ABCs of KMFeatured StoriesTacit knowledge for business benefit
Case studies of tacit knowledge for business benefit (part 2): Effective localization for successful global expansion
This article is part 2 of a series of case studies of tacit knowledge for business benefit.
The first article in this series introduces “tacit knowledge,” an important type of knowledge that can bring very big benefits to business. It then presents three case studies highlighting the benefits of engaging the tacit knowledge of customers to improve quality and reduce recalls.
This second article presents two further case studies, one of failure and one of success, highlighting how engaging the tacit knowledge of local communities can bring about effective localization for successful global expansion. Both cases are companies from the one country, the United States, but very different approaches by each company have led to very different outcomes.
Case study 4, tacit knowledge failure – Walmart
- Fortune 500 leader. American retail giant Walmart1 is one of the world’s most successful companies, topping the Fortune 500 ranking2 in 2025 for the 13th straight year.
- Mixed success outside US. However, Walmart’s activities outside the US have seen mixed results3. Its operations in a number of countries such as Canada and the United Kingdom have been successful, but its ventures in other countries including Japan and Germany have failed, and it has also faced struggles in China.
- Localization failures. The key cause of Walmart’s failures in Japan and Germany and a significant factor in its struggles in China are an inability to localize operations. Localization4 involves adapting products, services and marketing strategies to meet the needs and preferences of specific local markets. An effective localization strategy includes accessing the tacit knowledge of local communities in regard to cultural differences and preferences through employing experienced local managers and staff and using tools and methods such as focus groups and workshops.
- Failure in Germany. Walmart’s social interaction practices and large store approach5 did not align with the conservative ways and social norms of German people. Walmart’s smiling greeters and helpers made shoppers feel uncomfortable, and female customer service staff appeared to men as if they were flirting. German people normally pack their own groceries, so felt that Walmart’s approach of having staff do this was abnormal. The staff themselves felt uncomfortable with Walmart’s team building exercises. German people are also used to shopping in small high-quality stores, and felt that it took too long to find things in the very large Walmart stores. “Overall, Walmart had difficulty reaching the German market because they refused to change their business model and adhere to any advice coming from the locals.” That is, they failed to access the tacit knowledge of local communities.
- Failure in Japan. Walmart’s failures in Japan6 parallel those in Germany. “One of the primary stumbling blocks for Walmart in Japan was a failure to fully grasp and adapt to the intricacies of Japanese culture,” which it could have done through accessing the tacit knowledge of local communities. Walmart’s standardized, mass-market model and low prices approach clashed with the preference of Japanese customers for quality and personalized service over cost.
- Struggles in China. Next to the United States and the European Union, China has the world’s third largest consumer market7. Because of this, a large number of western consumer brands have sought to do business there, including Walmart. While Walmart has had relative success in China, it has also had significant struggles. As with Walmart’s failures in Germany and Japan, a key factor in these struggles8 is the inability to access the tacit knowledge of local communities. While Americans shop for groceries infrequently and select the items they want from a list they made before shopping, Chinese people shop for groceries frequently, typically every day as part of their daily walk, and browse before buying, often in several different stores. This means that Chinese people prefer smaller easily accessible stores rather than the massive centralized Walmart stores.
- The growing risk from not localizing in China. If Walmart continues to neglect the tacit knowledge of local communities, then its operations in China could fail as they have in Germany and Japan, particularly as the local competition continues to grow. I can offer Walmart my own tacit knowledge of the warning signs. When I first moved here in February 2023 to the city of Baotou9 in northern China’s Inner Mongolia Autonomous Region, there were two Walmart stores. One closed a few days after I arrived, and the other a few months later. I went to it only once as it was a long distance away. I found endless aisles of seemingly every grocery product imaginable, but hardly any customers. In contrast, the nearby local YH Bravo chain supermarket10 is thriving because it is small and convenient and has created an energizing people-centred experience that feels more like a food market. Alongside the new supermarkets, traditional mass food markets are still popular in China, just as they are in other parts of the world such as Africa11.
Case study 5, tacit knowledge success – KFC
- KFC founded in the United States. KFC12 (Kentucky Fried Chicken) is an American fast food restaurant chain that popularized chicken in the fast-food industry. It was founded by Colonel Harland Sanders, with the first franchise opening in Utah in 1952. The KFC chain is a subsidiary of Yum! Brands, a restaurant company that also owns the Pizza Hut and Taco Bell chains.
- KFC in China. KFC became the first Western fast food company in China13 after its inaugural outlet opened in Beijing in 1987. KFC restaurants in China are owned or franchised by Yum China, which also owns the Pizza Hut and Taco Bell chains in China and was spun off from Yum! Brands in 2016.
- Leading and largest brand in China. KFC is the leading and the largest quick service restaurant (QSR) brand in China14 in terms of 2024 system sales. Since opening its first restaurant in Beijing in 1987, KFC has grown to over 11,900 KFC restaurants in more than 2,300 cities across China at the end of March 2025. By comparison15, the United States has a little over 4,300 KFC locations.
- Early tacit knowledge localization. Pivotal to KFC’s outstanding success in China is effective early localization, after a terrible initial misstep had seen the company’s famous slogan “Finger Lickin’ Good” mistranslated16 into Chinese as “Eat Your Fingers Off.” Rather than hiring managers from the United States, KFC employed a team of Chinese managers17, all veterans in the fast food industry with up to 10 years of experience. This meant that they had a wealth of tacit knowledge in regard to local food culture and norms and management and administrative styles. This local management approach continues to this day, and has been supplemented throughout by actively engaging the tacit knowledge of customers, in particular KFC China’s 540 million members18.
- A very different menu. As well as many of its restaurants having elements of Chinese architectural style19, as shown for example in Figure 1 below, a very notable aspect of KFC China’s effective localization is the very different menu. It is so different that Americans familiar with KFC at home don’t recognize quite a few of the items on the KFC China menu.
- Starting with breakfast. An initial focus for KFC China’s menu localization was breakfast20. Traditionally, Chinese people made their own breakfast at home, or bought it at nearby mobile stalls. However, rapid urbanization has meant fewer and fewer mobile breakfast stalls, and the accelerating pace of work has meant less and less time to get up early to prepare breakfast. This has made going out to buy breakfast a daily necessity for many. As KFC China is a fast food chain covering large parts of the country, it was able to efficiently and cost-effectively meet this need. It took the lead by launching low-cost seafood egg porridge and mushroom chicken porridge on the breakfast menu. It then added other localized products including potato sticks, rice balls, soy milk, and fried dough sticks in order to seize the market.
- Old Beijing Chicken Roll. As shown in this article’s featured image above, another well-known localization example that has been on KFC China’s menu for over 10 years is 老北京鸡肉卷 (Old Beijing Chicken Roll), which pays tribute to Beijing duck21, a famous northern China dish.
- Tapping into regional cuisines. Yum China is continually tapping into the tacit knowledge of local communities to evolve and refine KFC China’s localization. In 2022, Yum China announced22 that its KFC brand is increasingly tapping into regional Chinese cuisines, with 12 regionally inspired menu items launched in 10 different regional markets for the first time. Examples are shown in Figure 2 below. The regional products are not available nationally, rather only in their particular regions, and have been well received by customers. The products include hot dry noodles, xiaolongbao (steamed dumplings), and hulatang (hot pepper soup). Hot dry noodles are sold at stores in Wuhan, and are the first noodle product on KFC’s menu since it entered China. Similarly, xiaolongbao has become a permanent fixture on KFC’s menu in Hangzhou.
- KFC’s localization in other countries. KFC has also effectively applied a similar localization approach in other countries. For example, in India23, it has embraced the cultural preferences of local communities by introducing vegetarian options like the Veg Zinger and Paneer Zinger, modifying flavors to suit Indian tastes, and avoiding beef and pork to respect religious sensitivities.
Header image: KFC China’s 老北京鸡肉卷 (Old Beijing Chicken Roll) pays tribute to Beijing duck, a famous northern China dish. Source: KFC China.
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- Chaidez, S. (2023, May 2). Walmarts Cross- Cultural Failure in Germany. Global Marketing Professor. ↩
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- Yum China. (2022, January 18). Yum China Caters to Local Tastes with Regional Menu Items. YumChina. ↩
- Chauhan, S. S., & Shiwang, B. (2025). Marketing Strategies of KFC in India. International Journal of Research Publication and Reviews, 6(6), 10076-10087. ↩
