American Business Must Produce a Generation of “New Internationalists”
by John D. Allen
World Trade Magazine
February 1, 2006 http://www.worldtrademag.com/CDA/Articles/Column/595e8fb6b2909010VgnVCM100000f932a8c0
Many academic, business, and media outlets point to the “export of U.S. jobs” as an “unfair business practice.” With the U.S. on track to hit a record $200 billion trade deficit with China in 2005, debating whether we are “exporting America” to low cost labor destinations provides a low return on energy.
Why not ask, “Why can‟t Americans export?” U.S. Department of Commerce statistics state that the U.S. trade deficit for 2004 soared to a record of $617 billion, or 24 percent higher than 2003; the final tally for 2005 will be even worse. Exports, on average, constitute less than 33 percent of total sales for U.S.-based Fortune 500 companies. For smaller U.S. firms, global export remains only a goal to aspire to, rather than a full attack plan.
Having recently returned from China as a member of Governor Schwarzenegger‟s California Trade Mission to China, I was struck by the lack of U.S. consumer and industrial goods available to the Chinese buyer. According to Andrew Leung, Chairman of the Hong Kong Textile Council, “American brands are not attractive to the Chinese market.” He went on to suggest that “laziness” was the word to best describe American business and its efforts to gain market penetration and then acceptance.
Many of my fellow California delegates arrived in China having done little homework but with high expectations. There appeared to be some pre-conceived notion that government entities or local brokers would show them the ropes and help grow their business. This lack of cultural perspective will most certainly lead to malaise and frustration when tackling the Chinese market.
What is needed is an ability to ramp up international business acumen throughout the rank and file of U.S. business operations, most especially at the higher executive level. Staying ahead of the migration of different industries to different developing regions has become tantamount to success. If the textile market is booming in Sri Lanka, for example, U.S. manufacturers must be prepared to export textile production machinery to Sri Lanka. But today, such awareness and responsiveness is not always the case.
How will America‟s “new internationalist” be created? The immersion must start in high school and college. Less than 10 percent of the U.S. adult population (excluding foreign nationals) has a passport. With the U.S. bilingual aptitude one of the lowest in the developed world, MBAs need to be „upwardly global‟ (not just upwardly mobile) and held to a second language as a prerequisite, with regional cultural studies a must.
To be sure, when these graduates enter the job market, they will confront low-cost production abroad and global sourcing that can take the wind out of the sails of even veteran U.S. business leaders. The “new internationalist,” however, can put into play cultural and linguistic skills to compete, unlike their predecessors. A small business featuring specialized valve and fittings, for example, can penetrate the Arab market even in these troubled times with a business savvy Arabic speaker on board. If competing companies make their way to Northern Chile to do business with the booming copper producing conglomerates, knowing about Chile‟s famous blind poet, Pablo Neruda, may be the decisive factor in getting the order.
Business for Diplomatic Action, a non-profit, non-partisan task force, serves as an example of those who have come to know that cultural sensitivity is a key driver to overcoming business hurdles abroad. Led by Keith Reinhard of DDB Worldwide, this task force produces a World Citizens Guide, a pocket-sized primer for aspiring globalists.
What can U.S. exporters do to garner more sales abroad? First, hire candidates with academic backgrounds in global business, strong second and third language skills and extensive experience interfacing with diverse cultures. This is no longer an option, it is a strategic imperative. Then give these new recruits a “long rope” once they have completed your company-training program. Creativity will come from this distancing effect while allowing these “New Internationalists” to push beyond the existing corporate culture. Third, senior management must embrace an internationalist attitude and broaden their own personal knowledge of the world.
The worldwide GDP is running at approximately $30 trillion, of which one-third is produced by the U.S. Yet, U.S. industrial firms sell much less than 50 percent of their total sales outside of the U.S. If a U.S. firm is not approaching 60 percent of its total sales outside the U.S., it‟s time to seek out a “new internationalist.” More exports from products made in the U.S. will offset those employment positions that depart from U.S. shores.
John D. Allen John D. Allen is President of Wilden Pump, a Dover company, whose international turnover exceeds 50 percent of its total sales.