Why digital will accelerate globalisation…but not as fast as you think

The phrase ‘digital equal global’ seems to be appearing with increasing frequency in my conversations with clients. But is there any truth to it? Anecdotally, digital business does seem to drive accelerated globalisation:
– consumers can buy (and do) buy goods or services internationally. If a book or a pair of jeans you want is unavailable locally, you may look further afield. Shipping costs constrain cross-border volumes, but many leading digital retailers (e.g. Amazon) are taking a global approach to sales.
– global enterprises increasingly force their suppliers to create a single global digital ‘gateway’ for purchases. This allows the buyer to monitor prices and cut administration costs. For example, one technology company now creates a tailored portal for each of its corporate clients.
– media is globalising. Consumers can find and access media produced anywhere in the world, and are seeking out sources that match that their interests – many of which are not locally focused. For example the Daily Mail Online is widely read across the English speaking world.
– social media goes further by connecting both content producers and content consumers on a single global platform. When you are watching YouTube you don’t much care who created the content or where they live.
– in turn, these forces will drive brands to be increasingly global. Retailers seeking cross-border business will need to build global brands. B2B brands will also increasingly globalise as corporate buyers demand consolidated interfaces.

So that’s the theory. As ever the practice is a whole lot more complicated. There are multiple barriers to globalisation than digital can’t easily solve:
– regulation. As a consumer, a global search may lead you to a bank offering better rates and better service. But you won’t be able to buy products from that bank if they don’t have a licence to operate in your home country. The same goes for telecoms, energy and many other services.
– politics. Leaving aside the constraints placed on consumer access in some countries, every country need to balance the desire to participate in a thriving global economy with the desire to create a sustainable balance of trade. Digitisation will likely accentuate competitive differences, potentially leading to measures that slow globalisation of trade (e.g., taxes)
– language and culture. In time, technology will deliver better translation engines, bridging the language gap. But cultural differences are more subtle. In some sectors a local tailoring of products, processes and marketing may always be required.
– corporate structures. Global digital delivery requires global processes, technology and organisational structures. Many corporations are still organised on local lines. Some are collections of acquired businesses with little process or technology in common. Very few organisations have driven through globally standardised processes and technology. Migrating to a globalised model can take many years.

So in summary. digital should accelerate globalisation, but probably not as fast as you think.

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