Going Global

Do You Trust Your Competitors Enough to Follow Them Anywhere in the World?

It strikes me as curious when I ask a company how they decided to enter a particular foreign market how many times the answer is that they learned that a competitor was selling product there so they concluded that there must be a market for their product.  This is called a "reactive" market selection strategy.  It stands in opposition to a "proactive" market selection strategy where a company analyzes its business model, its value proposition, and its competitive advantages and determines the foreign markets in which it can optimize its chances of realizing profitable growth.

One of the problems with following a competitor into a market is that you don't know how they selected the market.  In my experience the most frequent means by which a company selects an export destination is by another reactive strategy -- i.e. responding to an unsolicited order or an approach at a trade show by someone who wants to be a distributor or sales agent.  The latter group are also the companies that I see needing help sometime later digging out of an unfavorable distribution agreement. 

I don't know too many circumstances in which a company is likely to call a competitor to ask what move they should make next or seeking a recommendation as to how they might better position their business.   Let's face it, on the whole, we wouldn't trust a competitor to run our business.   So why would a company chase a competitor into an export market, at least why without a great deal of proactive market research?

One of the many great things about expanding into new foreign markets is that each one provides a new opportunity to hone your value proposition and gain a competitive advantage.  By doing the homework on a proactive market entry strategy, you might well wind up getting out in front of your domestic competitors in a market that they didn't explore, which is a whole lot better than always playing catch up in any language.

Globalization and Labor

Among the concerns frequently raised by those who fear global integration is an assertion that globalization leads to a deterioration of labor conditions for the world's workers.  This can be an emotionally charged issue, particularly when argued by a group of employees who have been affected by a particular change in their company or industry that has caused an immediate loss of their jobs.  It has always seemed, however, that an empirical analysis of this issue has been hard to come by.

Ben Muse in a recent post entitled "Is Globalization Good for the World's Workers" spotlights a recently published book by Robert Flanagan, a professor of labor economics and policy analysis at the graduate school of business at Stanford.  Professor Flanagan's book Globalization and Labor Conditions: Working Conditions and Worker Rights in a Global Economy takes on at least one part of this issue head on.  Among his conclusions are the following:

• Countries that are open to international trade have superior labor conditions to those that are not open to international trade;
• Wages and working conditions in multinational companies are superior to employment conditions in locally owned and operated firms.

These conclusions come as no surprise to people who have worked with the international operations of global companies and is consistent with observations made elsewhere in this blog, but it is reassuring to finally see a thorough analysis by someone with Professor Flanagan's credentials validate these observations.

As with any significant and rapid change, the global integration of commerce will inevitably result in temporal dislocations, and I would never diminish the personal anxiety of individuals directly affected by this process.  What must be kept in mind, however, is that globalization (1) is inevitable and, as importantly (2) is a positive thing in total.  Accordingly, to the extent interest groups seek to provoke policies which address the displacement of workers in particular companies or industries, those policies should be narrowly tailored to help ameliorate the immediate pain and should not be drawn so broadly as to undo much of the greater good that is going on as a result of globalization itself. 

The protectionists and isolationists among us should read this book before they push us further along the road of hunkering down in our bunker, hoping the world doesn't come knocking on our door for fear they want to devalue the world's labor supply.

A Cautionary Tale: No Matter How Familiar, We Are but Guests in a Foreign Country

As more and more people adopt the life style of "citizen of the world", it becomes increasingly easy to feel at home in a foreign land.  It's a wonderful experience so long as that familiarity is grounded in an abiding love and respect for the foreign country's people and culture, but it can be dangerous when the familiarity leads one to begin to treat the foreign home as if it is merely a cultural extension of the U.S.

For those who like a true crime / romance story, there is a sobering piece in today's Wall Street Journal (subscription required for on-line edition) profiling an American who was tried and convicted of murder and rape in Nicaragua.  If one takes the WSJ story at face value, it appears that Eric Volz was railroaded into a conviction -- the judge, cowing to a mob organized by the victim's mother, ignored substantial evidence that Volz was several hours drive away at the time of the murder as testified to by at least seven of his co-workers and clients and corroborated by cell phone records.  (An inside look at the case can be seen on the Good Will Hinton blog and on the Friends of Eric Volz blog).

The victim was Volz's Nicaraguan girlfriend.  It appears that Volz's first real crime was in ignoring local dating norms, instead treating his girlfriend as an American would relate to a girlfriend here.  The result was a very angry mother of his girlfriend.   His second crime was reacting to the work of police and prosecutors the way a bossy and arrogant American would when confronted with a lax investigation. 

Volz was fluent in Spanish and worked in Nicaragua as a real estate agent.  He had a local girlfriend (the victim of the crime) whom he helped set up a clothing boutique.  In the end, it appears that he became so comfortable in his adopted foreign home, that he forgot he was a guest.   Although appealing his conviction, he is currently serving what could be a 30 year sentence in a maximum security prison in Nicaragua.   I suspect that he is not so comfortable anymore.

Be careful out there -- but most of all, be respectful.  While this is an extreme tale, in some cases, violating cultural norms could get you in as much or more hot water as violating the law. 

You Say "Eur-a-gway" and I Say "Ur-a-gwhy"

As much as we celebrate our differences of pronunciation in the old song "You Say To-may-to and I Say To-mah-to", the fact is that when it comes to the place we live, we're all prideful and therefor a little sensitive when people from elsewhere can't seem to pronounce our local cities and towns correctly.  So it is that when someone from Willamette (accent on the second syllable), Oregon (two syllables, second one sounds like "gun") hears a person who was raised on the east coast talk about Willamette (accent on the third syllable), Oregon (three syllables, last one sounds like the word "gone"), they rightfully correct the mis-speaker, frequently in a tone that, while polite, implies a question about whether there aren't better schools back east where they might teach basic geography including the names of places outside of one's own provincial environment.

Given this near universal pride in the places we are from, and our sensitivity (at least those of us reading this blog because we are interested in international business) to foreign cultural norms, it surprises me a little how haphazard, inconsistent  and, at times, insensitive, our unwritten rules seem to be about how we pronounce places abroad.   Some examples:

• I don't think I've ever heard someone call Sao Paolo, Brazil "Saint Paul", but I hear people consistently call Petrograd, Russia "Saint Petersburg";
• Lima, Peru never becomes "Lime" and I don't think I've ever heard about the leaning tower of "Pise", but Roma always is referred to as "Rome" and Milano always is referred to as "Milan";
• A couple of decades ago after the U.S's rapprochement with China, the West began to adopt the pinyin spellings put into place in China in the 1940's, changing the phonetic spelling of many Chinese cities (e.g. "Peking" more appropriately became "Beijing"), so that our pronunciation of the names might more closely approximate what the Chinese actually call the city, and yet "Fiorenze" is always translated to "Florence" when we're talking about the city in Italy;
• Everyone in the U.S. seems comfortable with the idea that  the "s" at the end of Arkansas is silent such that we are willing to call it "Arkansaw" if only because that's how the people who are from there say it should be pronounced, and yet we insist on pronouncing the "s" at the end of Paris even though the people who have lived there for centuries before there even was an Arkansas pronounce it without the "s" -- is it any wonder that the French tend to think that we don't respect their language when we reflexively mispronounce the name of one of the greatest cities in the world simply because the way the people who live there say it is not the way we say it in our country.

To be fair, this sort of selective translation or re-pronunciation is not necessarily unique to the U.S.  In all the time I spent in Mexico, I never heard anyone refer to "Saint Louis", Missouri as "San Luis", but I regularly heard people refer to "New York" as "Nuevo York".

It all reminds me of the joke about the American and the English chap in the lobby of a high rise office tower waiting for the conveyance to an upper floor.  The fellow from England bemoans that it appears that the "lift" must be broken.  The American politely leans over and corrects him -- "It's called an 'elevator'".  Taken aback by the boldness of a stranger correcting his perfectly proper speaking, the Englishman responds "I'm sorry -- it's called a 'lift'".  Somewhat aggravated that the foreigner doesn't seem to get it, the American says in an edgier voice "Look pal, we invented the elevator."   "Well that may be" comes the Englishman's retort, "but we invented English".

So should we refer to places by the names and with the pronunciation given them by the people who live there, or should we be content to call them what we call them because, after all, that's just the way we do it here?  Perhaps we can agree as international business travelers that, whatever we do in the privacy of our own home, we at least will pronounce it the way the locals do when we are visiting on their turf.