The closing of American factories and the rising trade deficit with China isn’t enough. The latest spate of recalls from Chinese toy factories has led to a new era of “China Bashing.” You may remember that a similar term, “Japan Bashing,” was used in the 1980s. Someone needed to be blamed for the high trade deficit with Japan.

The mud slinging included referring to Japan’s government/business cooperation as an evil government conspiracy. Westerners complained that Japanese markets were “closed.”

The Japanese currency was blamed. Economists raced to revalue the yen, so that Japanese goods would be expensive in the West, thus less desirable.

Once the United States learned that semiconductors and microchips were being sold in the American market below Japanese manufacturing costs, antidumping measures were enacted.

However, don’t companies make a choice between market share and profit share? Why should it be illegal under U.S. laws to try to build a market?

Didn’t Bill Gates give away so much software that he then built the largest software company in the world?

Our Japan bashing culminated when a trade mission went to Japan and demanded open markets from CEOs there. During that meeting, Chrysler Motors CEO Lee Iacocca insisted the Japanese buy more U.S.-made autos. When Toyota’s CEO said U.S. manufacturers wouldn’t put the steering wheel on the correct side for the Japanese drivers (Japanese drive on the left side of the road), Iacocca said, “If you order more, then we’ll make them the way you want them made.” Of course, this made no sense to Japanese automakers, who spent 20 years researching the U.S. car market, and who still spend more than their U.S. competitors in that same research.

We’re now seeing the same arguments used to explain China¹s rise as the world¹s factory.

We’re hearing that the government controls everything. To large extents, this is true. However, the Chinese government is selling off its SOEs (state owned enterprises) rapidly to Western firms.

We’re hearing that the yuan needs revaluation. Critics of China say the Chinese market is closed. (Every market is closed unless you learn how to operate within it.) The China bashers have been fueled by recent news about lead paint (and other toxic poisons) being found in Chinese-made toys, pet food, vitamins and clothing.

There are U.S. consumer goods companies that are putting “China-Free” stickers on their products, to show there are no Chinese materials in the product.
But we need to ask ourselves some tough questions:

Are we really subcontracting to factories abroad, and then just walking away and saying, “Tell us when our shipment is on the boat?” We wouldn’t do that in our own domestic market. U.S. factories are closely scrutinized for health and safety violations, OSHA compliance, contamination, best business practices, fire escape plans and flooding, to name a few areas of interest.

U.S. companies have to spend money to be in compliance with all of these issues. They’re not doing it out of the goodness of their hearts. Going green is something we should have done 50 years ago. Let¹s not forget we sacrificed everything to make more products, cheaper and more commonly available.

So why is it shocking to us to find business practices abroad that we think are less scrupulous than ours? We’re also guilty of sending products that we find unfit to other (usually Third World) markets.

When products expire in stores (foods, baby products, chemicals, drugs) they’re supposed to be removed from shelves and incinerated. We can’t really delude ourselves into thinking that happens 100 percent of the time, especially when those products tend to turn up in Africa, South America and parts of Asia.

The latest quality scandal coming from China creates tremendous opportunities for clever professionals.

Public relations is a very small industry in China. Our large PR firms can and should be selling their services in China. Several of them already do.

Safety consulting will be a growing field. With our factories so highly regulated, every one of them should be in the consulting business. In addition to safety, they also can train Chinese factories about supply chain management, environmental protection products and services, RFID and other package/shipment tracking technologies, and quality control and other statistical testing techniques.

The weak dollar provides commodity export opportunities right now. Chinese are buying items such as wheat, cement and oil. We should be the ones selling it.

The greatest opportunity is to reform our way of thinking. Not all Chinese factories use lead paint, nor do they employ prisoners or children. The sooner we start calling these businesses by name, instead of blanketing them as “China,” the sooner we can fix the problems and appear more market-savvy.

The Colorado Rockies are in the World Series. It’s a time of joy for Rockies’ fans and all of Colorado.

While we all can and should enjoy the celebration of our local heroes, think about how other cultures and countries might perceive our enthusiasm. Such knowledge is useful to the international negotiator, as it will help you to connect better with your foreign business associates.

Europeans jest that the United States is the only country in the world that refers to a national sporting championship as “The World Series.” Simply being aware of this will help American business people bond with their European counterparts. And if you’re the first to point out this cultural nuance, you’ll get kudos from the people on the other side of the table. “The Super Bowl” is a much less ethnocentric term.

American ethnocentrism often is greeted with contempt and dismissal. In the minds of Europeans, no one country could possibly be as fabulous and incredible as the United States likes to present itself.

In business, Americans like to pepper their marketing lingo with ethnocentrism and extremes. “World’s greatest car,” “king of all beers,” “the number one golf club (which doesn’t mean best-selling)” “the purest, the best, the most amazing … ”

But when Europeans and Asians hear this language, they often dismiss it as American extremism and exaggeration. The lesson? If you down play many of these extremes, it will ingratiate you further with your foreign counterparts. They’ll see you as less excessive and more realistic.

If you look at how some of our overseas competitors advertise their products, you will see slogans (translated) such as: “The Driver’s Car,” (Germany); “One day, you won’t drink a beer, you’ll drink a Grolsch” (The Netherlands); “It’s simply just a good wine” (France); and “when you are friends, you have Meiji milk” (Japan). Notice how much subtler these slogans are when compared to: the biggest, the best, and the greatest.

We are slaves to our history and culture. Thus we’re often tainted with our own successes and interpretations when we head into overseas negotiations. Our counterparts are prepared for us to ramble on and on about our successes, and how brilliant our management is.
There are ways to avoid falling into this trap. One way to differentiate yourself is to use such phrases as:
• “This is our way of handling this situation. What is your way?”
• “This is why our customers buy from us. Why do yours buy from you?”

Framing your dialogue this way once again will distinguish you from the “world’s greatest business people” who head overseas.

Another example of American ethnocentrism is how we describe a business or business unit. Companies often use dollar figures to demonstrate success: “We did $100 million in Asia last year.”

Europeans would rather hear how many people you have employed in Europe in the last year. “We are 125 people now” would be the Swedish way of presenting success. Additionally, if one has to bring up sales figures, it’s better to do it in the local currency, as many business deals outside the United States are transacted in Euros.

“Wall Street sneezes and Europe gets a cold” goes the old expression. This is true. The U.S. financial markets have a large influence on currency fluctuations and market capitalizations abroad. However, that doesn’t mean that if American business is bad, then all business is bad. Remember that one of the reasons Europe and Asia react to Wall Street is due to the foreign investment in the U.S. market.

Be aware there’s a lot of international investment in the U.S. stock market, and the same is true for stock markets in London, Frankfurt, Tokyo, Warsaw, etc.

American humor will rescue you in a difficult situation. Americans love to joke about things they don’t understand. We make fun of every country, and we make fun of ourselves. While the humor itself will rarely translate, this genre of poking fun at oneself is an advantage overseas, especially since the American mentality is the subject of many jokes. Being able to joke about one’s own culture, and not be offended at the thoughts of others, are necessary tools for any business person.

Add a genuine inquisitiveness about the country or culture you’re visiting, and you will measure up to — or even exceed — many of your competitors, be they foreign or domestic.

I was offered a business opportunity with a new firm. The firm had the following problems:

1) They were under-capitalized. They were only at 10% of goal for year’s end, which was two months away. So poor marketing, poor sales, poor sales forecasting.
2) The firm’s website was difficult to understand. It spoke more of the company’s history and brilliance of the players. It spoke very little of how the firm would help its clients!
3) The software product that they have is perhaps 5% better than one I can get for $39/month with unlimited users. They are asking 10’s of thousands of dollars for this.
4) They were asking me to sell their product, which competes with my own.
5) They were offering me a small (below market) percentage of the sale to my clients. Whereas if I sold my own services, I would receive 100% of the revenue.
6) Their sales director couldn’t make a sale. Rather than fire her, they are repurposing her into another department.
7) They completely misunderstood the necessary time to market to have a success.
They wanted me to work on my own, no phone, no money up front, no business card.

Can you guess what industry this firm holds itself out as expert in?

Corporate Strategy!!!

Many languages have a masculine and a feminine form. The feminine form is usually more indirect

When marketing a product or service internationally, a host of marketing issues come to mind. These issues are separate from staff, legal, technology, and product issues
Let’s look at the categories of marketing issues a firm may encounter when marketing and selling abroad.

Market Research: Understanding Buyers/Competitors/Market Forces

Is the market organized, can you find information? Where are the written sources located and how can they be obtained?

What is the size of the potential market, and is there an expressed market need?

What languages does the market speak?

What are some of the available sources of information on potential buyers, written and personal, public and private? Is this information reliable?

How might an organization which is a potential buyer be structured?

Where in the organization will the decision be made to buy?

What is the best mode of entry into this market, and are you comfortable with it? (e.g. licensing, co-production, co-branding, direct export).

Advertising

Is advertising generally an acceptable means of company and brand promotion? Is there an image of your business or industry that is expected?

What characterizes a tarnished business image–one that would not make it through the front door? For example: KFC sounded too military when they opened up in Germany.

Is there a point at which the amount of advertising becomes offensive, or so ostentatious that it is self-defeating?

Are there any cultural taboos regarding message content, including choice of words, colors, and graphics? For example, yellow is the color of pornography in China.

Are there advertising/promotional media that are considered essential for the participant’s particular industry? (For example, if European publishers are not represented at the Frankfurt Book Fair they lose prestige, reputation and orders).

Can you re-purpose any existing advertising?

Do you need local advertising, websites, business cards, or addresses?

Networking and Contacts

Are introductions essential?

What are expected networking methods?

What is the attitude toward mixing business with pleasure? For example, in Asia, business IS pleasure.

Is club membership important in meeting key business people?

How involved does your family need to be? For example, Thais often work family to family.

Sales

Are connections necessary in this market, and if so, is your firm connected? Can you purchase these connections?

Does this market require local sales talent?

Is the sales person held to a different ethical standard than is the population in general?

What traits or qualities are considered admirable for a sales person to display?

What behavior is considered to be offensive?

Sales people in any culture must be assertive to a degree. At what point does assertiveness become interpreted as aggressiveness in this culture?

Are there specific selling techniques in this industry that are particularly effective in this culture?

How widespread is the use of American English in commerce?

How serious is a lack of fluency in the customer’s language or dialect?

The Purchase Decision

Is this an individual or collective decision? For example, Japanese work in consensus. There is rarely a single decision maker.

What is the pace and timelines of decisions? Americans will find that most countries take much longer to decide.
What behavior might be interpreted as “American impatience,” and what would the reaction be?
What priority might be assigned to:
o reputation of the vendor
o perceived quality of the product/service
o perseverance
o dependability of the vendor, e.g. timely delivery
o kickbacks, bribes
o personal qualities of the representative
-trustworthiness
-responsiveness to requests, complaints
-other
o interest in the customer’s personal life
Are contracts used? Even in markets that use them, they may also be ignored, violated, or changed continuously.

Customer Relations

Other than consistent timely delivery of quality products or services, what are acceptable means of maintaining good customer relations?

Should marketers expect to:

Give gifts? And if so, would they be personal or with a business logo? When should gift giving take place? And if so, how does a firm balance gift exchanges with personal and company ethics?

Engage in business entertainment? And if so, what kind?

Do favors asked by the client?

Spend extended time together?

In other words, what kind of relationship does your customer expect to develop with you?
What are the limits of the relationship? This can be a tricky area. Many years ago, a Chinese CEO asked me to teach his daughter English (and this can take years)!
How frequent is on-going customer/vendor contact for the purpose of maintaining the relationship?

How much information of a proprietary nature does your customer expect and want? For example, to build cars for the Chinese market, marketers often have to give away all of the IP associated with the project.

The answers to these questions industry market, and company specific. Yet having a grasp of most of these issues will lead to very animated discussions, and hopefully, put you ahead of the competition. And competition can be outside or inside the country at hand.

Chinese and Japanese are as similar as British and Portugese!

With more and more international deals being conducted in English, the need for professional interpreters seems to be less relevant. Nothing could be further from the truth. We are seeing more inexperienced people being thrown into negotiations than ever before. And even if our foreign will speak English with us, having an interpreter present can be seen as a tremendous courtesy. It allows our counterparts to occasionally use their mother tongue, and it shows an investment and consideration on our part.

The top 10 nuggets for using an interpreter correctly are:

1) Pay them. Use your own interpreter.
Don’t use your counterpart’s interpreter. When that happens, you have no control over what you are hearing, and what the other party is hearing. Editorializing is the enemy here. And the costs associated with using an interpreter are usually minor compared to the costs of completing your transaction. If the other parties bring interpreters to meetings, that’s fine. The more there are the more accuracy you can expect

2) Pick a pro.
Just because someone in your company speaks Polish and English, doesn’t mean she is an interpreter. An interpreter’s job is to faithfully and fully interpret everything she hears. A true interpreter has been trained, has experience, and is a master at providing service. All too often we hear of firms who may employ a Chinese engineer, and ask him to interpret (and sometimes even negotiate) for them. This is an enormous mistake. And if that engineer does need to be present at the meeting, he has his own business objectives to accomplish.

3) Train them in your business
Even though you may be dealing with a professional interpreter, who is fluent in your language and the host’s, this individual will need training.
Your interpreter needs to understand your business. How does your company prosper, what are your competitive advantages, and what taboos may exist in your corporate culture? Technical jargon should be discussed in advance.

4) Train them in your style
Your style is another area you need to discuss with you interpreter. Are your negotiations loose and casual, or formal and prescribed? Do you use humor (which rarely translates)? Are you gregarious and friendly?

5) Train them in your goals and objectives
You need to let them learn your objectives in the negotiation, as well as fall back positions you need to take. What do you hope to accomplish in the meeting, and what will you do if you can’t? Are you dealing with a situation of conflict, formality, or exploration?

6) Determine which style of interpretation suits your personality.
There are those that interpret simultaneously, and speak as you are speaking. And there are interpreters who wait for you to finish phrases, sentences, or even complete thoughts, and then translate. Try both methods and see which fits you.

7) Feed them, rest them, and treat them well.
Interpreters are people. They get tired, hungry, need breaks, and need positive reinforcement. Interpreting is a difficult job. If an interpreter gets distracted in a meeting for even a few seconds, the consequences can be disastrous. Make it clear to all parties that frequent breaks are needed. And if at all possible, have more than one interpreter for long meetings.

Clearly explain your expectations to the interpreter.
Discuss the long hours that may be needed, the fact that you may need him during times when business entertainment is happening. Discuss his availability for travel. Brief him on the personalities of the people he will be interpreting for. When eating together, remind him to take frequent but small bites of food during dinner! Your counterpart will often bring up social or business issues while the interpreter’s mouth is full!

9) Make certain you like and trust your interpreter.
You will be counting on her to get your message across clearly. You will be trusting her with inside knowledge about your business. You will at times be putting your safety into her hands. Beyond this, you will be spending a tremendous amount of time with her. You may be starting in the morning and working well into the night. You may be on planes and trains with her for hours. If your interpreter is difficult, untrustworthy, or just plain annoying then find another one. An interpreter is almost like an appendage.

10) Learn from her
While an interpreter shouldn’t be changing what you say or what you are supposed to hear, they can give you tremendous insight into the culture and personality of whom you are dealing with. In one instance, my firm concluded a negotiation in Ukraine. My interpreter took me aside and suggested we drink a ceremonial Vodka shot. When I asked her to order it, but she explained that a man (not a woman) must request it from the waiter. This cultural lesson only helped solidify my relationship with the Ukrainians.

And if you need to use an interpreter, remember to apologize to the locals for not speaking their language.

Top 10 mistakes made in offshore manufacturing

With international offshoring numbers impossible to count, we know only that the trend of offshore production is increasing, with no end in sight.

Though thousands of companies begin an offshoring program every year, it’s astonishing to hear some of the horror stories and the large amount of dissatisfaction.

Experts say offshoring dissatisfaction rates range from 10 percent all the way up to 100 percent.

Once a critical back-office process is farmed out, things may indeed go wrong. But avoiding these 10 pitfalls will greatly increase a firm’s chances of offshoring success.

The top 10 mistakes to avoid:

(1) Having the mindset that the customer is always right.
Therefore, since we are the buyers, the sellers must do everything our way. They need to adapt to us. This flawed thinking assumes that the factories are in fact customer-oriented, when they may owe their allegiance to political parties or factory managers. Additionally, they may have no idea how you define customer service and client adaptation.

(2) Relying solely on low labor costs to decide where to produce.
Can you get the goods delivered in time? Are supplemental services available to you? (These can include other suppliers, good transportation, livable hotels, working telecommunications, supporting banks and a legal system that makes sense). If low labor cost was the sole determinant for offshore production, then all that work in China would be produced in Tanzania.

(3) Using inappropriate people, and having no project champion.
Often the wrong people are chosen to manage offshore projects. Many cultures respect seniority, need continuity in whom they’re dealing with, get confused when the client changes staff and don’t express their concerns.
A true project champion will receive training in the culture in question, visit frequently and get to know the people who are running the factories as well as the local business people and government figures. And that champion is expected to be involved and working on the project for many years.

(4) Thinking in short-term time horizons and paybacks.
Anyone who has enjoyed offshoring success knows that the startup and transaction costs are huge, and it will take many production runs to amortize those costs.
If we assume a 30 percent to 40 percent savings in manufacturing lawnmowers, how many will have to be built to justify startup costs of, for example, $500,000 to $1 million?

(5) The belief that, “We signed up a factory, so our work is done.”
A relationship has to be established and nurtured so that questions can be asked, progress reports can be made, samples can be examined and improved, and quality-control issues can be addressed in a timely manner. Firms can’t engage in these activities when their business partners are strangers.

(6) A lack of commitment.
Commitment is shown in the resources a firm will dedicate to a project. These resources come in four ways: money, the involvement of the correct people, a true cultural understanding and patience. A shortage in any these ingredients could lead to disaster.

(7) Adhering to the adage that “A deal is a deal.”
This assumes no tolerance for different ways of doing business, and no flexibility. If that’s the case, what will a firm do when a supplier needs to change the price two months into the project? What will you do when the factory’s prices on raw materials suddenly increase? How will you work with your factory to defend against competitive threats?

(8) A “one-country” approach.
What happens if there’s political or economic risk? What if a large competitor comes in and buys your factory? What will you do if a large tariff is placed on your offshore country’s exports?
Examples of political risk include a change in government — perhaps a new dictator — a nationalizing of assets (India did this in the 1970s), or something as mundane as import or export quotas.

(9) Belief in any IP protection at all.
Forget IP defenses, because there are none. Instead of adopting a coercive litigious mindset, take the money you’re spending on legal fees and use it for relationship -building business trips to get to know your partners.
A relationship built on mutual benefit and trust is your best bet to protect yourself.

(10) Using offshoring as a substitute for innovation at home.
When offshoring becomes the sole emergency measure for a firm’s survival, the firm is doomed. When firms don’t innovate, learn and re-learn their markets and customers’ needs; revamp their advertising; hire the right people; and expand into new markets, then offshoring to a low-labor country is only a temporary solution.

Remember that the low-cost producer niche is tough to defend, as there always will be a cheaper producer lurking in your market.