The “foreign discount” in investor relations
- Emily Feng
- April 28, 2016
- 4,251 views
Skipping on translation now means suffering the “foreign discount” later on. The foreign discount is one in which global investors discount the perceived value of a company because of the extra effort or leap of faith one must take to decipher the translation and get to the essence of what the company does and how well it is doing it.
This discount can have crippling effects for investor relations. Investor relations (IR), according to the NIRI Board of Directors, is a strategic management responsibility that is capable of integrating finance, communication, marketing and securities law compliance to enable the most effective two-way communication between a company, the financial community, and other constituencies, which ultimately contributes to a company’s securities achieving fair valuation.
As one can imagine, maintaining good investor relations is crucial for any company that is looking to continue growing. You need your investors on your side. Without good IR, your company could literally be valued less.
Sarah Ingmanson, an IR consultant who focuses on the Japanese market, says that Japanese companies almost always lose out on business short term and prestige long term because of the lack of quality translation. The “Japan discount” that Japanese IR companies suffer, she says, prevents them from ever rising to equal their global counterparts.
“Whether of the conglomerate or Japanese variety, this discount is a cost associated with unlocking the mystery and complexity of the company message; and it is a cost many don’t care to pay after various corporate scandals have rocked Japan from seemingly unlikely places,” she writes in IR Magazine.
Similarly, customer relationships and public relations also suffer in quality and outreach when they remain locked in one language.
As we’ve written before, it almost never occurs to businesses to translate their press releases. Not only does that limit the potential scope of their company news and exclude huge swaths of potential clients in foreign markets, it also diminishes the company’s online presence and visibility in search engine results. Populating the web with multiple links to each version of your multilingual press releases boosts your online reputation and allows you to catch the eye of more customers online. In a day and age where most new business happens to be acquired online, making sure that you are visible online and populate the web with content in all your target languages will ensure global success.
Maintaining good customer relations with various markets speaking different languages is also impossible to manage without translation. Customer relationships are maintained through outreach and public relations, but also through a strong client support system. Client support can range from a customer service phone line, to a responsive rating system, to a webpage that gives customers a direct line to a company representative. Like investors, customers also need to feel like they are being listened to and understood — and if they are speaking a different language to begin with, that requires translation.
Pushing for more translation at the IR level and in your public relations and client relations departments takes coordinated top-down initiative. Translation efforts can happen spontaneously at the grassroots, but to maintain quality and consistency, businesses should be looking to set centralized standards for translation best practices and quality. This top-down pressure does not have to just come internally; regulatory bodies and investor organizations themselves push for greater global communications and translation efforts. After all, better translated materials mean both investors and regulators have an easier time doing their jobs as well.