US Brands Face Trouble in European Markets

Interesting article from today's Washington Times on the backlash I've also feared American companies will face in the global marketplace. I anticipate that the ability/inability of US companies to do business abroad will be an important business story in 2005. US brands are facing international market rejection, compounded by loss of market share when their competitors take advantage of this low in America's standing to court consumers in precarious markets. My commentary and background on Tradewind Strategies appear in the last several paragraphs.

http://www.washtimes.com/upi-breaking/20041227-062212-4711r.htm

Europeans costing American companiesBy Donna Borak
UNITED PRESS INTERNATIONAL

Washington, DC, Dec. 27 (UPI) -- The Bush administration's foreign policy may jeopardize the economic health of American multinational companies abroad, an international consumer survey released Monday said.

According to an international survey of 8,000 consumers taken by Global Marketing Insite World Poll on Dec. 10 through 12, fifty percent of foreign consumers distrust American companies as a result of the U.S. decision to invade Iraq and the war on terror. Additionally, 79 percent said they distrusted the American government, while 39 percent said they distrusted Americans.

"American companies' livelihoods depend on trust. It's extremely important. You almost never get a second chance once that trust is lost," said Allyson Stewart-Allen, co-author of "Working with Americans."

International consumers surveyed from G8 countries like China, the United Kingdom, France, Germany and others described U.S. brand companies like AOL, Exxon Mobile and Starbucks as "arrogant, intrusive and self-centered" making them the top companies likely to be boycotted.
However, analysts explained that consumers were more inclined to boycott a product because they believed it closely resembled the attributes of the United States, rather than brand loyalty.
For example, 64 percent of consumers surveyed thought of American Express as "extremely American," while only 17 percent considered Visa to fall into the same category.
According to Mitchell Eggers, COO and chief pollster at GMI, Visa has been an exception to the rule because it has been able to detach itself from the image of being an American company - a problem that may cost other companies loses in revenue.

"Some American brands become closely connected to their country of origin and are quintessentially American," Eggers said in a released statement. "They represent the American lifestyle, innovation, power, leadership consumers as a significant negative, when it used to be a positive."

According to the poll, the negative international perception of the United States matched the unenthusiastic views of American multinational businesses. Based on their findings, 61 percent of French consumers and 58 percent of German consumers had negative feelings toward American multinational companies. While an additional 47 percent of European and Canadian consumers viewed how Americans conducted business negatively.

"American companies are accused of aggressiveness and arrogance because they insist on imposing the American way of doing this on their international markets; they are inflexible. They show limited respect or concern for non-U.S. cultures," said Stewart-Allen.
For the last three months, GMI tracked the consumption of American products by Europeans and found that as many as 20 percent consistently said they would deliberately avoid purchasing American products.

The survey, which is based entirely on consumer perception, has already seen some affect in the current market with the recent mass layoff of 9,000 GM Europe employees in Germany. Additionally, products like Barbie Doll made by Mattel have seen a 13 percent drop in sales worldwide.

"It could play out in a year...or it just might be a couple months thing and then all of sudden it dies away," said Kenneth Pick of GMI.

However, even if a boycott does occur, some analysts explained that any consumer-lead boycott would not greatly affect American companies abroad.

"Sanctions and boycotts don't work unless they very directly hit the bottom line," said Usha Haley, professor of management and international business at the University of New Haven in Connecticut.

"They don't seem to affect (much) because companies can resort to various mechanism to sell their products."

Haley who has written a book based on a seven-year study on the effect of sanctions and boycotts on multinational American companies in South Africa explained that the best run multinationals are those who are perceived as local brands, so they don't have to face the full force of anti-sentiment.

Though she agrees that there has been a great deal of ant-American sentiment abroad, stemmed from the U.S. polices in Iraq, she does not believe it will significantly affect American multinationals in Europe.

However, other analysts fear the current neglect by American multinational companies to take a closer look at the effects of the current U.S. anti-sentiment, might open further doors to Asian companies who are looking to expand further into Europe.

"They're competitors are going to swoop into those markets," said Josef Blumenfeld, a global PR and communications consultant, and founder of Tradewind Strategies.

"If Whirlpool can't sell, Samson will. The Asians are prime and ready to swoop right in. You can expect them to move aggressively and forcefully to seize market share," said Blumenfeld.

Through his company Tradewind Strategies, Blumenfeld helps American global companies to develop strategies to counter the backlash of anti-U.S. sentiment. He recommends to his clients to promote their companies as "global brands, not American brands" and to localize the company wherever possible.

He cautions that companies should remain flexible in its global marketing plan under the constructs of the current geopolitical situation, which can be unpredictable and ever changing.
However he added, "If they continue a unilateralist approach with complete disregard for the European governments, American businesses will suffer as a result of that."

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Blogged by PR in India site

http://pr-india.blogspot.com/2004_10_01_pr-india_archive.html

Flattered that our colleagues in India think like we do!

Article: Cultural Awareness is Key to Securing Global Business

The following article that I wrote was recently published by Mass High Tech:


http://www.masshightech.com/displayarticledetail.asp?art_id=67411&sec_id=130


Cultural Awareness Carried the Day for Companies Seeking Global Reach
Dec. 20, 2004

How you answer this question could be an indicator of the future of the Massachusetts’technology sector in a globalized economy. Ready?

What country is achieving economic growth of 8 percent a year, graduates close to 1 million engineers and programmers annually, saw its stock market rise 80 percent last year, and has free trade agreements with Japan, Australia and the United States?

If you answered "China,"you were off by a couple of thousand miles. Read on for the answer, below.

Since 2000, Massachusetts has lost more than 94,000 Innovation Economy jobs. And it’s not over; layoffs and restructurings continue. The Massachusetts Technology Collaborative recently observed that Massachusetts businesses are failing to capitalize on globalization and that the regional economy could be significantly expanded by "serving a wide variety of international markets."

A recent piece in BusinessWeek pointed the way to those markets for the high tech industry. According to the report, with affluent markets maturing, tech's next one billion customers will be Chinese, Indian, Brazilian, and Thai. In reaching them, the report predicts, the industry will be deeply transformed. Unless something changes, this transformation is likely to leave many Massachusetts technology companies behind.

Massachusetts has a lot going for it: large immigrant/expatriate communities; proximity to Europe; an established venture capital community; a multilingual, diverse workforce; and world-class services that can aid corporate globalization efforts. The state’s innovation economy accounts for 25 percent of its workforce. For Massachusetts to continue to thrive, new businesses and industries must blossom, creating new jobs. To make that happen, we need new markets.

Agility, flexibility and timeliness are crucial to reach global markets. Opportunities can appear or disappear virtually anywhere, anytime. Exploring the following seven parameters can give any company an edge as it ventures into the global arena:Gauge your company’s collective global experience. Make sure your organization has team members with work experience in key markets - these may include China, India, Japan and Korea. It could be anywhere. Ask your marketing department what international expertise is in-house and what outside resources exist. If no one in corporate marketing has a valid passport, take that as a sign of trouble.

China. No matter what your business is, your company is likely to be affected by China. From Lenovo’s acquisition of IBM’s PC business to supply chains to the 2008 Olympics, the business momentum in China is having an effect on corporate America. The opportunity in China is as impressive as China is vast. The risks of doing business in China are no secret: constant innovation and cultural savvy are key to staying ahead of reverse-engineering, counterfeiting and counter-innovation (it’s coming).

Don’t let the allure of China overshadow India for attention. India is a democracy with a thriving free press. Indians speak English, and are more culturally transparent to Westerners. These are important distinctions from China. In addition, India’s information economy is booming. Although the media spotlight is focused heavily on the issue of offshore outsourcing and the resulting loss of U.S. jobs, Indian job growth carries an upside: household consumption is expected to double by 2008. That’s opportunity.

E-mail is a terrible form of communication. Particularly for non-native English speakers. Do not rely solely on e-mail to communicate with global partners, customers and suppliers. Relationship building is crucial to doing business in international markets, just as it is at home. Get on a plane, and break bread with your business partners. The results are worth it.

The world is not the United States. Even though English has become the lingua franca of global business you cannot expect contacts and customers abroad to be proficient in English, particularly in technical subjects. Translate and localize your product literature, web site and business cards. Language should be clear and free of idioms. In markets like Japan and Korea, hire professional translators for every important meeting. In these face-saving cultures, it may be difficult for someone to admit that he or she doesn’t understand English well. Decrease the risk of miscommunication and embarrassment by having dialogue translated for everyone. It’s a matter of respect, which is often important currency abroad - particularly for Americans who often have to dispel a reputation for arrogance.

Be prepared. Have crisis plans in place, as well as opportunity strategies. Just as crises erupt without notice, business opportunities can quickly appear. Identify new markets or categories of interest. Advance work on requirements, translation and who the players are could give you first-mover advantage if circumstances unexpectedly allow.

Globalize your perspective. Become a consumer of global media. Read online business news and analysis from a range of global economic centers, including London, Hong Kong, Sao Paolo, Singapore and Frankfurt. Know that the CNN we watch here at home is not the version the rest of the world sees. Understand the differences and what they mean.

Expanding IT business into global markets is a key to growing the entire industry and expanding the Massachusetts economy. Each international market is unique, with its own risks, challenges and rewards.

The answer to the question posed above, by the way, is India.

As more Massachusetts companies reach out to international markets, and more of us learn the intricacies and nuances of those markets, the answer to that question, and so many others, will become clear. The result can be a thriving Innovation Economy and a workforce that leads rather than follows in global business.

Josef Blumenfeld is a consultant on global public relations management and founder of Natick-based Tradewind Strategies. He can be reached at jblumenfeld@tradewindstrategies.com.