twist, American companies are not only inventing new products for overseas markets
but also lifting products and ideas from their international operations and bringing
them home. As an example, Häagen-Dazs had developed a flavor for sale solely in Ar-
gentina called dulce de leche, named for the caramelized milk that is one of the most
popular flavors in Argentina. Just one year later, the company rolled out dulce de
leche in supermarkets from Boston to Los Angeles to Paris. The co-opted flavor now
does $1 million a month in the United States and is particularly popular in Miami,
where it sells twice as fast as any other flavor.^25 Product invention is a costly strategy,
but the payoffs can be great, particularly if you can parlay a product innovation over-
seas into a new hit at home.
A growing part of international trade is taking place in services. The world mar-
ket for services is growing at double the rate of world merchandise trade. Large firms
in accounting, advertising, banking, communications, construction, insurance, law,
management consulting, and retailing are pursuing global expansion. Arthur Ander-
sen, American Express, Citicorp, Club Med, Hilton, and Thomas Cook are known
worldwide. United States credit-card companies have streamed across the Atlantic to
convince Europeans of the joys of charge cards. In Britain, industry heavyweights
Citibank and American Express have wrested a lot of business from big British banks
like Barclays and already control 7 percent of the market.^26 Many retailers are trying
to make similar inroads. Faced with slowing growth at home in the United States,
Wal-Mart is using cash flow from its domestic business to fuel the growth of its $9
billion international division. In November 1997, Wal-Mart acquired German retailer
Wertkauf, adding 21 hypermarkets with annual sales of $1.4 billion. Just two months
earlier, the retailer had purchased its Mexican joint venture partner, CIFRA, making
it the largest retailer in Mexico. Wal-Mart is the leading discount retailer in Canada
and has opened outlets in Argentina, Indonesia, and China. As of 1998, Wal-Mart em-
ployed 105,000 international sales associates in 602 international retail units and had
plans to open up 50 to 60 retail units outside the United States that year.^27 Brick-and-
mortar retailers are not the only ones expanding overseas. Cyberretailer Amazon.com
has purchased three European companies—two in Britain, one in Germany—to build
European book and video sales.
At the same time, many countries have erected entry barriers or regulations. Brazil
requires all accountants to possess a professional degree from a Brazilian university.
Many Western European countries want to limit the number of U.S. television pro-
grams and films shown in their countries. Many U.S. states bar foreign bank branches.
At the same time, the United States is pressuring South Korea to open its markets to
U.S. banks. The General Agreement of Tariffs and Trade (GATT) is pressing for more
free trade in international services, but the progress is slow.
Retailers, who sell books, videos, or CD-ROMs, and entertainment companies have
also had to contend with a culture of censorship in certain countries, such as China
and Singapore. Consider the case of Borders Books and Music.■ Borders Books and Music Borders expanded into Singapore in late 1997.
Despite the Asian currency crisis and the worst retail sales slump in Sin-
gapore’s history, the store was a huge success. Many of its 140,000-odd ti-
tles had never been offered before in Singapore. Local bookstores were too
small and none had ever tried to stock the range of titles common in most
bookstores in the West. Yet, Borders had to fall in line with Singapore’s cul-
ture of self-censorship. Borders censors its offerings internally and in con-
cert with the Committee on Undesirable Publications (CUP). Borders must
submit potentially “hot” titles to CUP for approval. Inspectors have ob-
jected to the Marquis de Sade and William Burroughs’sNaked Lunch. Ye t
Borders has managed to push the envelope a little. It has five shelves of
books in its sex and fertility section, and it has even managed to get ap-
proval to stock academic studies on homosexuality, not available elsewhere
in the country.^28
Clearly, ethics or ideals that are upheld in the home country may sometimes have to
be compromised in order to do business in other countries.part three
Developing
Marketing(^382) Strategies