Friday, June 10, 2005

What is Local?

[Please tag: business, local, flatworld, local+internet]

As you’ll notice, the name of this blog is ThinkLocal. I started it because I believe I have some unique and valuable insights into the intersection of the Internet and local business. But when it comes to defining “local business”, things get fuzzy very quickly. Let me explain:

Local clearly means that a business has a local presence. So, we can say that Amazon is located in Seattle, so here in silicon valley it is not a “local business”. But they have a research group (A9) in Palo Alto. Does this make them local or does a satellite office, employing a fraction of the number of people as their headquarters, fall short of conveying the local title upon them. It gets worse.

In Georgetown KY, Toyota is the largest local employer, with 8,000 employees. They seem pretty local to people in Georgetown, but are they? In total Toyota employs 36,360 people in the United States, so are they foreign or domestic? In the individual towns, I’ll bet they feel pretty local. Does the fact that their headquarters is in Japan make them less local?

If you ask a local coffee shop, Starbucks isn’t local. But Starbucks employs local people. These employees describe themselves as working at the local Starbucks. Is a single store owner-operated coffee shop more local?

So what about franchises? They are owned and operated locally. My closest McDonalds is owned by someone here in town. Sure they buy supplies from corporate and pay franchise fees to, among other things, pay for national advertising, but they are independently owned and operated. Aren’t they local? They’re certainly more local than company owned stores, but not as local as the single store owner-operated burger joint.

What other factors are considered when proclaiming yourself a local business? Is the source of the goods or materials you work with factored into the equation? Would McDonalds be considered more local than a mom & pop store whose inventory is primarily manufactured in China? Do we consider where the items come from? Do we consider who added what value in the manufacturing process? Or is ownership of the business where the items are sold the sole consideration?

OK, consider this one. I just bought a laptop from HP, a major local employer with their headquarters here in the valley. Sounds local right? Well it was manufactured and assembled in China and shipped directly to me. If I have technical problems I call an 800 number and speak to someone in India. Did I buy from a local vendor?

Does it matter whether a business is local or not? Yes, people like to buy from local vendors, to keep the money local, to support the local economy. My business makes a point of saying “Support your local vendors”. But what does local truly mean? In speaking with friends they don’t always grasp the nuance that franchises like McDonalds are locally owned and operated. They view McDonalds as a mega-corporation (that also happens to be the international symbol of American imperialism). So to them a single store burger joint is local, but McDonalds isn’t. HP is considered local because it employs so many people here in the valley, but is it?

In the end, as Thomas L. Friedman says in his book “The World Is Flat: A Brief History of the Twenty-first Century”, everything is being blended. Almost nothing is 100% local these days. Instead we get degrees of locality.

In the end, the underlying facts about what is local and what isn’t are meaningless. The real issue is whether businesses and individuals perceive a company as local. Perception is reality. So, in effect, when we say support your local businesses, we’re actually telling people to support businesses they personally believe are local, because local isn’t black and white, it’s shades of gray.