Being Local but Acting Global: How Companies overcome language barriers to create export success

1. Being Local but Acting Global:How Companies overcome language barriers to create export success Professor Stephen Hagen Vice-Chancellor (Acting), University of Wales Newport

2. The Issues • How is globalisation impacting on the different languages spoken round the world. • And what changes can we expect to see over the next half century? • How are companies in Wales coping with global communication demands and what are the patterns of success in language management? • In other words, what strategies do Welsh companies employ to succeed in a multilingual cross-cultural global trading environment?

3. Recent Reports on Economic Benefits of Languages • 2004-5 British Chambers of Commerce Survey • 2006 ELAN Study of European Companies’ Language Needs, European Commission/CILT, (Principal author: Hagen) • 2009 ‘GoSkills’ Employers Skills Survey, Sector Skills Council Passenger Transport 2010 Education and Skills Survey, CBI • 2011 'The economic case for language learning and the role of employer engagement'. Education & Employers Taskforce • 2011 Report on Language Management Strategies and Best Practice in European SMEs, (The ‘PIMLICO’ Study) European Commission 2011 The Language Guide for European Business. Successful communication in your international trade. European Commission • 2012 ARCTIC Study of Language Use by Export Companies in Southern England and in South Wales (study by universities: Surrey, UWE, Newport and funded by the Arts & Humanities Research Council)

4. Multilingual Global Consolidation • 50% of the world’s population speak now one or more of 12 languages • Mandarin, English, Hindi, Spanish, Russian, Bengali, Portuguese, German, French, Japanese. • This comes as a manageable relief to some global organisations and smaller international companies • The consolidation of global communication into a few giant language communities, increasingly characterised by their regional footprint.

5. The steady rise of Chinese and the slow decline of Japanese. Davis (2004) • English accounts for only 30% of the world’s GDP • Chinese 23% • Japanese 5.6% • Spanish, 5.2% • German 4.9% • French 4.2% • Portuguese 3.4%.

6. Foreign Language Provision In HE • The number of degree programmes offered in the six principal languages have fallen since 2003 from 503 to 271, a fall of 46%. • Recruitment to specialist language degrees peaked in the UK in 1992; there followed more than a decade of steep decline. • The decline has slowed in recent years: between 2002/3 and 2009/10 the total fall was 2.6%, including a 1.2% drop in first degrees and 13.8% decline in other undergraduate degrees (Source: UCML)

7. ELAN findings: Macro-economic benefits in Europe • Assuming a model where SME’s account for 45% of European output (the range across the EU is 30% - 60%) and supposing that half of the SME’s responsible for that output adopted the four language management elements listed above, we could speculate that exports would rise by an astonishing 10% of GDP – equivalent to more than 1 trillion euro. • Furthermore, it is likely that there would be productivity gains from exporting which would wash back to the internal economy. Total Factor Productivity for exporters can be as much as 3.7% higher than the industry mean. • The 3.7% productivity spill-over from increased exporting could have a substantial additional impact on the EU economy: 3.7% of 10% of GDP is 0.037% of GDP, which for the EU as a whole, is equivalent to an extra 4 billion euro +.

8. The Next Internet Revolution… • …will also not be in English. • The proportion of English web-pages is declining relative to others. • While internet usage increased by 40% in the USA, in Brazil it went up by 200% in Brazil, 300% percent in India, and over 500 percent in China.

9. Language barriers as a tariff on trade • Language differences as trade barriers and have been quantified as between 15%-22% in terms of tariff equivalents. • Sharing a common language can increase bilateral trade by between 75% and 170%

10. Language Barriers in UK Export Companies [Elan Report, 2006] From the results of many surveys of language use in UK companies over 10-20 years: • At least 20%-25% of export companies in England and Wales regularly declared they had generally lost business due to language or cultural deficiencies • Only 6% declared they’d lost tangible contracts in ELAN • One estimate suggests that barriers currently cost the UK at least £7.3 billion, or 0.5% GDP, and possibly as high as 1.2% GDP.

11. Reducing the tax… • In the case of the UK, the boost to well-being from the reduction of even 1% tax on British exports, that amount to one quarter of GDP, can be substantial

12. The cost of language gaps • raising British standards of language competence to the rest of the world average is equivalent to between a 3% and a 7% tax reduction on British trade • even 1% reduction in the language tax — much less than the difference between Britain‘s ‘tax‘ and the world average — would be equivalent to a more than £3 billion increase in productivity

13. Higher Education: Placements Abroad • Too few UK graduates currently undertake work and study abroad. • The number of participants in the EU’s ERASMUS student exchange scheme continue to expand, while UK participation, with the exception of 05/06-07/08, when existing work placements were incorporated into the ERASMUS scheme, has consistently fallen. • Across the ERASMUS programme, non-specialist language students represent 85% of participants. Only in the UK do specialists in other disciplines make up only 60% of ERASMUS participants: such is the lack of language skills among UK students generally, and their lack of recognition of the benefits of work and study abroad. • Source: UCML

14. What Impact do cultural barriers have? ‘(In Germany they are) less prepared to accept technical data/results from non-German sources.’ (Welsh company) ‘In Germany if you can prove that what you’ve got is better than what they’ve got, they’ll buy it.’ (Welsh company) ‘Need for much greater relationship-building in Italy’ (East of England) ‘(In the Middle East) personal interaction – family-friends-business holistic approach’ (East of England) ‘English often too polite and don’t get the same success rate within Germanic cultures, as they don’t insist enough’ (East of England)

15. For companies • For companies wishing to ride the global challenge, the key to operating in multicultural environments requires companies to develop communication or language management strategies (LMS) • There are 4-5 specific ones that appear to make all the difference • More UK companies need to acquire the knowledge to develop Language Management Strategies • Plus: Intercultural competence relevant to market

16. Features of Successful Companies According to the ELAN Report: 4 language investments have been found to boost sales abroad:- • employment of staff with existing language skills • a language management strategy, = ‘the planned adoption of a range of techniques to facilitate effective communication with clients and suppliers abroad’. • employment of nationals • use of professional translators = e.g. for high-quality translation and localisation. + 5th : Multilingual and culturally adapted website

17. Where using the customer’s language can bring additional benefits • Establishing a positive rapport and sense of trust with major customers. • Showing respect for cultural and religious differences. • Demonstrating a long-term commitment to a foreign market. • Showing your employees and foreign clients that ‘you mean business’. • Increasing the flow of market intelligence and customer feedback and understanding its real meaning. “Talking to customers in their own language leads to better communi­cation and can prevent misunderstanding. It shows our customers and business partners that we foresee a long-term commitment to their market. Each partner is more confident in business meetings, and ‘speaking the same language’ can save time, allow for a more relaxed meeting and result in better business.” (Nikwax Ltd, UK, PIMLICO Study)

18. Common Language management measures • translation of promotional, sales and/or technical material; • language training and cultural briefing schemes; • online language learning; • employee selection and recruitment policy; • support for employee mobility, ‘buddying’ & secondment schemes; • link-forging with local universities; • foreign student placement programmes; • native-speaker recruitment; • e-commerce involving multilingual operations; • product or packaging adaptation in line with local tastes and customs. Source: PIMLICO Study, 2011

19. Impact analysis of adopting LMS: PIMLICO Study 2011 • Adopting a language management strategy has been linked to a 25% increase in some companies’ export sales. • Quotations: “Employees, customers and premium partners get a better, more open feeling if their native language is used. This increases the trust. People feel the interest, if we speak their language.” Franz Huber, Huber Kartographie • “The closer to the client, the closer to the target. Through trust, the company can nurture its relationships internally and externally in terms of brand recognition, loyalty and successful business models.” • “Native speakers are vital in establishing the trust with clients from their culture as they brief the personnel and help plan the nature of a business relationships, especially when starting new markets and expanding.”

20. Phased Introduction

21. Extracts of Best Practice: Multilingual Websites • Multilingual website adaptation and use of local agents to solve language problems are the two most cited aspects where a monetary value can be put on the gains. • Example: Danfo AB in Sweden believes its turnover increased by 11-15% due to its language management strategy. • The vast majority of top-performing export companies in Europe have invested in multilingual websites – the range of languages depends on the market size and its attitude towards English. • Rapina Paberivabrik (Estonia) translated its website into six languages: Russian; English; Latvian; Finnish; Lithuanian and Romanian • The company has measured the impact on its sales in the various markets where it has a language on its website: adapted websites have increased sales by between 16% and 25%.

22. Example: What is the success of FILC’s language management strategy? • The company empowers people in the company to operate in the markets they are knowledgeable about and gives them the direction where and how they can improve and then transfer their insight of the culture to stimulate the best results. • Staff deal with 5 languages (staff expected to speak at least 2 languages) and undertake cultural briefings in 7 cultures: Irish, French, Italian, Russian, Turkish, US and Spanish. • They deal with people demands designing and pre-planning cultural and language competence and constant knowledgeable adaptation to the culture of the client by constant briefings, on-going communication, flexibility of the sales personnel and solid all-company communication. • Barbara Čepin Vrckovnik, Managing Director, FILC, Slovakia

23. Nikwax – UK Exporter Extraordinaire • Every employee speaks 2 foreign languages • Invites a German to visit every two weeks to understand the German culture • Labelling requires special fonts • Testing on local equipment (buying foreign washing machines) • Sales lit and invoices in local language • Invite distributors out to dinner when attending local trade show • Company website culturally adapted and presented in six languages

24. A study of communication practices of SMEs in England and Wales

25. ARCTIC Study, 2012: Methods • A phone survey of 93 SMEs • In-depth interviews with leaders of 12 SMEs across the three regions

26. Language management: ARCTIC vs. ELAN • A word of caution • ELAN: 100 companies from across the UK • ARCTIC: 93 companies, Southern England and South Wales only • but: SMEs have expanded the range of language management strategies they adopt

27. Why a language management strategy is important “there are lots of Europeans that speak English as this is the first language they learn - so you can get away with it but you can’t maximise your opportunity and there is a big difference of getting away with it and what you could potentially do” (Sales & Marketing Director, Surrey)

28. Language management Comparisons

29. Languagemanagement-Cont’d

30. The issues with language training... “ Which language do I learn? You know ‘cause if I learn French it will cover five [markets...] … if I learn Chinese it will cover one, but it’s more” (Sales & Marketing Director, Surrey)

31. Lost Business

32. Lost business ARCTIC Study • Why? • Building relationships, • preparing translations, correspondence and phone calls, • etiquette, making initial contact, • failed negotiations, lack of competence in foreign language at trade fairs, • misinterpretations, • Culture: work ethic, ‘mindset’, communication style, socialising

33. Lost business, cont: ARCTIC Study • Which languages? • French, German, Russian, • Spanish most frequently mentioned, • also Japanese and Italian • Which cultures / countries? • China (negotiations), France (negotiations), • France (mindset), Middle East (mindset)

34. Case Studies • Daniels Fans (Llanelli, South Wales) • Spectrum Technologies (Bridgend) • Steelpress, Poland

35. Future Plans need to acquire additional expertise in countries in the next three years plans to begin trading in a new foreign country in the next three years decision of investing based on knowledge of the relevant language or culture need to acquire additional expertise in languages in the next three years

36. The future is international • “we started exporting (and) well, it saved us” (Quality Manager, Surrey) • “export is a game changer” (MD, Bristol)

37. Which countries?

38. English vs. Non-English

39. Our Challenge: ‘Monoglottery’ or Multilingualism? • What is Our National Strategy for specialising in BRIC languages? • Should we restore languages as obligatory at Keystage 4 in secondary schools? • How do we introduce more export-focused specialist language degrees and cultural awareness programmes at UK universities (so every graduate leaves with a language) • How do we implement internationalisation programmes at the earliest stages of education to wean people off the ‘English-is-enough’ perspective of the world, • How do we challenge public attitudes favouring ‘monoglottery’ in favour of multilingualism for the 21st Century Global Citizen?