THE BLOG
12/10/2015 06:12 BST | Updated 09/10/2016 06:12 BST

Western Tech Can't Succeed Everywhere in the World

For the last few days I've been travelling around South Korea on business. It's a truly beautiful country with hyper-modern infrastructure, transport and technology sitting side by side with traditional culture and architecture. It's also got some amazing food!

But while I was there a few incidents made me realise that some countries are going to be a lot more difficult to enter than others for Western tech companies. And conversely, countries like South Korea are going to struggle to expand their homegrown tech companies outside their own borders. Going global just may not be an option for them.

I was in South Korea with my friend and colleague Vikas Saxena, CEO of Nimbuzz. He's a vegetarian and on our first night in Seoul we went in search of a veggie meal. Easy, we thought! This city is going to be full of vegetarian restaurants, just like New Delhi. Not so. Obviously, our lack of Korean language didn't help but it quickly became apparent that a restaurant selling a range of vegetarian food was going to be tricky to find.

But South Korean internet speeds are colossal - the fastest average speeds in the world; 40 per cent faster than her closest rival, Japan. So technology came to the rescue and we got round the veggie situation by translating what we were looking for on our mobile phones, and showing it to a street-food seller. This would have worked perfectly. However, in the kind of twist of fate reserved for trips to new faraway places in the world, we were overheard by another person who not only happened to speak English but, and you won't believe this, actually owned a vegan restaurant! It must have been one of the very few in Seoul. He'd shut the shop, but he reopened just for us - and made us a fantastic meal. Everyone we met in South Korea was kind and welcoming. Korean people are incredibly hardworking, can seize an opportunity and really do go the extra mile!

All these things make South Korea seem like the perfect place for a Western tech investor like me to do business. But is that really true?

I was overwhelmed - and very surprised - by the number of homegrown tech brands in South Korea. After a short while, it became apparent that despite the emphasis on English taught in schools, it's not widely spoken in the country. This makes it extremely difficult for Western tech companies to launch their current products in the country; your app has to be translated and localised first. Also, as Korean uses a different writing system to English, translating the app usually means more with just replacing English with Korean - often the whole interface and functionality will have to change so it looks natural. This raises the barrier to entry.

In addition, in markets like Korea, local customs and sensitivities are sometimes very different to the UK, USA and, even, India. These rules can dictate the smallest things that you assume are completely trivial, like the placement of the 'Register' button. It's very easy to launch a new product in these markets which just feels unnatural for the local consumer. The solution? You need to build up knowledge of the local market and its cultural sensitivities - and this takes time and money. And while I think you should be prepared to do this in any event, it means it is very easy to launch a product that gets the whole market completely wrong.

You might think that this is a good thing for South Korean companies. Because of the language barrier, they don't have Western competition or Silicon Valley giants snapping at their heels. They have a captive market. But as we all know, competition is a good thing in business. It pushes up standards across the board, lowers prices for customers and encourages innovation. However, as local players haven't had to compete with the bigger or global tech companies, in some cases, there is an air of complacency on the part of the incumbents, and - as a result - less feature-rich and polished apps.

On the other side of the coin, while everyone in the West is looking to go global, South Korean players are finding it incredibly hard to break through. They haven't been forced to compete with the big Western players, so while they have more than enough energy and determination, many lack the experience and skills needed to break out of South Korea. That's not to say that tech companies in South Korea are all struggling! There are many top-quality, fantastic start-ups and digital companies that trump this rule. KakaoTalk is just one great example.

My trip has shown me that it's possible to categorise markets in two ways: open and closed. Open markets are free, have an English-speaking user base, a culture that is familiar with the West, governments that welcome inward investment and encourage UK and other Western companies to open up shop in their country. In an open market, it is easier - but not simple - for Western companies to launch products.

South Korea is an open market in many ways. But in my view starting businesses there is more complicated due to cultural differences and a lack of the English language. I loved South Korea. I loved its cities, countryside, people and culture. I will definitely return. But in this global era, when there are big choices for investors, sadly, countries such as India, Nigeria, Indonesia, Bangladesh, Myanmar and Vietnam to name but a few, all trump South Korea as a place for western companies to do business.