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Responding to the Earthquake in China -- Global Companies, Global Customers and Global Responsibilities

One of the things that great companies have in common, or at least companies that are great at product development, marketing and customer service, is that they have a genuine empathy for their customers.  This inherent customer centric view allows them to anticipate and respond to customer wants and needs even before the customer has asked.  Talking with the leaders at these companies, it becomes clear that they care about their customers as people.

As a result of this, another phenomenon you can observe at companies such as this is that they tend to be active in the community in causes that are important to their customers.  One can be more or less cynical about this, but my observation is that at truly good companies, their sense of social responsibility is not a contrivance to ingratiate themselves to their customers but stems from a genuine desire to have a positive impact on their customer's lives.  As a result, they naturally support the good works that are important to their customers -- they raise money for the childrens' hospital, they sponsor the community little league, their employees organize crews to work on habitat for humanity houses.

One of the things that happens when a business goes global, of course, is that your customers become international, and if you are as genuine about your customers abroad as you are about your customers at home, you will find the call to grow beyond just being good citizens in your local community to being good citizens of the world.

Now I would think that anyone with a conscience feels for the victims of the recent earthquakes in China_earthquake China, but if you have a company or you individually are doing business in China, and you aspire to be great in that endeavor (and if you don't aspire to be great at it, what's the point -- to be mediocre at it?), then you should feel a particular pull to respond to this need.  So here's my suggestion -- go to the China Esquire China Law and Business Blog.  Read its ongoing coverage of the earthquake and more importantly go to the specific post entitled "More Ways to Help in the Aftermath of the Earthquake - Updated".  You will find numerous ways to help out including links to a host of charities supporting the relief efforts, at least one of which should appeal to your sensibilities.  I used the site yesterday to navigate to the American Red Cross where I was readily able to immediately make a donation specifically to its efforts directed toward the China earthquake victims.

Now that your business is international, the community that you should give back to is a little bit bigger.  And there are lots of opportunities to give back -- starting now.

Can Today's Mis-educated High Schooler Become Tomorrow's Global Leader?

Among the concerns with secondary education today is that in teaching to the lowest common denominator dictated by standardized tests, the average American high school student is woefully undereducated in subjects critical to the world of the future (and today of course), particularly math and science. Add international trade to the list of subjects in which a good education is lacking.

I have the pleasure of serving as a mentor in a program for students attending one of our local large urban public high schools.  We were catching up this morning on how things were going in his geography class.  When I asked what they were working on, I was momentarily pleased to hear that they were Ridgemont_high studying international trade.  My pleasure turned sour when I asked what he was learning about global trade.  His answer:

Basically we're learning how international trade is good for rich countries like the United States, but that it's really hurting the poor countries in the world.

I guess I should have seen that coming.  I asked whether there is much class discussion or whether it was primarily lecture from the teacher.

There's discussion . . . but since we don't really know anything about it other than what our teacher tells us, basically what we discuss is how harmful trade is to the poor countries in the world.

My mentee's teacher is not alone of course in substituting a belief in a political ideology for a grounded understanding of international economics and business.  An example of this school of thought is found in Antonia Juhasz's book "The Bush Agenda, Invading the World One Economy at a Time"  in which the author argues that the only country benefiting from globalization is America to the point that she believes that globalization itself is a conspiracy between the U.S. government and its large corporations to use global economics as an express arm of foreign policy enabling the U.S. to assert its hegemony on the world without having to resort to strictly military means.

There are a number of aspects of this view that strike me as odd -- not the least of which is that in this presidential election season the two liberal candidates are bashing international trade and calling for the renegotiation of agreements such as NAFTA claiming that international trade only helps other countries while harming the U.S.   And in the strange bedfellows department, this anti-trade chorus is joined by right wing pundits such as Lou Dobbs who in his utterly wrong headed diatribe entitled "Exporting America", argues that the only people benefiting from globalization are foreign countries which are taking advantage of what he sees as a conspiracy of greed driving American corporations to export jobs and to undermine the very existence of the American way of life.  It seems that quite a number of ideologues outside of this teacher's classroom think international trade is bad for exactly the opposite reason -- that it is bad for the U.S.  [The coexistence of these contrary ideological views of the role of the United States in world trade is discussed in a slightly different context in an earlier post entitled "Ben Bernanke on the Benefits of Globalization".]

I also wonder how my mentee's geography teacher addresses the real world juxtaposition of the experience of countries such as China and India when contrasted with countries such as North Korea or Myanmar.   Not too long ago, both China and India had nationalistic policies that isolated them from world markets.  They were also among the world's poorest countries.   Since fully embracing international trade, of course, they have become shining examples of the ability of expanding markets to produce widespread economic opportunity to a previously destitute population.  Meanwhile countries such as North Korea which have regimes that continue to isolate their people from world markets in order to keep the citadel walls around their autocracies remain countries with the most abject poverty.

My student told me that his teacher particularly focused on poor countries in Africa as examples of how international trade keeps poor countries under the boot heels of wealthy nations.  As discussed elsewhere in this blog, interestingly the problem many countries such as those in Africa have with making headway in a global marketplace isn't international trade, but the lack of free trade.  The principal products that many of these countries could naturally export in order to gain the currency necessary to participate in international trade are agricultural.  But it is in agriculture that the wealthy nations are most protectionist both in terms of subsidies to their domestic agri-businesses and tariffs on the import of agricultural goods from elsewhere.  This is exactly the problem that the Doha round of trade talks is trying to address -- talks repeatedly scuttled by the wealthy nations' insistence on protectionism, not the existence of free trade.

I suppose it would be too much to ask that a teacher broaching the subject of international trade begin Spiked_world by imparting an understanding of the theory of comparative advantage and then allowing students to examine case studies of how the theory plays out for better or worse in the real world and then see where an objective discussion on the subject leads from there.  In any event, global commerce is a significant part of the world dynamic that future leaders need to understand and be comfortable with, and if our education system in this area concerns itself with political ideology rather than established trade theory and practice, our future in this regard will not be so bright.

So here's a few suggestions:

  • Business organizations (chambers of commerce, World Trade Centers) and individuals engaged in international business might volunteer time and resources to support secondary education in the area of global trade and economics;
  • College degree programs aimed at future teachers might include more substantive education in international economics and business as a core subject;
  • Secondary schools might offer a course in business and economics rather than leave the subject up to ill-prepared geography and social studies teachers to cover as an aside to other topics such as the comparative wealth of nations. 

If suggestions such as these were to be implemented, I would be saved from having to dispense the wimpy advice that I ultimately imparted to my mentee this morning -- since my role in this particular program isn't to provide an alternative education, but rather is to help the kid get through high school, after suggesting some alternative ideas on international trade, I counseled him that usually with teachers such as this, the way to get a better grade is to parrot the teacher's political view point.  My charge was happy with that advice, particularly since the only information he has on the subject is what he was told by his teacher -- which is where the problem starts in the first place.

What It Took for an American Icon to Become #1 in China -- Another Lesson in Global Marketing

Regular readers of this blog know that from time to time we've examined whether global companies have the power to impose standardization upon foreign markets (ala Ted Levitt's original conception of globalized business), or whether the most successful global competitors are those that can adapt their products and business models to work in the face of divergent cultural tastes and norms.  Looking at global behemoths such as Disney and Wal-Mart, leading edge product platforms such as My Space and industry trends such as micro brews and the beer industry, the conclusion seems to be that the modern world of information driven consumerism has changed the game since Professor Levitt's seminal article in the Harvard Business Review.  As with everything else in the internet age, customer specific customization seems to present the winning formula.

The latest example of this that I've seen is the experience of Kraft Foods selling it's iconic Oreo cookie in China.  The Oreo has long been my personal favorite store bought cookie -- so much so that when my Oreo_in_china kids were little, Oreos were called "Daddy Cookies" in our house.  Particularly dunked in milk, they are almost the perfect snack food.  If there were any product I can imagine that should sell itself anywhere in the world just by getting people to try it, this would be it.

Alas, in the world of global consumer tastes and preferences, such is not the case.  Kraft, the world's second largest food seller began marketing the Oreo in China in 1996 (84 years after it was first introduced in the U.S.).  Like many "can't miss" products, it in fact struggled.  It was too sweet for the Chinese palate.   The packaging offered too many at too high a price to be seen as a good buy.

Kraft's efforts under CEO Irene Rosenfeld to become more entrepreneurial in its market approach is highlighted in an article in last Thursday's Wall Street Journal entitled "Kraft Reformulates Oreo, Scores in China."   As profiled in the article, a team led by Shawn Warren who took over Kraft's push in China in 2005 completely reworked the product to the point that a Chinese Oreo would be virtually unrecognizable in the U.S.  It is a reduced sugar concoction rolled around a combination of vanilla and chocolate creme and dipped in a chocolate coating.  The thing that it shares in common with its American namesake is that it is now the country's number 1 selling snack cookie. 

As I think about this story, it seems to me there are two distinct approaches for a company looking at entering international markets -- are you trying to find foreign markets for your existing U.S. products, or are you trying to expand and diversify your company into global markets.  If it is the former that you seek, then you need to be careful to vet the wants and needs of consumers in particular markets to be sure that they align with the value proposition used to sell your current products.  If you are seeking to accomplish the latter, however, aspiring to be a truly global company instead of an American company with products that are sold overseas, then you need to be flexible and innovative in designing products that are right for the markets you are seeking to enter.   Understanding this critical difference may require some initial soul searching that in my experience most companies don't do an adequate job of before taking the plunge into international markets.

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