Born Global means that international expansion (business expansion in overseas markets) will be carried out in a short period of time after the company is founded, and sales of overseas business will account for the majority of sales . Specifically, a company that expands overseas within about two to four years after its founding and earns 25% or more of its sales in overseas markets is called a “ born global company “.
In the past, internationalization of corporate activities was often carried out after establishing a position in Japan, so it generally took a long time from the time of establishment. However, in recent years, the number of companies that develop their businesses with Born Global in mind is increasing rapidly.
Born Global is a concept that has expanded in the last 20 to 30 years. It was originally proposed by McKinsey, a consulting firm that researched companies that achieved early internationalization in Australia.
- Three reasons for the increase in born global companies
- Three characteristics of Born Global Company
- Strengths of Born Global Companies
- Notes for Born Global Companies
- Born Global Companies examples
- Born Global Success Conditions
- Human resources required by Born Global companies
Three reasons for the increase in born global companies
Progress of globalization
The first reason is “ progress of globalization “. In recent years, due to the diversification of transportation means and the liberalization of trade, it has become easier for small and medium-sized enterprises to internationalize their businesses. Therefore, the number of companies that are aware of the international market is increasing immediately after the company was founded.
Popularization of PCs and smartphones
The second reason is “ popularization of PCs and smartphones “. There are many products and services that are used worldwide, such as PC-related products and smartphone applications, regardless of regional characteristics.
For example, the mouse, which is a PC component, is used all over the world. There are also many global SNS. Due to the nature of the activities of companies that handle such products and services, it has become easier to spread around the world immediately after the company was founded. It is also important for companies in the relevant field to increase the number of users by targeting the target market all over the world, even when considering the externality of the network.
Maturation of the domestic market
The third reason is “ maturation of the domestic market “. Depending on the country or region, there is a limit to the profits that can be earned only in the mature domestic market such as Japan. Targeting the international market as a company is born also has the purpose of risk diversification.
Three characteristics of Born Global Company
Although it is not an essential condition, companies that develop their businesses with Born Global in mind often have the following three characteristics.
We provide products and services that utilize our technological capabilities
First of all, there are many companies that sell and develop products and services that utilize their technological capabilities . Since technological capabilities have strong universal characteristics regardless of the market, they are deeply involved in the emergence of Born Global companies.
Does not require huge investment
Second, there are many companies that do business that does not require huge investment.
For example, in an industry that requires a huge investment to build production equipment and distribution networks, it is difficult to expand internationally immediately after the company is founded.
After success in the domestic market, we will immediately implement international expansion with the profits obtained from the domestic market
Finally, there are many companies that have succeeded in the domestic market and then immediately expand internationally with the profits earned in the country . In particular, many companies have established a position in niche markets and are expanding internationally using the strengths gained there as an engine.
Born global companies with the characteristics described so far are now active all over the world.
After launching the mobile app “TikTok” in China in September 2016, we are rapidly expanding internationally to the Japanese market in August 2017 and the Indonesian market in September 2017.
Money Tree, a Japanese company that provides personal asset management and household account book applications, has grown steadily in the Japanese market since 2013, and entered the Australian market in 2017.
Strengths of Born Global Companies
Born Global’s strength lies in its ability to standardize production and marketing in global niche markets, rather than developing customized products. Associate Professor Kotosaka of Keio University in Japan explains that “the modern age of globalization is an era in which the global value chain is fully utilized.” Nowadays, we can carry out international operations even with about 5 employees without owning our own factory. Nowadays, it is a feature that “small global companies” with excellent mobility can play an active role. Previously, many Bourne Global companies were technical manufacturing companies that exported globally competitive parts to finished product manufacturers around the world, but now the Bourne Global Company category has expanded. Starting with Internet services, we are expanding into categories such as fashion and information equipment.
Notes for Born Global Companies
One of the pitfalls that Born Global companies tend to fall into is the term “high-tech Born Global company trap.” This is a phenomenon that tends to occur especially at startups of tech companies, and even if we are developing services with a technology orientation, as a result of the rapid transition of the target overseas market, we cannot change the flexible technology strategy, and the product It is a phenomenon that it becomes unacceptable to the market. In order not to take this risk, it is important to be market-oriented rather than technology-oriented for overseas markets. Market-matched products are the key to success, rather than sticking to your core technology.
Born Global Companies examples
Born Global companies can often be found in high tech industries such as the IT industry such as TikTok, but can also be found in other industries. For example, Terra Motors, which develops electric motorcycles, and GLM, which develops electric vehicles, are also representative companies of Bourne Global.
This time, I will explain the following companies in detail.
Weathernews, a Japanese company that develops weather information services, has already established a US corporation and started international expansion two years after its founding in 1986. Currently, it is one of the world’s largest weather information companies with offices in 20 countries and regions other than Japan. With 24% of sales from overseas markets, it is truly a bone global company.
The weather information handled by the company is necessary information everywhere, so it is compatible with international expansion, and the founder of the company was the president of the Japanese subsidiary of an American marine weather research company. It was a tailwind for international expansion.
Metaps is a company that provides marketing business and online payment agency operation in September 2007. The company started overseas expansion in 2011 and has offices in eight countries as of April 2020. With 39% of sales and 47% of gross profit from overseas markets, it is a company that succeeded in early globalization. In developing overseas markets, Metaps is strengthening its overseas business by hiring human resources locally and planning and implementing strategies in each region locally.
Moneytree is a Fintech venture that has been providing personal asset management and household account book application “Moneytree” in Japan since 2013. It is the best application in the App store for the second consecutive year, and it has grown steadily in Japan, such as receiving investment from Japan’s three major mega banks, and entered the Australian market in 2017. The three founders, including CEO Paul Chapman, are not all Japanese. Even now, more than half of our employees are foreigners, but we are the first startup in Japan and our head office is also in Japan. In Japan, where cash payments are still the mainstream, we are aiming for a service that will be used for a long time in the future.
Mobingi is a Japanese company that provides a platform service for cloud management of applications for enterprises. Founder Wayland Zhang is a successful serial entrepreneur who has successfully created several companies in Canada and China. Two months after he came to Japan at the request of my Japanese wife, I couldn’t speak Japanese at all and it was difficult to get a job in a normal job. It is a startup that found the founder and started a business. Mobingi’s corporate registration is in Japan, and many of its employees are Japanese, but the head office was temporarily relocated to the United States due to the investment from a venture capital firm in the United States.
Japan’s flea market app “Mercari” is a popular application that has exceeded 71 million downloads and 10 million monthly users in five years since the service started in 2013. The number of products listed exceeded 10 billion, and it was listed on the stock market in June 2018, with a market capitalization of 351.6 billion yen at the time of listing. In overseas expansion, we have expanded into the United States and the United Kingdom, and plan to continue expanding our business mainly in Europe. In addition to “Mercari,” we are expanding our business from various perspectives, including the payment service “Merpay” and the investment fund “Mercari Fund.”
Famous as Japan’s first born global company, Terra Motors operates an electric motorcycle business in Asia. Based on the idea of the founder, Mr. Tokushige, “Because the domestic market will shrink eventually, it is necessary to be conscious of targeting the growing Asian market as domestic demand.” We started to provide services at 3 bases at the same time. After securing stable profits in the electric motorcycle business over 6 to 7 years, we established Terra Drone as the next market and entered the drone business. Mr. Tokushige himself is conducting domestic business and Australian business at the same time.
GLM, an electric vehicle manufacturer from Kyoto University in Japan, is developing the body of an EV platform with the aim of shifting from a global gasoline car to an EV. Although the development base is Japan, such as attracting attention from China, which is the world’s largest market, and raising capital from an investment company in Hong Kong in 2017, we are developing an electric vehicle business targeting China.
Born Global Success Conditions
Providing products and services that are compatible with international expansion
Born Global companies operate in products and services that are compatible with international expansion and are easy to succeed. Especially in the high-tech industry and information and communication industry as explained above, there is almost no awareness of regionality in the products and services themselves and the technologies that realize them.
Being able to build the organization / network necessary for international expansion
In order to carry out international business development, it is also an important success condition to be able to secure human resources on a global scale and build a network with related companies.
And the qualities of the management team that manages the company are also important conditions for success. One of the success conditions for the birth of a Born Global company is that the manager has not only business expertise but also international experience and network, and has the mental aspect of aiming for international expansion while taking risks.
Human resources required by Born Global companies
In the case of web services, it is essential to secure designers in charge of UI / UX and spokespersons to expand the service. Especially for Bourne Global companies, design and advertising specifications differ from country to country, so it is essential to secure local human resources who are familiar with the country in which they are expanding. Engineers are often less required to speak English than clerical workers, but managerial engineers also need communication skills and language skills to lead local engineers.
It is essential for manufacturers to secure human resources who are familiar with the hardware they manufacture as their business. It is also important to have an engineer who can embed the software in the hardware and an algorithm engineer who is the basis of the software. People who are familiar with both the hardware and software fields have the opportunity to play an active role. Language is also required in research and development and manufacturing, but it also has the characteristic of advancing communication on a technology basis. There is an anecdote that Japanese and American engineers used to talk only in the program without words in Honda in the United States before. However, clerical work requires language skills, and English skills are essential. If the CEO is from an academic or technician, there is often a need for a right-hand man who can lead the clerical position.
Research and development of university-launched ventures requires human resources with academic experience. Since it is a university-launched venture, the founder is often from an academic background. Therefore, human resources with abundant experience and knowledge about business and finance are also required. Because of the many opportunities to work with academics, it may be necessary for business people, such as sales and spokespersons, to have knowledge of the business.