Monday, March 14, 2005

When Business Gets Personal

Voting With Blue Green Fingers

A couple of months back, when confronted with questions about the mounting trade deficit that has caused so much concern for various directors of foreign central banks precariously awash in declining dollar assets, President Bush offered a seemingly naive response:

That's easy to resolve. People can buy more United States products [sic] if they're worried about the trade deficit.
Although the President grossly oversimplified the magnitude and dimension of the problem with our current account deficit, and that's an understatement, there is an important underlying point - that America still has international appeal and will continue to play a prominent role in the world's economy based on the attractiveness of our financial institutions, our wealth, and the allure of our assets. As such, we will continue to sell commodities, consumer products, and entertainment to the world - which could help to stabilize our trade deficits if other more fiscally responsible policies are pursued (unfortunately, if the latest budget proposal is any indicator, the sense of responsibility is a long way off).

However, I wrote a post back in December that discussed the dynamic of "
Brand Name America," against the backdrop of an unbridled exertion of unipolarity and the open embrace of hegemony that has found many vocal and prominent outlets in influential foreign policy circles in the nation's capital, and within the Bush administration. The foreign policy itself, which shows a marked lack of regard for world opinion, coupled with the strident rhetoric pouring forth from its adherents (such as the tragic choice for U.S. Ambassador to the United Nations, John Bolton) who reinforce the actions with words that go above and beyond in terms of fervor, must have some effect eventually - Right? While we may, by virtue of our vastly superior military capacity and envied financial institutions, be able to act with relative impunity in certain arenas of politics and economics, logic would dictate that the rest of the world might not take too kindly to such bullying, strong-arm tactics for long.

That logic has been confirmed in poll after poll that tells of a declining opinion of the United States in almost every region of the world - and particularly in the Middle East and Europe. Given these realities, the likely outcome is that people and governments will not buy more "United States products" or engage America's financial institutions to the same degree because brand name America is so tarnished. In many ways, a nascent international backlash is beginning to emerge, and its eventual size and magnitude will be directly related to decisions we are making at this, the apex of our hubris as a nation.

A short article appearing in this month's
Atlantic (scroll down to bottom of page) highlights the increasingly hostile international terrain that U.S. companies must navigate.

The U.S. government isn't all that's taking a public-relations hit overseas these days: U.S. brands are hurting as well, according to a study of European and Canadian consumers conducted by the market-research company GMI. Roughly 20 percent of people surveyed reported consciously avoiding American products in response to U.S. foreign policy. The brands most at risk, the study noted, are those that have "America" or "American" in their name (such as AOL and American Airlines) or are considered quintessentially American (such as Coca-Cola and McDonald's).
Although world opinion overwhelmingly favored John Kerry last election cycle, voices on the Right are fond of pointing out that the rest of the world had no vote. In fact, considering the dismissive attitude shown to international organizations, from NATO to the UN, the rest of the world has been increasingly disenfranchised from the process of shaping our actions in any context. But it is myopic to crow over electoral victories and the neutering of international organizations when, in an interconnected world, citizens of the world can vote with their feet and their wallets, and this could greatly impact the American economy and our position of cultural and educational dominance, in addition to our foreign policy goals.

Our appeal is not limitless, pre-ordained, or inherent. The opinion of others matters. Think about how easy it is for groups like
Buy Blue to crop up around the goal of rewarding businesses that support the Democratic Party on the one hand, and on the other side of the spectrum for religious conservative organizations to lead boycotts of Disney and other businesses that espouse tolerant views of homosexuality or other incongruent positions. Whether or not responding to specific calls to activism, the rest of the world is beginning to cast their vote on America, and the results need no translator - they're hitting the sacred bottom line. The GMI group that conducted the polling referred to by the Atlantic found, among other things, that 50% of European consumers distrust American companies, and that American brands were the top targets of boycotts:

When European and Canadian consumers were asked to characterize the American government and President Bush, they were most often described as arrogant and self-centered....With this in mind, when consumers were asked to characterize American multinational brands, the data revealed select American multinational company's - AOL, Exxon Mobil and Starbucks - were viewed very much like the American government and President Bush: arrogant, intrusive and self-centered.

"Some American brands become closely connected to their country of origin and are quintessentially American. They represent the American lifestyle, innovation, power, leadership and foreign policy. Unfortunately, current American foreign policy is viewed by international consumers as a significant negative, when it used to be a positive," explains Dr. Mitchell Eggers, COO and chief pollster at GMI.
The International Visa

It used to be the case, not too long ago really, that the brand name of "America" was actively sold to the world in the form of political and economic theories, and literally in the packaging of consumer products such as the globally ubiquitous trademarks of Coca Cola and McDonalds. Companies were able to cash in on the association of their products to the American ideal because the world had a healthy appetite - willingly devouring all things American in a show of support and an endorsement of the message of America: freedom, democracy, respect for human rights, economic opportunity, technological advancement, and the Big Mac. In the process, America became the hip, creative, trend-setting epicenter of culture - as the world turned to us for the next craze and newest fashion be it jazz and hip hop or the mini-skirt. As a testament to our cultural hegemony consider the fact that for all of America's vaunted productivity, and vast expanses of natural resources, our number one export to the world is entertainment in the form of music, film, and television. The mantra was the simple, but undeniable, assertion: "America" sells.

What a difference one presidential term makes. Enter the realm of reverse patriotism. Now, far from trading on America's image, American corporations have had to run from their roots, and conceal their links to their country of origin. Just as an association to America is the kiss of death for democratic reformers in the Muslim world, so too a connection to the United States is an impediment when doing business abroad. While we were busy renaming "french fries" "freedom fries" we failed to notice that having "American" in your name was the real liability.

American multinational companies will need to mount a valiant effort to distance themselves from the image of the U.S. federal government and its unpopular foreign policies in the New Year or risk continued brand erosion and ongoing boycotting by European and Canadian consumers, according to independent market research solutions company GMI, Inc....

Allyson Stewart-Allen, an American based in Europe for the past 17 years and co-author of best-selling business book Working with Americans...adds that for the New Year, American companies need to distance themselves from being American. She concludes that "U.S. companies abroad now need to focus on adding yet more value and repositioning their brands to consumers in the intensely competitive global village in which they compete, and the more aligned they are with those customers - regardless of their U.S.-created DNA - they'll win. American companies need to focus on alignment with international markets and embrace their market differences and idiosyncrasies."
As the GMI polling data indicates, some brands are at a decided disadvantage because of their historical association (Coca Cola, McDonalds, etc) and others because of their name (America Online, American Airlines, etc). Unlike American tourists abroad who claim they are actually Canadian citizens to avoid anti-American backlash, our companies will have a tougher time fooling foreign citizens. Expect many companies to study models such as Visa that have been able avoid the American stigma more than others.

"Visa has managed to disconnect itself and its brand from its country of origin," comments Dr. Eggers. Eggers added that because Visa has managed to distance itself from Brand USA, the anti-American sentiments abroad are much less likely to affect Visa's revenues.

According to the GMI Poll data, only 17% of the consumers identified as boycotting American brands thought that Visa was extremely American; only 15% said they would boycott Visa and 54% reported using Visa at least once or more in the previous month. In comparison, 64% of consumers surveyed thought American Express was extremely American; 48% said they would definitely boycott it and only 2% reported using it at least once or more in the past month.
Unfortunately, what is occurring at the micro and local levels with consumers and consumer activism, is also being replicated in a macro sense with governments and entire regions. In a prior post, I linked to two stories that tell of the realignment of nation state politics in reaction to American hyper-hegemony. First this article by Michael Lind cited on Steve Clemons' site:

A decade ago, American triumphalists mocked those who argued that the world was becoming multipolar, rather than unipolar. Where was the evidence of balancing against the US, they asked. Today the evidence of foreign co-operation to reduce American primacy is everywhere -- from the increasing importance of regional trade blocs that exclude the US to international space projects and military exercises in which the US is conspicuous by its absence.
And Fred Kaplan, writing on, discussing some of the findings of the most recent intelligence assessment put out by the CIA:

It is true that the US remains the only country capable of projecting military power throughout the world. But unipolarity in the military sphere, narrowly defined, is not preventing the rapid development of multipolarity in the geopolitical and economic arenas -- far from it.

In this new world, a mere 15 years away, the United States will remain "an important shaper of the international order" - probably the single most powerful country - but its "relative power position" will have "eroded." The new "arriviste powers" - not only China and India, but also Brazil, Indonesia, and perhaps others - will accelerate this erosion by pursuing "strategies designed to exclude or isolate the United States" in order to "force or cajole" us into playing by their rules.

America's current foreign policy is encouraging this trend, the NIC concluded.
Turning In Circles

that post, I examined in detail some of the actions taken in the past, and currently being pursued, that are provoking this level of response abroad. At the root, these policies, and the rhetoric supporting them, have germinated in a school of thought that deals in a taunting contempt for the rest of the world - or those nations that do not march in lock-step with our dictates. Thus, it is not surprising that the international community has responded in kind.

There have been some signs that the Bush administration is softening its stance somewhat on these matters, but no sooner did Bush return from his highly touted charm offensive in Europe, than he appointed notorious UN-basher John Bolton to the post of U.S. Ambassador to the United Nations. In a single move, he halted almost all of the momentum he had built up on his trip (as well as through internal personnel moves that have been leaning toward more internationalism), and sent a distressing signal to the rest of the world that his administration was all about business as usual - even if this position was hurting business.

Some have suggested that Bolton will be valuable as a critic, likening his prickly relationship with the UN to that of Daniel Patrick Moynihan. But this analogy is poorly reasoned and misses the point. Bolton is not a critic, he is a usurper. In fact, I can hardly think of anyone who would be a bigger disaster for America in terms of mending fences and healing alliances. As
Steve Clemons recently noted:

Here is the deal. I just don't think America's core interests can be served by this appointment. I don't mind a U.N.-skeptic going to the United Nations, but at least that skeptic needs to believe in the essential role and function of a reformed United Nations -- and needs to be a constructive force in achieving that goal.

I have thoroughly read through Bolton's statements and writing and can find nothing that indicates that he would be anything but destructive.
The Armchair Generalist, in the comments section at Liberals Against Terrorism, reminds us of these Bolton classics.

At a 1994 panel discussion sponsored by the World Federalist Association, Bolton claimed, "There's no such thing as the United Nations," saying that "If the U.N. secretary building in New York lost 10 stories, it wouldn't make a bit of difference."

In 1998, when he was senior vice president of the American Enterprise Institute, Bolton described the International Criminal Court (ICC) as "a product of fuzzy-minded romanticism [that] is not just naïve, but dangerous."

Regarding efforts to add a verification proposal to the bioweapons convention, Bolton told colleagues in 2001, "It's dead, dead, dead, and I don't want it coming back from the dead."
Steve Clemons also points to this well written article by Sidney Blumenthal.

"If I were redoing the security council today, I'd have one permanent member because that's the real reflection of the distribution of power in the world," Bolton once said. Lately, as undersecretary of state for arms control, he has wrecked all the nonproliferation diplomacy within his reach. Over the past two decades he has been the person most dedicated to trying to discredit the UN. George Orwell's clock of 1984 is striking 13.
At a time when US businesses, and foreign policy objectives, are being met with a burgeoning tide of skepticism, suspicion, and outright hostility, the Bush administration has to take serious measures to change the direction of the world's perception of us as a nation. This will require more than congeniality from the President on trips to Europe. It will necessitate real initiatives aimed at addressing the concerns of other nations, concerns around issues like global warming, the International Criminal Court, non-proliferation, the relevance of international law, and the significance of diplomatic ties and legitimacy in general. It will be hard work to change the flow of events, and will require a multifaceted and sustained effort. If the decision to thrust John Bolton onto the world stage is any indicator, our forward motion looks a lot like reverse. In the meantime, maybe American Express should consider acquiring a Visa.

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