Going Global

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, 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.

Globalization, Change and Education -- What It Takes to Prosper in the 21st Century

In the US and most developed western countries we think of education in terms of math, science, history and literature.  These are the tools necessary to understand and succeed in the secular world.  It's easy to forget that not all the world views education this way and, unfortunately, this difference in educational perspective may have much to do with the gap between the haves and have-nots in the global marketplace of the 21st century.

If you are doing business in predominantly Islamic countries, I commend to you the article in yesterday's Wall Street Journal profiling Azim Premji, the head of Wipro Ltd., the large Indian firm that provides outsourcing services to many global brands.  With a net worth estimated at $17 billion, Mr. Premji is reported to be the world's richest Muslim who has not derived wealth from the royal control of oil resources.  He is also a Muslim thriving in the predominantly Hindu culture of India.

Apparently Mr. Premji is the object of criticism from many struggling Muslim's who are among India's most impoverished residents because his fabulously successful company hires only a small percentage of Muslim employees relative to the proportion of the country's population that adheres to Islam despite the Islamic faith of it's CEO and principle owner.  The limitations imposed upon Mr. Premji by his country's and his faith's perspectives in this regard are instructive about the education gap and the consequent wealth gap found between developed and developing countries in the world today.

As background, one should appreciate the extent to which Wipro is a paradigm of the need to be flexible in order to survive and be successful in a global economy where the rate of change is ever increasing.  When Mr. Premji took the reins of what was then known as Western India Vegetable Product Ltd. in 1966, the company had annual sales of $2 million and produced primarily sunflower oil.  When India took a turn toward socialism in 1977, many multinationals fled the country, leaving a vacuum in India for the products that they had been producing or importing, including electronics and computer hardware.  In a radical departure from the vegetable oil business, Wipro entered the vacuum, becoming one of the country's leading manufacturers of computers and consumer electronics.

In the 1990's, India moved quickly back toward capitalism and the rush of global corporations back into the country displaced much of Wipro's market -- a global economic change that would have been the death knell for many less flexible companies.  But instead of wilting in the face of this onslaught of new international competition, Mr. Premji again saw opportunity instead of threats and once again completely retooled Wipro's business.  Today, of course, Wipro is a global powerhouse listed on the New York Stock Exchange with a $20 billion market value.

So why does Wipro hire so few Muslims?  Being that Wipro's customer base is made up of global companies and that English is the international language of business, they look to hire people with some proficiency in English.  Not surprisingly, they also look to hire people with some education in mathematics, science, engineering and business so that they can understand their client's businesses as well as become successful employees supporting Wipro's own successful business strategies.

Most of India's Islamic population who attend school attend traditional Muslim schools.  Here they work on memorizing the Quran in its original Arabic.  There is no science and no English in the curriculum.  This is not an oversight but done with intention as these schools see a career in a global capitalist market as a bad thing not to be desired or pursued.  The WSJ article reports on an interview with an imam who runs one of the traditional Muslim schools in which he opines that "a future as self-employed shopkeepers or peddlers is preferable to seeking formal work at a large company."  The imam is quoted as adding "A job is like being a slave."

For most of us with a Western world view, education is the principle vehicle through which we would hope to overcome the cultural divides that separate people in a world becoming ever smaller through communication and transportation technology.  We also believe that education is the means for providing people with the opportunity to create a better and more prosperous and vital future for themselves.  Clearly Mr. Premji shares this view, but the fact that it is not a universally held perspective presents some significant challenges for Mr. Premji as a Muslim in a capitalist world -- to say nothing of the challenges faced by companies seeking to be capitalists in the Muslim world. 

Unique Financial and Business Challenges in the Islamic World

One of the things I enjoy about the challenges of international business is that there are always new ideas and perspectives to learn and understand.  It constantly challenges your world view and keeps your edge sharp.  I must say today I really had my eyes opened to an issue of which I was embarrassingly unaware until reading about it in a place no less accessible than the front page of the Wall Street Journal in an article entitled "Malaysia Transforms Rules for Finance under Islam".

I confess at the outset that my experience in business in the Muslim world is relatively limited.  While I have opened up distribution, put together manufacturing and sales JV's and been responsible for foreign based operations in Asia, Europe and Latin America, my business in the Middle East has been limited to a few LOC / cash-in-advance spot export sales.  The few times I had occasion to discuss broader distribution arrangements with potential Middle Eastern partners, when it got down to discussing credit terms, it seemed as if they wanted us to carry the financing for inventory but refused to pay anything for extending that credit.  I assumed that they were being needlessly difficult negotiators on a straight forward point of business and didn't expend the time to sort through the road block given the existence of easier and more lucrative business elsewhere in the world.

While I might have had some vague cognizance of the Islamic view of credit in reading at some point about the origins of the old saw "neither a borrower nor a lender be", it was not until I read the WSJ article that I understood that charging or receiving interest payments apparently violates a Quranic prohibition.  Perhaps my would-be Middle East partners were not intentionally being difficult business people as much as they were trying in earnest to abide by their Islamic faith.   At a minimum the true motive got lost in translation and the potential deals were killed even before they got off the ground.

The focus of the WSJ article is how Malaysia, being more distant from the more traditional Muslim faith centers in the Middle East has come to dominate Islamic international banking through the development of innovative financial products which mirror in many ways the workings of an interest paying bond, but which do not, strictly speaking, pay interest.  Instead, they are structured as profit sharing or real property rental pools based on business assets which secure what otherwise looks very much like a western debt instrument.    Not surprisingly, as with any issue tied up with a tenet of religious faith and the interpretation and application of religious doctrine, not everyone in the Islamic world concedes that these innovative financial instruments in fact comply with the requirements of the faith.

The result of all this is an entire shadow world of Islamic banking that parallels western banking, but which cannot easily or fluidly mesh with predominant international financial structures.   It seems the impact is enormous and far reaching.   At a first level, it has to make it considerably more difficult for businesses owned or controlled by Muslims to obtain the capital necessary to expand and compete easily in global market places unless they have direct access to the oil revenues largely controlled by the ruling sheikdoms.  Access to broader markets is limited and the opportunities for entrepreneurial start-ups of small businesses is hamstrung.  Indeed, when it comes to ordering any business idea around a rational assessment of risk and reward, it is going  to be more difficult in the absence of embedded interest rates, which at some level are the market's price indicators of normal risk return requirements.

It is often pointed out in financial guidebooks that one of the characteristics that separates the rich from the poor is that the poor have to work for their money while the rich have their money work for them. In an economy that prohibits the payment or collection of interest, it is virtually impossible for a person without the substantial wealth necessary to invest in sophisticated financial instruments to earn any return on whatever money they do have.  The WSJ article indicates that customers of the largest Islamic financial institution in Saudi Arabia have $18 billion in no-return checking accounts and that "because of concerns about illicit interest , savings accounts do not exist there."   Nor, I would assume, do CD's, money market accounts, bond mutual funds, or other simple savings tools which constitute the average person's entree onto the road of financial investing and intelligent money management.

On a more subtle level, the need to develop and maintain a parallel financial structure with complicated financial instruments secured by income producing assets has to increase the transactional costs to businesses throughout the Islamic economy.  I don't envy Muslim business people trying to succeed in a fast paced financially driven global marketplace given these limitations that inherently segregate them from many avenues of international commercial opportunity and necessarily disadvantage them relative to business people of other faiths who can operate without such fundamental financial restrictions. 

Having just begun to ponder all this, I don't have any brilliant insights, and it is a subject about which I will certainly seek to learn more.  It is certainly a dimension that anyone seeking to do business in the Islamic world needs to understand if they hope to structure deals that work for everyone involved.

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.

Jet Li, Cross-cultural Experience, and the Triumph of International Commerce

I took my teenage son and a couple of his buddies out to celebrate his birthday last night.  They wanted to do Chinese food and a movie.  The movie of choice was "Jet Li's Fearless".   Aside from being a very good movie, it was a fascinating experience from a Going Global point of view as well.

The film is entirely in Chinese with English subtitles.  Set in the late 1800's into the first decade of the 1900's, it tells the story of one man's fight to protect China's cultural identity against the onslaught of westerners arriving to take advantage of the country's recent re-opening to international trade.  This is the kind of movie that even 10 years ago would have played in a couple of small art-house theaters, one showing a night, two on weekends.

This movie was playing in every major cineplex in the Denver area, five shows daily.  At the multiplex that we went to, it was in one of the larger auditoriums -- stadium seating and all.  What's more, the show we went to was packed.  Couples arriving near the end of the previews had to either sit in the front row or not sit together as it was hard to find two empty seats in the whole place.  And it was an incredibly diverse audience, spanning all ages, genders, races and socio-economic groups -- an audience not only large, but broad as well. 

Make no mistake, this movie is not some government sponsored cross-cultural sensitivity thing.  It's an act of raw commerce, pure and simple.   The Chinese movie studio set out to make a film that would appeal to the mass market for entertainment not just in China but in foreign markets as well -- and judging by the crowd's reaction at the show we went to, they have succeeded.   Of course one of the collateral impacts of a movie like this is that it will do more to provide audiences in the U.S. a degree of cross cultural sensitivity than any government program could ever hope to do, if only because it will reach a far larger and more diverse audience.   And you get popcorn as part of the experience.  Talk about a win-win-win deal.

Cultural Differences and Good Communication

Business people wishing to maximize their chance of success in pursuing an opportunity in a new foreign market should familiarize themselves with the cultural sensitivities of the country in which they intend to do business.  But the dynamics giving rise to this fundamental maxim of international business do not cease to operate after that first trip abroad.   The development of a successful relationship with one's foreign business contacts built on mutual trust continues with each phone conversation, letter and e-mail.

As noted in an earlier post, the process of developing these relationships "requires patience, a quality frequently in short supply in the fast paced world of the information economy, particularly for American business people used to closing the deal."  With this thought in mind, I was interested in a recent post on the excellent "Manage to Change" blog by Ann Michael entitled "Are American's Rude?"   The post quotes findings by Margaret Neale of the Stanford Graduate School of Business from an article in the Harvard Management Update to the effect that "the e-mail behavior of Americans, who tend to go immediately into the task, often is experienced by people from other cultures as rudeness . . . "

Dealing with these cultural nuances can at first seem overwhelming -- avoiding the unintended offense when we were merely intending business as usual.  Ms. Michael's post makes the excellent point, however, that avoiding these cultural faux pas may be less a matter of developing a new found cultural sensitivity than simply following the most basic tenet of effective communication -- i.e. "communication is not about us, it's about the audience!"  At least in this respect, a foreign audience is no different than an audience we might face at home -- usually what is important is not that we said something, but that it was understood as we intended.   It is critical to understand the perspective and needs of the audience and gear our communication to those expectations and needs if we are to achieve our business goals in any culture.

McMarket Research -- Food for Thought or Indigestible Data?

In an earlier post I talked about some of the sources for on the ground market research and trend spotting such as trade shows.  I had not considered a foreign McDonalds hamburger restaurant, however, to be an international market research laboratory until reading a recent post on the Japanese cultural commentary blog Japundit.

Certainly one thing about a business which is both standardized and ubiquitous is it provides a basis for controlled comparisons across borders.  The Economist has been using comparisons of the price for a Big Mac hamburger as a means of indexing real exchange rates to purchasing power for 20 years.  The worldwide impact of the "Big Mac" index is such that it is translated and relied on in many languages, as illustrated by the interesting chart presentation at right from the German business news site Die Welt ("The World").  A discussion of the index can also be found on the McChronicles blog, a site not affiliated with the company but nonetheless dedicated to all things McDonalds.

The Big Mac comparison was extended a few years ago by researchers at Princeton University and Charles University to provide a measure of comparative productivity through an analysis of the number of Big Macs turned out per employee at comparatively busy locations in different countries.

But it was not until I read Japundit's review of the Shaka Shaka potato product currently being offered at McDonalds in Japan (you have to read the original post on Japundit to fully appreciate this product), that I appreciated the potential for individualized on the ground market research.  The Japundit post suggests that one can glean a great deal about reactions in a particular country to the influences of American culture, both good and bad, by seeing what aspects of a standardized franchise such as McDonalds are preserved and what aspects are changed in order to appeal to local consumers.  The argument makes sense, although I am still weighing whether I want to risk the irreparable damage to my digestion and my self image if I start eating at American fast food joints while traveling abroad just so I can add incrementally to my evaluation of a particular global market.   Then again, who am I kidding -- I have eaten in a McDonalds in at least 10 different countries on 4 continents that I can think of.