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Languages generate growth

Blog post   •   Apr 16, 2015 09:03 BST

More languages lead to more business

Research has shown that both small and medium-sized Swedish companies use fewer languages in their customer communication that the corresponding companies in other European countries. German and Danish companies use an average of 12 languages and French companies use eight, while Swedish companies rely on just three. The difference is also reflected in the number of export countries per company, with Germany having 11 countries per company and France having eight, whereas Sweden only has four. Due to a lack of multilingualism, 20% of small and medium-sized Swedish companies lose out on export business. The corresponding figure for Germany is 8%, and for Denmark just 4%. It is clear that language limits Swedish exports unnecessarily, making it vulnerable when – using language as a tool – we could reach new growth markets while also gaining a better geographical spread and export growth.

“But Sweden is already an export nation,” you may well argue, and this is certainly true, but around 100 companies currently account for two thirds of our exports, with a group of just ten companies accounting for a full 40%. This leaves us vulnerable to the successes and failures, acquisitions and production decisions of a few companies. Not only do languages offer significant growth potential for small and medium-sized companies, increased exports from more companies also makes Sweden as a nation less vulnerable in terms of the balance of trade and employment.

The ability to understand is crucial

As consumers, 30% of us are not at all keen on online shopping if we do not understand the information fully (and the same is true generally – there are also geographical differences). Asians are least inclined to buy in such situations, and Russians are also very wary. Swedes are among the group who are most comfortable, but this is mostly an advantage for foreign companies who want to attract Swedish customers.

As consumers we are better at English and are more worldly wise when it comes to information and user interfaces, but despite all this we are at heart most comfortable with our own native language. Studies show clearly that when faced with a choice between an English version and a localised version of software we are 4.5 times more likely to choose the localised version. 67% would even do so if the localised product were more expensive! If the English-language product also lacked product information in the local language it is fairly certain that the customer wouldn’t even look at it, let alone buy it.

Unused potential

Language economics is a modern, interdisciplinary field dealing with the economic significance of languages, language use and language skills. There is concrete added economic value to be gained both by individuals and companies and by nations. Research within language economics has estimated that language barriers reduce bilateral trade by up to 75-170%, and according to the Swedish Federation of Business Owners language skills can make a difference of between 7% and 43% in international business.

Expanding geographic reach is one of the best and most natural routes in order to achieve growth. We have to stop looking at translation and localisation as simply an expense and start looking at them as an investment instead – an investment that is intimately linked to growth.
Talking so that customers understand

Willy Brandt, former Chancellor of the Federal Republic of Germany, is said to have declared in the 1970s that “If I’m selling to you, I speak your language. If I’m buying, dann müssen Sie Deutsch sprechen.”And this still rings true today. As customers, we are four times more likely to buy from a website that ‘speaks’ our own language.

Interesting facts:

  • Just over half of online consumers prefer to buy from websites that use their own native language. For those with more limited English-language skills, this figure rises to four fifths.
  • Of those consumers with limited English-language skills, seven out of ten very rarely or never choose to buy from an English-language website. This figure is even higher – nine out of ten – for those with poor English-language skills.
  • 37% of online consumers spend more time on websites in their own native language. Almost a fifth boycott English-language websites entirely.
  • A number of studies have clearly shown than even if consumers know a foreign language they do not automatically prefer to use it – the fact is that even consumers with excellent knowledge of English choose goods with information in their native language if they have a choice.

Sources

Språkekonomi – en introduktion, Stockholm University, 2014Can’t Read, Won’t Buy, Common Sense Advisory, February 2014Svenska företag går miste om affärer när få kan tyska, SvD, October 2012Unik studie: Flerspråkighet ger exportfördelar, Newsmill, May 2010/November 2011Språkkunskaper ger export, the Swedish Federation of Business Owners, September 2010Finally! Data to Prove that Localization Matters, Common Sense Advisory, March 2009Localization Matters, Common Sense Advisory, November 2008

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