China Business News Interview: China Brands and Globalization

Oct 152006

china-business-newsChina Business News interview with Lisa Merriam, originally published October, 2006 discussing China brands, marketing challenges and globalization.

Question: What do the developing countries get from globalization in the economic and social way?

Answer: Trade can be short-term disruptive for the societies of both sides, in this case both the developed nations that multinationals call home and for developing nations. It encourages specialization, drives improvements in quality, and forces maximum efficiency in costs and prices. But, at the same time, there are benefits for both sides. For developing nations, globalization (global trade and commerce) brings in new ideas, new capital, new jobs, and over time, an increased standard of living.

Question:What kind of problems do those multinational corporations meet frequently?

Answer: Multinationals do run into problems if they are not aware of “brand” in its larger sense.. Most companies believe they are doing their job if they make great products and have strong brands. For multinationals, that is no longer enough. A number of multinationals are now bigger in terms of revenue than the GDP of entire nations. Multinational brands thus have a bigger role beyond product and beyond company, extending to social, political, and economic considerations. The mistake they make is not thinking about these issues until a crisis forces them to do so. By that time, the damage is done.

Question: Could those problems be avoided or solved exactly?

Answer: Yes, these problems can be avoided or minimized—and also solved. First, though, companies need to realize where they could run into trouble. Then, they need to put plans into place and act on those plans. Considering social, political and economic impacts is indeed an expansion on the concept of brand. Making the mistake of thinking of a brand in terms of a product, a name, a logo, and maybe some advertising is is to misunderstand the very nature of brand. Brand is really reputation. Product/name/logo/advertising certainly play a role in reputation, but so too does how companies source raw materials, how they treat their employees, how they behave in markets, etc. Multinationals that do best (both in terms of generating sales and profit, and in serving society), are led by people who understand brand is reputation. They manage that reputation deliberately and actively at the very top. “Job one” of a good CEO is manage brand through every other function and corporate activity.”

Question: Recently, some countries started to suspect the developing of multinational corporations and funds in their own land — some even started an anti-globalization movement. Could this situation become worse? Why?

Answer: Anti-globalization forces have been active in recent years—most visibly since the 1999 riots in Seattle. Most of these activists have other agendas and are using globalization as the vehicle to protest for any number of causes. Books, blogs, television shows and other media have been produced to decry globalization. While it is certainly possible to find cases of companies behaving badly, on the whole, globalization has benefited people. Looking at countries that prosper the most, you will see that they all actively engage in and encourage global commerce. The history of economic development is a story of how standards of living and national wealth have increased across the board. Look at the world’s poorest nations and you will find nations that don’t engage in free and widespread trade. The anti-globalization movement has already lost steam since 1999. The “protester” population segment has largely moved on to other issues such as protesting the war in Iraq. Companies once the target of anti-globalization forces have changed policies, behaviors and communications to address many of the complaints. And the disruptions that accompany any large-scale change in trading are already being absorbed by the many of the economies and societies in question.

Ms. Merriam adds:
I would like to contribute an additional thought. The idea of tying economics to nations may eventually become obsolete. Nations are political entities and economics transcends nations. As humans travel more, communicate more and trade more, the concept of nation economic concept may become irrelevant. Consider an industry where globalization has been under way for decades. It used to be that a Volkswagen was a ‘German car.’ No more. It may be designed in Germany—but with significant input from the U.K. Parts might be made of Chinese steel tooled in Canada and finished in Chicago. The whole thing might be shipped via a Greek company to be assembled in India and sold by a dealer network in Mexico. So is it really a ‘German car?’ Is Germany the economic beneficiary—or are dozens of nations economic beneficiaries? The automotive industry exemplifies both the initial disruptions and end game benefits of globalization. Are there fewer steel jobs in Youngstown, Ohio? Yes. Are fewer cars made in Detroit? Yes. But there are more cars made and better cars made, and, in constant dollars, cheaper cars made. More car jobs have been created around the world. Now one town and one country doesn’t corner all the benefits—those benefits are spread around the globe. As globalization continues, and it may be an unstoppable force, products, companies and profits may no longer be things of nations, making the developing nation vs. multinational issue moot or, at the very least, the wrong way to frame the debate.

© 2014 Lisa Merriam