

Instead, the company is using a combination of United Parcel Service shipping and an outsourced service from Fioravanti-Redwood International (FRI) that handles order management, distribution and logistics applications on the Web. FRI integrates RiversideWorld's internal HP 3000-based database with its own Web service, which includes links to UPS websites.

RiversideWorld uses the service to determine shipping costs, status, delivery times and the delivery service being used for all its B2C shipments. Hill said the company uses an internal warehouse management system for B2B shipments but plans to expand the FRI service for B2B deliveries in six to eight months.

While many companies are relying on technology to conduct global e-business, some find there's no substitute for having a physical presence in other countries. "It's a big advantage that we already have facilities overseas, such as warehouses and merchants," said Office Depot's Seltzer. "Our people there not only speak the language, but they understand the local laws, business practices and customs."

For instance, he points to German laws that dictate large discounts given to large companies must also be extended to small companies.

It's also important to have adequate on-site support staff for both business and IT issues, said Continental Airlines CIO Wejman. "In some places in the world people expect a different level of service," she said. "They expect the technical people to also handle sales and operational issues."

The Web may be making overseas markets more accessible, but Fontanella of AMR Research cautions against treating foreign markets as just another sales territory.

"Even with developments such as Europe now trading under a common currency, countries are still very much independent and have their own trading practices," he said. "Companies have to understand they're not selling into one big monolithic market."