Here’s how to properly shake hands in 14 different countries

By Kathleen Elkins and Skye Gould 

In Brazil and the United States, a firm handshake is expected. This would be off putting in the UK, as the British like to greet each other with a lighter handshake.

Every country has a unique set of customs, and it is important to recognize and respect cultural differences, especially when conducting business around the world.

We created a helpful guide for handshake etiquette across 14 countries, thanks to information from BBC and Mental Floss:

(Business Insider)

As Emerging Markets Slow, Firms Search for “New” BRICs

by Richard Leggett, HBR.org

By all measures, emerging markets are having a tough year. The Economist bemoans their “great deceleration” and HBR featured a well-researched study on how multinationals are becoming less global. However, multinationals still expect their emerging market portfolios to deliver robust growth and increasing profits based on the memory of their performance in recent, more bullish years.

In this new operating environment, I find more and more multinationals looking to new frontier markets for growth while demanding profitability from their emerging-market operations. Using our 200+ clients as a proxy for global sentiment, I find the pivot towards profitability to be significant: 37% of MNCs are focused more on profitability than growth in emerging markets, up 16% from just last year.

To accommodate these new market dynamics, executives are adopting a dual strategy of “going deep” in the BRICs while simultaneously and aggressively pursuing the next frontiers.  Let’s see how this story is playing out in the different emerging market regions.

Asia Pacific

Asia offers a good example of this push to frontier markets. I remember a conversation I had with an executive in 2000. I asked which markets he was focused on outside of China and India. He responded, “for us, China and India are Asia.” It’s been awhile since I heard a similar response, as companies are now expanding aggressively into ASEAN (Malaysia, the Philippines, Singapore, Thailand, and especially Indonesia). This is the result of a growing and affluent middle class that supports private consumption and is bolstered by favorable demographics; over 50% of the population is under 29 years old and approximately 52% live in urban areas.

However, there are some risks. For example, on the Indonesian archipelago, supply chain and distribution logistics present serious challenges — with logistics costs at 24% of GDP, compared with the regional average range of 9-11%. Difficulty in distribution is not unique to Asia and reflects a global trend. According to our recent benchmarking survey of more than 100 senior executives, 94% of executives sell at least partially through distributors, accounting for about 50% of their revenue in emerging markets. Additionally, managing corrupt business practices often makes it difficult for MNCs to realize growth potential in the short term.

Latin America

As executives become more sophisticated in their understanding of these countries, they balance their focus between looking to expand in new markets as the old standbys–namely Brazil and Mexico–have recently slowed to disappointing growth rates. For example, Peru’s rising middle class offers an increasingly attractive choice for consumer goods and retail MNCs looking to diversify their investments beyond established markets.

Quantifying the impressive rise of the middle class, FSG calculates private consumption in Peru is set to grow 54% between 2010 and 2015. Real increases in personal income and access to credit will support growth across all retail categories, but the automotive, consumer electronics, and food and drink sectors will outperform, as consumer taste becomes more sophisticated.  The consumer sector has already begun its high-growth phase as over 36 new shopping centers have been built in Peru over the last 10 years. The three main grocery retail chains in Peru grew from 57 stores in 2001 to 155 stores in 2010.

Eastern Europe, Middle East & Africa

Eastern Europe, the Middle East, and Africa follow the same pattern of slowing growth in traditional strongholds, with opportunities in previously untapped frontier markets. In Russia, having made significant investments in the two largest cities, we are seeing companies expanding into regional markets by relying on third-party distributors, similar to the storyline in Indonesia. Growing beyond Moscow and St. Petersburg allows companies to build market share, strengthen their competitive position, drive profitability, and contribute to long-term sustainability in Russia – and it’s worth remembering that 64% of Russia’s GDP sits outside of the these two cities.

Sub-Saharan Africa is in many ways the last great frontier. Here multinationals are reacting to South Africa’s stagnant growth by looking to the hottest frontier markets globally: Nigeria and, to a lesser extent, Angola. The region has piqued executives’ interest, as it benefits from improving business conditions, demand for infrastructure projects, and a strong demographic profile.  Nigeria is especially attractive, as it is poised to overtake South Africa as the largest African economy afterits GDP grows 40-50% as a result of the government changing the way it measures GDP at the end of the year. Nigeria’s automotive industry is booming, as international car makers are expanding their dealerships and setting up local assembly plants.  Case in point: Ford is planning to introduce at least five new models after seeing a 33% increase in sales in the first half of 2013 in Nigeria. Mercedes-Benz and Skoda have recently expanded in the country with new showrooms and models.

In emerging markets, what began primarily as a growth strategy has evolved to a dual mandate of growth and profitability. Executives must act fast to capitalize on the final frontiers, while market share is still there for the taking. Although each region exhibits similar potential, success for multinationals will depend on identifying the most attractive opportunities for their unique businesses and adopting management best practices that account for the local nuances of each market.

RICHARD LEGGETT

Copyright © 2013 Harvard Business School Publishing. All rights reserved. Harvard Business Publishing is an affiliate of Harvard Business School.

Brics Nations Take Steps on Currency Trade, Bank

Brazil and China Set Currency Swap, but Bloc’s Idea for Development Bank Encounters Some Obstacles

By PATRICK MCGROARTY in Durban and DEVON MAYLIE in Pretoria, The Wall Street Journal

ReutersSouth Africa’s first lady Bongi Ngema toasts China’s first lady Peng Liyuan as President Jacob Zuma looks on.

Members of the Brics group of emerging markets took steps to trade their currencies more freely and to establish a joint development bank, seeking to counter the influence that developed countries exert over the global economy.

Brazil and China agreed Tuesday at a summit of Brics leaders in Durban, South Africa, to use their central banks to swap up to $30 billion in Brazilian real and Chinese yuan over the next three years, allowing businesses to trade between the two countries without converting earnings and investments to U.S. dollars, the standard conduit of global trade.

Brazil’s finance minister, Guido Mantega, said the arrangement, which the countries have been working toward since this past June, would give them a means to exchange currencies “independent of the conditions of financial markets.” He also said the Brics countries—Brazil, Russia, India, China and South Africa—were close to an agreement to pool some foreign-currency reserves in case of a balance-of-payments crisis.

The bloc’s move to create a new development bank, however, was weighed down by disagreements over funding and management, said Russian Finance Minister Anton Siluanov. “On the whole, we agreed that we will continue to work on creating a Brics bank once the unresolved questions are answered,” the Interfax news agency quoted Mr. Siluanov as saying.

South Africa’s finance minister, Pravin Gordhan, added that he was pleased with the negotiations. “We’re on track,” he said.

South African officials want a new development bank to fund infrastructure projects that the International Monetary Fund and the World Bank have overlooked. Larger Brics members, such as China and India, are eager to establish an institution that could extend their influence deeper into Africa and other emerging markets where their economic interests are expanding.

The Brics’ slow march toward establishing their own bank illustrates their struggle to move past populist rhetoric to true cooperation between powerful and sometimes adversarial nations. Each is eager to reap the benefits of a larger trade group—and all are fearful of being flooded with products from the others, particularly China.

“What we now seek to address jointly is to find the means towards a more equitable balance of trade,” South Africa’s President Jacob Zuma told reporters in South Africa’s capital, Pretoria, after meeting with China’s President Xi Jinping. “Africa is counting on the People’s Republic of China for support in the continent’s development.”

Mr. Xi acknowledged China is pursuing its own commercial interests in Africa. “We each see the other side as an opportunity for our own development,” he said.

According to the proposals discussed Tuesday, each country would likely contribute up to $10 billion to the bank, an official said, speaking before plans were to be approved by the national leaders gathering Wednesday. The bank would focus on infrastructure development, he said, both in the five-nation group and in emerging markets where they want to do business.

But economists and business leaders said an initial pool of $50 billion wouldn’t be enough for the bank to make its mark in Africa or elsewhere.

“At this point it’s somewhat symbolic,” said Anthony Thunström, chief operating officer for accounting firm KPMG LLP‘s Africa investment program. “Its potential will only be realized when it’s better capitalized, and I think that’s going to be a longer-term project.”

More specific decisions—including which country will host the bank and where it will invest—will be postponed at least until the bloc’s next summit meeting in Brazil in 2014, he said.

“There is general agreement that there is a need for this,” said the official involved in the negotiations. “Creating a multilateral institution takes quite a long time from being an idea to being set up.”

 

Double vision: Netflix changes its stripes for foreign markets

By: Sarah Treleaven
From: Business without Borders

A Q&A with the author of “Netflixed”

When Netflix introduced a DVD-by-mail program in 1998, it changed the way people consume entertainment. But now, in an increasingly digital world, Netflix faces a different landscape and increased competition. Gina Keating recently published Netflixed: The Epic Battle for America’s Eyeballs. In this interview with Business without Borders, Keating comments on the impact of leadership styles and why Netflix is finding it harder than expected to go abroad.

 

comments on the impact of leadership styles and why Netflix is finding it harder than expected to go abroad.

Netflix CEO, Reed Hastings
Photo: Getty Images

I understand that several people at Netflix refused to speak to you for this book. How does what you’ve written differ from the company’s preferred mythology?

It’s pretty different. The main thing is, when I started interviewing people about the history of the company, this name kept turning up: Mark Randolph. I had covered Netflix for eight years and this was very curious to me. It turns out that he was one of the main innovators of the consumer interface, of the idea of renting DVDs online. The idea that the concept behind Netflix was born when Reed Hastings got a late fee [from Blockbuster] is just wrong. Once I found out about that, it was not a happy thing for the company.

Why has Netflix, which once appeared so promising, been so volatile lately?

My thesis is that when Marc Randolph and Reed Hastings were both leading, the company had the perfect parents. Randolph was the big idea guy, the consumer-facing guy who loves people and wanted to put out a product people couldn’t resist. And in Hastings it had a guy who could take those ideas and optimize them for the Internet; he turned those ideas into code. That’s what made Netflix so powerful. When the company lost Randolph and his sensibility, the engineer took over and a lot of mistakes came from the lack of someone looking out for the customer.

Reed Hastings has been called America’s worst CEO, but you also call him a genius. What makes him such a polarizing leader?

First of all, Netflix is one of the most shorted stocks. Time after time, people have underestimated that model.  Hastings is a visionary, and he’s often three or four steps ahead of his peers, but there’s resistance to his ideas – not only in the media industry but also in the analyst community. The other part is that this guy just doesn’t care what anybody thinks about his leadership style or ideas for where the company should go. That’s threatening to people. He’s made mistakes, and one of those was pushing out a lot of the management team that held his hubris in check. That’s been a big problem since 2010.

What are Netflix’s key challenges now?

They have many. Carl Icahn buying so many shares is not, in my opinion, a positive thing. [Icahn is a billionaire and former corporate raider who in November purchased nearly 10% of Netflix’s shares] In my book, I talk about the effect Icahn had when he made a similar investment in Blockbuster and it completely took the company off track. I think he thinks that Netflix will be bought; if that doesn’t happen I’m a little concerned about how he plans to get out of that investment and still make money. It could be very harmful to Netflix. The second challenge is that the competitive landscape is much different than when they first started streaming. They have to compete for content against much bigger players. They’re going to have to be so nimble to stay afloat. I think that Icahn’s involvement in Blockbuster prevented them from responding in a quickly changing landscape.

Can you tell me a little about their international expansion? Have they had much luck moving into other markets?

They went into Canada first and that service grew incredibly quickly; they arrived just at the moment that Blockbuster was retreating there. Latin America has been a little more difficult because the consumption patterns, technology and markets are different. It’s a little more trouble than they were expecting. They just launched in Scandinavia and it’s been more costly than they anticipated. But they’re reaching a saturation point in the U.S. and they have no choice but to go overseas for growth.

How are the international markets different?

International markets have all been streaming-based and that’s part of what makes them so appealing to Reed Hastings. The international markets have become the paradigm for what Netflix will be — they’ll be able to go in and negotiate content based on streaming only. Hastings really envisioned that the television of the future would be a lot like an Internet application — and that’s really what Netflix is in every country but the U.S.

You’ve mentioned that one of Hastings’ biggest weaknesses is his difficulty understanding consumer response. Has that been an obstacle in trying to cater to other cultures?

I can’t really speak to that, but I can tell you how they make the decisions they make. They’re extremely data-driven and their data is excellent. The Netflix website collects behavioral data as people navigate it. So, for example, if you watch a whole bunch of TV episodes on a weekend, during a certain time of day, and you fast-forward through certain episodes or certain parts of the episode or stop and watch a certain actor a few times, the algorithms attached to that make assumptions about you that are so accurate that I don’t think the human brain can even process it. And that’s how they go about offering people certain movies. Hastings isn’t making these intuitive leaps about his international audience; he’s watching them. But he has 15 years worth of data on his U.S. customers and almost nothing on his international customers, so there will be a learning curve there.

How can Netflix be used as a model for anyone who seeks to drive a service online?

The main lesson from Netflix is that the technology has to serve the consumer. There is a remove from the consumer when you sell something on the Internet because they can’t see it, smell it or touch it. You have to come up with a very compelling offering driven by an emotional attachment to the company and the experience they create. Randolph understood that, and that’s part of the reason Netflix grew so fast. They took us on a journey to places we didn’t think we would go. How many people had previously watched a lot of Bollywood or anime or Chinese martial arts before Netflix came along?

Keys to ABCs – “Your Company’s Keys to American Business & Capital”

Emerging Markets Business: Keys To America™

presents

Keys to ABCs 

“Your Company’s Keys to American Business & Capital”

Master Class Tour Across 42 Emerging Markets Kicks Off The Emerging Markets US$5Billion Business  Challenge!

As part of  the EMERGING MARKETS BUSINESS: Keys To America™ initiative to help emerging market countries create $5 billion of tangible economic value over the next two years, Fluent In Foreign Business, along with the Princeton Council on World Affairs and RSL Media are pleased to announce “Keys to ABCs”  – a 42-country educational tour beginning November of 2012 and continuing through May of 2014.

This unique tour is the first step of the Business Challenge program and will feature a series of 2-day comprehensive master class workshops titled:

• “Your Company’s Keys to American Business & Capital Markets”
• “Entering North American Business Markets”
• “Preparing Your Company for International Business”

 The sessions will be taught by me personally and a cadre of Fluent In Foreign Academy’s experienced instructors.   The unique workshops and comprehensive will provide qualified corporate participants in those countries with a unique opportunity to participate in the Emerging Markets:Unlocking America Challenge™, to diagnose their companies’ present “international business IQ” and to develop practical useable strategies to position their organizations for access to the International Financial and Strategic investments, Low-interest Loans, Technology Partners, World-renowned Franchisors and Lucrative Customers.

 (READ  MORE http://wp.me/P1iIhX-aa )

Emerging Markets

© 2012 by Daryl D. Green Nu Leadership Revolution Blog

I remember listening to Kenny Rogers sing “The Gambler” growing up in my community.  As many of you know, Rogers is a country artist.  I was well aware that if my friends knew I listened to country music, I would have lost my ‘cool card’ among my rapped-crazed peers.  Today, the lyrics of “The Gambler” still guide my business strategy.

“You got to know when to hold ‘em, know when to fold ‘em
Know when to walk away and know when to run
You never count your money when you’re sittin’ at the table
There’ll be time enough for countin’ when the dealing’s done
Every gambler knows that the secret to survivin’
Is knowin’ what to throw away and knowing what to keep” 

If most senior leaders would guide themselves with this simple lyric, their organizations would be better off.  For example, you find a good spot in the lake where there are an abundance of fish.  You keep this secret, but then start sharing it with a few friends. Sadly, the word gets out about your special spot.

Finally, you find yourself squeezed out from your favorite spot.  It’s a hot spot now.  The fish are being topped out.  Yet, people continue to fish there despite obtaining less fish and requiring more time to get the same results.  Even though you love the spot and have a sentimental connection with this area, you abandon this location and move to another unknown location that shows plenty of potential.  You moved not because you wanted to move; you moved because you are a fisherman who loves catching fish.

Likewise, today’s businesses are operating abroad in order to catch more fish and obtain more profitability.  U.S. multinational companies, like Coke Cola and McDonalds, realize that America’s market is pretty saturated and riddled with hypercompetitions.

How many more burgers or cokes can Americans continue to consume?  Additionally, companies hope to lower their costs by searching for a lower cost labor force.  Charles Hill, author of International Business, suggests that outsourcing is systematic:  “By doing this, companies hope to lower their overall cost structure or improve the quality or functionality of their product offering, thereby allowing them to compete more effectively.”[1] Therefore, emerging markets become more attractive.

The fragility of today’s world’s economies demands that businesses act more prudently and decisively about their market strategies. Emerging markets, which were once stigmatized with the name ‘Third World’ markets, will be dominant players in the world’s future economy.

The top four emerging markets include China, Brazil, India, and Russia.  According to Goldman Sach’s projects, these countries will overtake the seven largest industrialized countries (United States, Japan, Germany, France, UK, Italy, and Canada) by 2040.  Antoine va Agtmael, author of The Emerging Markets Century, argues that the prominent role of emerging markets is in future commerce.

He predicts revolutionary changes due to these emerging markets and equates these changes to the second industrial revolution.  Some of the key success factors for these emerging companies are the following: (1) an obsessive focus on quality and design, (2) brand building, (3) logistics, (4) being ahead of competitors in adapting to changing market trends, (5) acquisition savvy, (6) sustaining an edge on competition in information technology, (7) clever niche strategies, and (8) unconventional thinking.[2]

Additionally, these companies have a hunger to compete since their success will improve their way of life. Sadly, many Americans do not understand the level of poverty that motivates these countries. Agtmael further notes: “A new breed of companies will play a critical role in producing this shift; a select number of which truly deserve to be regarded as world class.

In the face of these firms’ vigorous emergence on the world stage, there will be a temptation to go into protective mode….”[3]  However, globalization makes retreating a passive signal of being defeated in a world market.  Therefore, U.S. companies like IBM and Google may see themselves fighting to keep their dominance from unrecognized firms from these emerging countries with a hunger to topple established U.S. businesses.

Discuss how U.S. companies can effectively address the competition from firms located in emerging markets.

[1] International Business by Charles Hills

[2]The Emerging Markets by Antoine va Agtmael

Brazil’s answer: spend, spend, spend

June 27, 2012 5:48 pm by Jonathan Wheatley, Financial Times

Eight thousand trucks; 3,000 tractors; 30 mobile missile launchers; 3m items of school furniture. These are some of the things the Brazilian government will buy in an R$8.4bn ($4.1bn) spending spree announced on Wednesday.

It’s an extraordinary programme. Not just for its size but also for some strangely candid admissions it makes along the way – and for what it says about economic policy.

The package is dubbed the “PAC Equipamentos“  – PAC from the government’s flagship accelerated growth programme (PAC in Portuguese) and equipamentos because that is what it will buy. Of the R$8.4bn in the programme, about R$6.6bn is additional to spending already planned.

So, what makes it odd?

First, its language. It arrived in our inbox as “measures to tackle the deceleration of the economy” (although over on the finance ministry website the target is “deceleration of the global economy”).

“These anti-crisis measures strengthen our condition to overcome the difficulties of the international scenario,” the programme says, adding that they are being introduced “when the Brazilian economy is already returning to growth”. So the finance ministry can’t quite admit that Brazil’s economy is in trouble, though the hints are pretty strong.

Second, its take on foreign exchange policy. While the government has made no secret that it is fighting a “currency war” with the unfairly devalued currencies of its trading partners, the central bank has always denied that it targets or manipulates the exchange rate. Yet the programme contains a chart – “Permanent action on the exchange rate” – showing just how effective and, er, permanent this action has been.

Third, its inclusion of a reduction in the TJLP, the long term interest rate that the BNDES, the state development bank, charges for its lending (borrowers typically pay the TJLP plus a margin charged by the commercial bank handling the loan). This will fall from 6 per cent a year to 5.5 per cent. Bear in mind that (according to the programme presentation) market lending rates are an average of 25 per cent a year to the corporate sector.

The presentation says cutting the TJLP will deliver “yet another reduction in the cost of finance to investors borrowing from the BNDES”. It will also deliver a bigger bill to the taxpayer and a further distortion of Brazil’s credit market, making it even harder for those companies not favoured by government policies to raise finance.

The PAC Equipamentos is further confirmation that the government believes the way to encourage investment and growth is to pick winners and back them at the expense of everyone else. No doubt bosses and labour unions in the automotive industry will be delighted. Those labouring in other parts of the economy – who would be more grateful for a level playing field and removal of across-the-board distortions such as Brazil’s tax and labour systems – will be dismayed.

Still, nothing like a crisis – especially one you deny is really there – to bring out the old instincts. The Brazilian state is settling ever more comfortably into its position at the centre of the real economy.

USTR.gov August 26th, 2011

Ambassador Marantis Emphasizes the Importance of Trade Agreements for Georgia Businesses at the Port of Savannah August 22, 2011 This afternoon, United States Deputy Trade Representative Demetrios Marantis traveled to Savannah, Georgia to highlight the job-creating benefits of the pending trade agreements with Korea, Colombia, and Panama. Ambassador Marantis was welcomed to the port by Savannah Mayor Otis Johnson, as well as Georgia Ports Authority Chairman Alec Poitevint and Executive Director Curtis Foltz. Read more USTR Announces Agreement between the U.S. and Israel to Reaffirm Commitment to Expand Bilateral Trade and Investment August 26, 2011 Washington, D.C.- Deputy United States Trade Representative Ambassador Miriam Sapiro and Israel’s Director General of the Ministry of Industry, Trade, and Labor, Sharon Kedmi, this week reached agreement on a process to further their shared commitment to expand trade and investment between the United States and Israel. They applauded progress on trade and investment issues since a meeting between Ambassador Kirk and Minister Ben Eliezer in Washington in October 2010, and agreed to a plan that will guide future discussions and develop further as those discussions evolve. They also agreed to redouble their efforts to make further progress ahead of the U.S.-Israel Free Trade Agreement (FTA) Joint Committee meeting, to be held later this fall. “The Obama Administration places great importance on the relationship between our countries, and we will continue our collaborative efforts to expand trade and investment opportunities for American and Israeli exporters and investors,” said Ambassador Sapiro. The two sides also agreed to explore ways to realize fully the potential benefits of the U.S.-Israel trade agreement, including through the further liberalization of trade in services and agriculture and the removal of trade-restrictive measures. Ambassador Sapiro and Director General Kedmi also committed to consider cooperation in other areas, including addressing regulatory issues which might be impeding the movement of goods, services and capital between the two countries, in consultation with relevant stakeholders.   New Online Tool will Support American Jobs in the Textile Industry, Enhances Trade and Investment in the United States, Central America, and the Caribbean August 23, 2011 USTR launches new online tool at annual MAGIC textile trade show   Las Vegas, NV – Yesterday at the MAGIC textile trade show, USTR announced the launch of a new online directory that will help to enhance textiles trade and attract job-supporting investments to the United States and six trading partners who are parties to the Dominican Republic-Central America-United States Free Trade Agreement (CAFTA-DR). Gail Strickler, Assistant U.S. Trade Representative for Textiles, and Daniel Vasquez, Senior Trade Consultant at the Inter-American Development Bank (IDB), took part in the launch.   The DR-CAFTA Sourcing Directory is a timely and practical tool that will help American firms and their estimated 395,000 workers in the U.S. textile industry seize regional trade opportunities in support of small businesses and jobs here at home. Building better connections between textile buyers and manufacturers will facilitate additional investment in the region, including increased sourcing of textiles and apparel in CAFTA-DR member countries, as well as attract increased sourcing of textiles and apparel to the Western Hemisphere.   The Directory will be featured at MAGIC from August 21-24 in the first ever “Sourcing in the Americas Pavilion,” hosted jointly by USTR and the U.S. Department of Commerce. The Pavilion will also feature 75 exhibitors from throughout the Western Hemisphere, including booths sponsored by the U.S. Department of Commerce (Office of Textiles and Apparel) and the Textile and Apparel Business Council of Central America and the Dominican Republic (CECATEC).   You can view the directory here.   You can view background information here.   United States and Liberia Review Progress in Deepening, Expanding Trade and Investment Relationship August 19, 2011   WASHINGTON, D.C. – U.S. and Liberian officials met this week in Washington to review progress in deepening their partnership on trade and investment under the United States-Liberia Trade and Investment Framework Agreement (TIFA). This was the third meeting of the United States-Liberia TIFA Council, which provides a high-level forum for advancing cooperation on bilateral trade and investment issues.   Deputy U.S. Trade Representative Demetrios Marantis and Liberian Minister of Commerce & Industry, Miata Beysolow, co-chaired the day-long meeting on Wednesday, August 17, which examined the two governments’ work together on a number of trade-related issues, including: implementation of the African Growth and Opportunity Act (AGOA), trade capacity building, export diversification, trade and investment promotion, infrastructure issues, and Liberia’s accession into the World Trade Organization (WTO).   Minister Beysolow was accompanied by a high level delegation of Liberian Government officials, including Minister of Agriculture, Florence Chenoweth; Minister of Post and Telecommunications, Frederick Norkeh; Minister of Transport, Willard Russell; Chairman of the National Investment Commission, Natty B. Davis; Deputy Minister of Finance for Revenue, Elfrieda Tamba; Deputy Minister for Economic Affairs and Policy, Sebastian Muah; and Assistant Minister of Commerce and Industry, Aletha Brown.   “Since the TIFA was signed in 2007, the United States and Liberia have made huge strides in strengthening our engagement on bilateral trade and investment,”said Ambassador Marantis, “and we have seen increased trade in both directions as a result. Liberia offers enormous potential and opportunity for trade and investment. We plan to use the U.S.-Liberia TIFA Council to develop specific initiatives to expand economic opportunities for workers, farmers, businesses, and consumers in both countries.”   Following government-to-government consultations under the TIFA, meetings were held with the U.S. business community at the U.S. Chamber of Commerce and the Corporate Council on Africa. During these meetings Liberian officials outlined the many policy, legal, and regulatory steps that have been taken to encourage investment in Liberia and U.S. businesses had the opportunity to discuss their interests and questions about doing business in Liberia.   In 2010, the U.S. and Liberia’s total two-way goods trade was $370 million. U.S. goods exports to Liberia totaled $190 million in 2010, up 102 percent from the previous year. Top U.S. exports were medical instruments, vehicles, cereals, and iron and steel products. U.S. goods imports from Liberia totaled $180 million in 2010, up 124 percent from the previous year. Top imports from Liberia last year were rubber, oil, and precious stones (diamonds).   You can view background information here.

USTR.gov HEADLINES Haitian Apparel Producers Showcase Products at MAGIC August 24, 2011   This week, the Textiles team at USTR is attending the MAGIC trade show in Nevada. MAGIC is the largest trade event for the textiles and apparel industry in the United States, convening thousands of business leaders in textiles, fashion and accessories twice a year to share planning and sourcing tools. The trade event kicked off in Las Vegas on Sunday and will wrap up today.   This week at MAGIC, over 20 Haitian firms are showcasing garments from t-shirts to tuxedos at the “Sourcing in the Americas” Pavilion. Sponsored by the U.S. Agency for International Development (USAID), the “Made in Haiti” exhibit showcases the Plus One for Haiti program and the continued recovery and growth in the Haitian apparel industry. The Haitian companies are present along with other regional manufacturers in a series of events at the Pavilion designed to strengthen the textile and apparel supply chain in the Western Hemisphere.   U.S. Trade Representative Ron Kirk launched the Plus One for Haiti program at last year’s February 2010 Magic convention in the wake of the devastating earthquake. As part of U.S. efforts to aid in Haiti’s economic recovery, this initiative encourages U.S. brands and retailers to work towards sourcing 1 percent of their total apparel purchases from Haiti. Read more   Foremost Farms: U.S. Farms Benefit From Global Consumption August 23, 2011   Foremost Farms USA, headquartered in Baraboo, Wis., is a farmer-owned cooperative and dairy processor. Their members’ farms are located in Wisconsin, Minnesota, Iowa, Illinois, Indiana, Ohio and Michigan. This cooperative manufactures raw milk into cheese, butter, and a variety of whey ingredients, a byproduct of cheese-making. Foremost Farms’ Director of Communications & Brand Management, Joan Behr, attributes part of the cooperative’s success to unique advantages in this region of the world not often found elsewhere. Good weather and fertile land that produces forage and healthy grains to feed cattle, combined with a solid infrastructure, allow the dairy farms of this region to produce delicious and nutritious milk. Read more   Announcement from the Small Business Administration: Tell us your Export Story: Announcing SBA’s YouTube Export Video Contest   SBA is teaming up with Visa to ask small business owners: “Where will your next customer come from?”   To recognize successful exporters and get the word out about how the federal government can help, we’re sponsoring the YouTube Export Video Contest. The contest, presented in partnership with the National Export Initiativeand Export.gov, will award monetary prizes to five successful small business exporters representing a variety of industries.   American small businesses looking to expand are going global. There are a number of advantages to exporting: reaching new customers, increasing sales and profits, and becoming less dependent on domestic demand, to name several. In fact, over two-thirds of the world’s purchasing power is based outside the U.S., where the vast majority of consumers reside. The U.S. government stands ready to help your small business get started in exporting, with an array of programs, tools and resources.   We want to hear your exporting story in a short, original video submitted to YouTube.   Winners will be given cash prizes, an expenses-paid trip to be honored at the National District Export Council Conference** in Las Vegas, Nevada from November 2-5, 2011, and $1,000 towards a Commerce Department Gold Key service, or various other trade-related events.   U.S. small businesses that have made at least one exporting transaction are elgible.*   To enter, submit your video starting August 1, 2011 through September 3, 2011, and tell us: where will your next customer come from? For more information, visit the official contest website: http://www.sba.gov/exportvideocontest.

Holding America Hostage – part 2 (as standoff continues, casualties rise)

It’s impossible to get somewhere taking one step forward and two steps back. Strike that, it’s impossible to get somewhere forward and constructive.  Yet, more and more it seems like that is what we are doing when on one hand our country is pushing National Export Initiative to double exports and help stimulate the economy yet on the other hand, certain interests in Washington are not only slowing down some key pieces of trade legislation, that would stimulate sales,  but through Washington’s inaction they are allowing foreign competition to usurp key markets and cripple the ability of American companies to compete long-term in those markets.

On May 29th in my post ” Holding America Hostage” I expressed outrage at the unwillingness and inability of our lawmakers to pass three critically important Free Trade Agreements, which would unlock tremendous economic benefits to our country’s producers and exporters.  Since that date, while very little took place in Washington, mostly more hostage holding over a relatively minor retraining TAA amendment renewal.  While there has been some small positive steps (the USTR.gov post below describes some very anemic movement of the trade legislature through Congress) nothing constructive has happened since 2006!!!! when one of the Trade Agreements in question has been negotiated.  Meanwhile, in the last 30 days both the European Union ratified the Free Trade Agreements and their firms have been swiftly moving into the markets leaving American companies saddled with high tariffs and rapidly losing sales, market share and weakening their competitive positions.

It boggles my mind that at a time when our country faces massive economic issues such as a real estate crisis, record federal and state budget deficits, high unemployment, skyrocketing healthcare and education costs to name just a few, our lawmakers manage to squash even those initiatives, which can deliver immediate, clear, measurable and highly tangible benefits to the U.S. economy.  The article below provides a very good synopsis of the ongoing situation. As always, I hope you enjoy and welcome your comments.

While Washington Dithers, Rivals of U.S. Firms Pounce

By John Bussey  The Wall Street Journal. July 8th, 2011

In the competitive world of international business, today’s dawdlers are tomorrow’s roadkill. It’s a lesson the U.S. is learning all over again.

A long list of U.S. businesses—from farmers in Montana to machinery makers in Illinois to service providers in New York—have been waiting for Congress to ratify trade deals that would reduce big tariffs in South Korea, Colombia and Panama. The agreements were negotiated with the nations years ago and would give U.S. exporters considerable relief.

There was some light at the end of the tunnel in Congress yesterday. But the delays—including a spate of recent ones –—have already taken a toll and could get costlier still.

ASSOCIATED PRESSThe U.S. sells wheat to Colombia; above, a farmer near Norwich, Kan.

While the U.S. continues to debate the agreements, other nations are speeding ahead with their own free-trade pacts with these countries. Last Friday, the European Union’s deal with South Korea went into effect. Next month, Canada’s accord starts with Colombia.

That means the competition just got more intense for U.S. companies. Freed from paying tariffs, firms exporting from Canada and the EU can lower the price of their products and grab more market share.

U.S. wheat growers, already feeling the pressure, say flour millers in Colombia like U.S. grain but may switch to Canadian suppliers because of new, favorable prices brought about by the Canada trade deal.

Volkswagen of Germany is busy expanding its showrooms in Seoul, South Korea. Boeing is assessing Airbus’s new tariff advantage in South Korea and the coming one in Colombia for Bombardier. Boeing CEO Jim McNerney worries about getting “a level playing field with competitors who already have such agreements.”

From the farm, “we envision $2.5 to $3 billion of additional U.S. agricultural exports, including soybeans, as a result of the three agreements,” says Lorena Alfaro of the American Soybean Association. That’s if they’re ratified. “As long as we delay, we’ll continue to lose market share, especially in Colombia,” she says.

Colombia is a good example of what happens when rivals get a tariff advantage.

The U.S. and Colombia reached their trade pact in 2006. Colombia is America’s 13th largest export market (if the EU is considered as a bloc), and the Obama administration believes the pact will generate several thousand jobs at home.

Since 2006, without ratification, nothing has happened. But competitors moved ahead. The previous year, Mercosur, the South American trading bloc, made its own deal with Colombia and agreed to relax tariffs. Argentina, a big soybean producer, belongs to Mercosur. It has since been savaging U.S. market share in Colombia.

Total U.S. soybean exports to Colombia dropped 51% in 2009 from the year before. In 2010, share dropped another 27%. U.S. corn and wheat farmers have been in a similar free fall.

Colombia has big coal mines, and Caterpillar sells its large bulldozers and other earth-moving machinery into that market. The current head wind: a tariff of roughly $100,000 on each of the big D-11 bulldozers it makes in East Peoria, Ill., and ships to Colombia. Tariffs on its excavators can range up to $300,000.

Caterpillar is dominant in Colombia and is eager to keep that lead, particularly against competitors from Asia— Komatsu of Japan and Chinese companies elbowing into global markets. It believes the trade pact would help cement its position. After the U.S. ratified accords with Chile, Peru and Australia, Caterpillar’s U.S. exports to those countries jumped 300%, 60% and 200% respectively, partly because of the boom in commodity prices but also because tariffs were cut.

Caterpillar, Citigroup, WalMart, International Business Machines, Oracle and General Electriclead a group of 1,200 U.S. companies and business organizations pressing for passage of the Colombia pact. The group has posted a “Tariff Ticker” on the U.S. Chamber of Commerce website, tracking the cost since 2006 of not ratifying the agreement: $3.65 billion in tariffs paid to Colombia, and counting.

Last week, there were new hitches. Talks broke down in Congress over funding for a retraining program for workers displaced by trade pacts. Some legislators say they won’t vote to ratify the accords without the retraining program in place.

Whether the three pacts will fuel or drain jobs in the U.S. has been a point of contention since they were signed. “Such trade deals have contributed to the loss of more than three million manufacturing jobs in the U.S. since 2001,” the AFL-CIO says.

Opponents in Congress and elsewhere argue that even though exports from the U.S. may rise, an increase in cheaper imports could hurt businesses and kill jobs at home. Some are concerned that opening more markets abroad will encourage U.S. companies to move operations overseas and outsource more work. And others believe there are inadequate worker protections in Colombia.

It’s been a lengthy debate.

“It just demonstrates the disconnect between business and government,” says William Lane, who handles trade issues for Caterpillar. “In business, if you somehow get ahead of your competitors, you never let them catch up. The U.S. government had a four-year lead on these policies.”

Yesterday, the machinery clicked forward a notch: Congress made headway in considering draft bills for implementing the three agreements. There’s still no compromise on funding the retraining program, and it’s unclear whether that will further delay a ratification vote.

Princeton Council’s “Is Your Business Fluent In Foreign?” event at the University Club of Washington – a great success

Washington, D.C. July 8th.

On Thursday, at the University Club of Washington, Princeton Council on World Affairs (www.princetoncouncil.org) hosted second event of its “Is Your Business Fluent In Foreign?” series.  The event included a comprehensive presentation by panel of distinguished international experts from the U.S. Government and private sector.  Topics covered subjects of Political Risk Insurance (PRI), International Dispute Resolution, Foreign Corrupt Practices Act (FCPA), financing international trade and investment using U.S. Ex-Im, or Overseas Private Investment Corporation (OPIC) programs, working with the U.S. Trade and Development Agency (USTDA) and Private Public Collaborative Alliances in sports and education.

Over 60 guests attended the seminar and networking reception, which followed. Guests included high ranking officials from several Embassies, representatives of OPIC, U.S. Ex-Im, USTDA, State Department and IMF.  For more information on the upcoming events, or to obtain a copy of the program and seminar presentation materials please contact Ruth Sigalus at rsigalus@princetoncouncil.org

All Exports, All The Time

PRINCETON COUNCIL ON WORLD AFFAIRS ( www.princetoncouncil.org ) held a very successful and well attended “Is your business Fluent In Foreign?” seminar and networking event et the New York Athletic Club last Thursday.   VIP Guests included First Vice Prime Minister of Georgia, Deputy Chief Mission of the Georgian Embassy in the United States, along with the Consul General of the Ukraine in New York and several  members of the Diplomatic corps. Guests also included prominent business people, attorneys and financial professionals. Over 80 people attended the seminar and lavish reception, which included presentations on Political Risk Insurance, OPIC vs. EXIM for international project financing, Foreign Corrupt Practices Act (FCPA) issues and compliance, as well as bridging the cultural gap with Betlitz’s Cultural Navigator® product.  Rob Levin, Publisher of the New York Enterprise Report  (NYER)did a wonderful job as the event’s emcee.  Each guest received a copy of the Fluent In Foreign Business book along with the latest issue of the NYER magazine and a full color reprint of the Industry Today article – U.S. Must focus On Exports A Washington, DC round-table reception is planned for this coming Thursday July 7th, at 4pm, at the University Club of Washington. For more information please contact Ruth Sigalus at rsigalus@princetoncouncil.org

U.S. Must Focus on Exports Below is the article I wrote for the Industry Today magazine.  My underlying premise is to provoke thoughts and actions needed  to keep our nation’s present export momentum going for years and to develop the foundation, which would convert U.S. from the haphazard to the hard core export nation.  As always I hope you enjoy and welcome your comments.  (full color reprints of this article are available from the Princeton Council On World Affairs, to receive a free copy, please email Ruth at rsigalus@princetoncouncil.org) As seen in the latest issue of Industry Today magazine http://www.industrytoday.com/ Alexander Gordin’s admonition (“The U.S. must think all exports, all the time”) may sound like a tag line for a marketing campaign. But it’s far more than that. It relates to the economic survival of the United States. Gordin – explains why. Tsunami and earthquake in Japan, armed rebellion in Libya, civil unrest in Egypt, Yemen and Tunisia – these calamities impact millions and occur just as the United States struggles to overcome the most severe economic contraction in recent memory. For U.S. businesses to rebuild and thrive, they must take advantages of new opportunities often found under their noses. Opportunities for growth of export of services and manufactured goods have been woefully neglected, yet they are a well-established and effective way of rejuvenating economic health. About a year ago, President Obama unveiled an export initiative that called for the doubling of our country’s exports in five years. This initiative has already shown early signs of resounding success despite a disturbing figure from the Small Business Administration: only one percent of all U.S. companies currently export. CRUNCHING THE NUMBERS Let’s look at some figures. In 2010 the total American exports of goods and services was $1.834 trillion – $1.289 trillion in products, $545 billion in services. Those numbers represent an impressive growth of 21 percent and 8.6 percent respectively over the previous 12-month period. Financing of exports also grew significantly, with the Export-Import Bank of the United States (U.S. Exim), the Federal agency charged with financing U.S. made goods and services exported out of the country, having completed a record fiscal year. The U.S. Exim financed $24.5 billion, an 11.7-percent increase over 2009, which had been a record year. Those numbers are on track to hit the President’s goal of doubling U.S. exports by 2014. But more must be done. Although the recovery is projected to continue for the next several years and the U.S. dollar is likely to remain low for some time – which is a stimulus for others to buy our goods and services – our country will not be among the global export leaders, as measured by the percentage of total exports to GDP. Instead, we will need to fight for a greater market share among the world’s exporters. The way I see it, the United States must make cardinal changes, not only to how we think about exporting but also to our basic approach. We must make exports a strategic priority to our nation’s businesses, learning to approach exports more strategically and cultivating exporters as a recognized part of our economic landscape. FOUR FUTURE CORNERSTONES I believe that our next wave of national export expansion must be built on four cornerstones: Comprehensive education of exporters Enhanced export infrastructure Increased national focus on exports “Securities” market approach to exports Let’s consider each. Education – The United States must establish an educational system where exports and international business are taught not as a byproduct, but as a core economic discipline at all levels starting with middle school. In our country talented people who shape industries and professions such as science, sports, music, law, art and architecture are allowed to develop their skills, starting early in childhood. Existing infrastructure helps weed out both promising and weak candidates. In sports, farm team systems exist and thousands of hours are invested in training and practice. Commitment by families, coaches and teachers to produce a travel team athlete or a budding marching band member often borders on fanatical. Debate teams exist to shape lawyers, and terrific science camps and competitions exist to spur innovation and identify our best and brightest scientific minds. We identify stars in these fields by training and preparing millions of students who are better prepared to succeed in certain aspects of life. Yet, when it comes to exporters with potential to create long-term financially rewarding benefits that will produce for decades, we simply leave things to chance. We offer our support late in the game, after mistakes have been made. As a nation, we do offer export advice and some training, but we don’t cultivate exporters through intensive training or formal education. Also, we have no system for measuring and standardizing the quality of export organizations. If we are to succeed in exports, education is key. Enhanced Export Infrastructure – To stand a chance at reaffirming our global position, we must refine and enhance our export infrastructure to better focus our formidable resources on assisting and preparing promising companies to export effectively. We must seriously consider expanding the reach of small federal agencies such as the U.S. Trade and Development Agency (USTDA), which delivers $47 in exports for every dollar it spends in funding project feasibility studies and reverse trade missions. We should explore leveraging government resources with Private Public Partnerships, wherein selected private non-profits are charged by U.S. government agencies with developing and funding nothing but export-related projects, transactions and initiatives. We must involve more banks and private finance companies in funding exports. Currently, only a handful of large banks finance export transactions guaranteed by the U.S. government through the U.S. Exim Bank. Increased National Focus on Exports – Exports must become an important part of our national focus, on par with issues such as healthcare, housing, real estate and education. Media reporting and advertising, direct outreach by the U.S. Government and NGOs, grass roots outreach, union outreach – in short, every possible opportunity – should be utilized to preach the economic benefits and need for exports. This should be done not only during bad economic times when our domestic output shrinks, but at all times, on a consistent and sustainable basis. If asked to name the top three initiatives that are going to improve our economy, the majority of Americans should be able to name exports as one of them. “Securities” Market Approach to Exports – To attain the next level of economic growth, the U.S. export machine might have to borrow some pointers from the way the securities industry is structured. Specifically, I refer to information and analysis, which provide almost real-time updates as to how changes in the world affect given securities, alter opportunities and highlight changing risks. Think about how well our export industry could be served if, for example, in the wake of Japan’s nuclear crisis, an export analyst covering the nuclear sector could highlight new opportunities to U.S. exporters for the sudden need of containment materials. Export opportunities opened up, as Japan called on Ukraine nuclear specialists after the devastating tsunami. But these specialists in Ukraine did not have the necessary equipment, worth tens or hundreds of millions of dollars, to effectively provide services to the Japanese. American providers of these required goods needed a way to quickly be apprised of the opportunities. Another example of coverage would be a broader dissemination of pending project opportunities, which have export potential, such as those developed with USTDA’s funding. Overseas Private Investment Corporation or private developers could reveal export opportunities to U.S. providers of goods and services early, thereby allowing them the chance to respond quicker. Having an actionable analytical/informational platform for the industry vs. the current platform for reporting past deals and transactions will provide a strong forward-looking base of transaction flows for U.S. exporters. Such a “securities type” platform can be developed on the basis of information from banks and insurance companies currently financing exports, EMCs (export management companies) and independent private analytical services. Self-policing and self-regulation should probably be the model for such a platform. Yet regardless of the model, the need for immediate and current information and analysis is critical to help exporters in their decision-making and business development. MOVING FORWARD As a nation trying to combat economic conundrum and to rebuild its prosperity, the United States has started on the correct path to growing its exports. With improved education of exporters, enhanced export infrastructure, increased focus on exports as a national priority, and the addition of a forward-looking information and analytical platform to aid exporters in growing their business, the country is certain to secure its rightful place among the leading exporter nations in the world.