Avoid failure accessing a foreign market.

Accessing a foreign market is appealing but can be risky if you do not understand the basics. 3 examples of failed expansions abroad.

Home Depot accessing China.

Home Depot was in front of what seemed to be a great opportunity to grow their business via the Chinese market.

In the 1990s, the Chinese government allowed 1.2 Billion citizens to own their homes for the first time since the communist revolution, many of them in a state of disrepair.

Home Depot did not want to miss the opportunity and purchased the Chinese home improvement store Home Way to convert them to Home Depot stores.

“This acquisition provides us with a great point of entry in one of the world’s largest and fastest-growing home improvement markets,” said  Bob Nardelli, chairman of Home Depot, to Forbes magazine in December 2006.

The original excitement eventually turned into a significant hit to their financials after closing 12 stores.

Taco Bell accessing Mexico

Taco Bell had a similar experience when they attempted to enter the Mexican market. Why not sell tacos in the land of tacos? 

The Mexican market did not embrace Taco Bell,  resulting in the company closing all their stores.

Target Accessing Canada

Target decided to expand into Canada, opening a total of 133 stores across the country.

Many Canadians did embrace the arrival of Target, but disappointment started shortly after the stores opened.

Distribution channels issues and location of several of the stores are only a few of the reasons behind the failure.

After operating for two years, the company closed all the stores.

The foreign markets are out there, but companies need to do their homework to access them successfully.

Home Depot failed to recognize that contractors could be hired in China for a relatively low price, contrary to the DIY culture predominant in North America …. besides, where would people store the power tools and ladders in relatively small condos?

Taco Bell failed to recognize that naming a meal “taco” does not necessarily make it a taco… in a market with plenty of expert taco eaters.

Target’s failure was attributable to multiple issues, one of them was not recognizing that Canada’s rules differ from the USA’s, and that systems need to run in local currency, even in French, in certain regions.

Companies targeting foreign markets need teams with experience in those markets. They need people who have lived and breathed the local culture, otherwise, run the risk of failing like Home Depot, Taco Bell and Target did.

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