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"Global
Opportunities: Weathering the Economic Storm"
The past year has brought tough challenges across the board and, while going global is not right for every organization, globalization remains a key tool for many firms to weather the tough economic times of the U.S. and global economy. Having spent time working in several countries and handling investment concerns with many others since 9/11, I’ve been both astounded and fascinated by the No. 1 question I’ve been asked when overseas: "So, when is the U.S. economy going to get better so ours will get better, too?" Such questions remind me of the power, strength, resilience and leading role we have played, and will continue to play, as part of the world marketplace. Despite the current recession, the World Economic Forum continues to rank the United States as first in growth competitiveness. But the forces of technology and globalization have dispersed power, and it is interesting to consider how five other superpowers play leading worldwide economic roles, both on their own and in partnership with U.S. business interests. China: Every decade has its "most popular nation" award. In the 1980s it was India; in the ’90s it was Japan. In the new millennium, of course, it is China. It seems that every U.S. investor wants a piece of this pie, despite the costly and consuming demands it takes to get it. The economy is booming, with GDP growing at about 5 percent per year; but never forget the enormous implementation challenges this country faces in terms of infrastructure development and distribution if it is going to carry even one-half of those 1.2 billion citizens to a higher standard of living. Long-term expenditures for those national needs will clearly curtail the great investment plans that are detailed for the excited and eager foreign investor. In my visits to China in December 2001 and June 2002, the only visible impact from 9/11 was in the diplomatic circles; on the street and in meetings, the nation was far more consumed with its Herculean task of preparing for the digital Olympics and gaining technology assets for all sectors – particularly from the other superpowers, and especially the Japanese and U.S. China is a world power with sights set on world domination, but it will take many decades before the nation’s economic, political and financial systems will come together to realize its ideological vision. In the meantime, do chase its markets – they’re huge and eager for your goods and services – but remember that partnership in China usually means, "What can you do for me today?" Japan: While Japan will never have the size or scale of the United States, the world’s second largest economy has figured out how its proximity to China can provide both nations with the perfect match of technological know-how and a large and eager labor force. The Japanese businessmen and hotels dominating the Chinese landscape bring to mind the great joke in India in the mid-1980s, as the nation opened its borders to foreign investment. "Hey, do you know the first thing an American does when he arrives in India (China)?" "He confirms his return ticket home." "Do you know the first thing a Japanese does when he arrives in China?" "Buys real estate." U.S. firms have invested billions in this market, which is frank about its desire to source indigenously; U.S. firms may be more effective if they pursue their Japanese relationships as part of a broader pan-Asian (China?) strategy. Russia: Somehow, discussions of Russia and the great possibilities that its open borders created have fallen to fifth or sixth place on most U.S. firms’ investment maps. Certainly the great gold rush rule has played out: Those who knew how to play in this turbulent investment climate or had the relationships to help them succeed won in the ’90s as borders opened, while many others who were new and ran blindly and anxiously after the promised gold lost their shirts and went home bankrupt. But this country – with its direct manner, vast natural resources, a skilled science and engineering base, and key ties into Central Asia and Europe – can be more familiar to Americans than the better promoted Asian markets, and be accessed and leveraged off of a firm’s regional operations and established partnerships. But remember that Russia’s political and institutional systems remain weak. Like China, Russia remains a long-term market that should be explored while securing more immediate revenue from established customer bases. India: The great passion for chasing India was spearheaded by Rajiv Gandhi’s liberalization policies in the ’80s and accelerated by important changes in foreign investment laws in the’90s. But what of India today? The dominant news concerns its border issues with Pakistan, but this situation is far removed from the economy, which has been growing steadily, and the established information and technology industries that are expanding into regional markets (including China). India’s British-born infrastructure – its common commercial, legal and language ties to the U.S. – remains a primary motivator for why India should be on virtually every U.S. firm’s international radar scope. The bureaucracy will test any investor’s patience, but the institutional systems are in place, rendering paper battles well worth the effort. With a middle class that is about the size of the entire United States, this materialistic society welcomes U.S. goods and services. Just ensure that you’ve got your local partners to handle the grueling day-to-day political and organizational wrangling, and secure your investments through available commercial and political insurance tools. Europe: Given that the European Union economy is about the size of the U.S. economy, with lifestyles and spending patterns that are similar to ours, by now, any U.S. firm offering products or services for a developed country environment should have a presence in this world powerhouse. Europeans have served as imperialists and traders far longer than the U.S., so in addition to regional sales, partnerships with European companies and countries provide U.S. firms with access into key markets (e.g. consider Telefonica’s dominance of the Latin American telecommunications scene). Consider language and ethnic ties from Europe and Turkey into the Baltic, Caucus, and Russian arenas, and you’ve got a solid third of the world’s spending power in your market scope. It is no secret that current U.S. policies and our administration’s rhetoric raise important questions about how well U.S. interests and investments will be received as we move forward with the political and military challenges 9/11 generated, as well as the limitations of the global downturn. But in the meantime, for those firms that are eager, ready and capable to globalize, the need to get on a plane and visit your partners and customers is more important than ever. Di Landau is president of Global Resources, Inc., a global telecommunications and information technology consulting and training firm that is based in Irvine, Calif., with offices in Bridgewater, N.J. and worldwide affiliates. For information, call (949) 721-0323.
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