Vodafone's lesson: Think global, act local

26 Mar 2006
00:00

Cellular might be global but consumer business, like politics, is local.

That's the simple lesson Vodafone overlooked in its unhappy foray into Japan.

The UK giant failed after trying to stamp its global cookie cutter approach onto the market. Consumers rejected Vod's clunky handsets in favor of sleeker product from DoCoMo and KDDI.

The result was years of sliding market share - down to 2.8% in January, and facing competition from three new licensees, until Masayoshi Son stepped forward to put poor Vodafone KK out of its misery.

Of course, if there is a society in the world which is bound to its own culture to the exclusion of all things foreign, it is Japan. The ability to roam to dozens of other UMTS networks, for example - Vodafone's unique selling point - counts for little in Japan.

The deal also took some of the heat off Vodafone following weeks of bad press and boardroom acrimony.

Yet it holds our attention because Vodafone's Japan experience is a major mis-step by the world's largest global cellco. It's perhaps unfortunate that the current management is being held to blame.

Vodafone KK wasn't the only investment that former CEO Chrisopher Gent made in the flush of dot-com enthusiasm. He also mustered up $2.5 billion for a 3% stake in China Mobile. Thanks to the exclusion of foreign players from the mainland market, Vodafone hasn't had the chance to repeat its Japanese mistakes in China.

Vodafone's Japanese withdrawal hardly heralds an end to the globalization of cellular. But it may become the high water mark of the belief that mobile businesses worldwide can be knit into one operation.

Global limit

Cellular is a scale game, sure, but there's a limit to how far international cellular groups can go in leveraging volume handset, network sales and business strategies around the globe.

The senior execs at global players, however, pleased as they might be with their brilliance at home, need to allow country managers to drive domestic strategy. That's especially critical in Asia, where cultural sensitivities are acute.

That's the approach Hutchison 3 and SingTel take in successfully running cellular operations across the region.

And we do see it in the post-Gent Vodafone, where it has focused on partnering rather than investing, teaming up with SmarTone in Hong Kong, Celcom in Malaysia and M1 in Singapore, among others.

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