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Is America really terrible at globalization?

I disagree with this post, but I feel that it merits discussion. What are your opinions?

Re-blogged from qz.com courtesy of Ray Hays, Member of Arizona District Export Council.

“The Big Mac Mirage”: America is actually terrible at globalization

By Tim Fernholz — March 5, 2013

Shockingly, this is about as good as American globalization gets. AP Photo/Ng Han Guan

Coke is so prevalent around the world that non-profits look to its supply chain for help on distributing aid. McDonalds, in 122 different countries, is so widespread that there’s a foreign relations theory that no two countries hosting the burger franchise will go to war, although the strong version of that theory is well dead. And Wal-Mart is the world’s third largest global employer, after the American and Chinese militaries, respectively.

The US must be great at globalization, right?

Unfortunately, no, according to Bhaskar Chakravorti, the director of Tufts’ University’s Institute for Business in the Global Context. He says all these examples represent “the myth of American global market power”—they are outliers that disguise the real failing of American multinationals to succeed around the world, and especially in fast-growing emerging markets. Despite what you might hear, he says “we are extremely under globalized.” Here’s an excerpt from a forthcoming paper he’s written with fellow economist Gita Rao (emphasis mine):

In 2010, emerging markets represented 36% of global GDP; these markets already account for the majority of the world’s oil and steel consumption, 46% of world retail sales, 52% of all purchases of motor vehicles and 82% of mobile phone subscriptions. With two-thirds of global growth coming from these markets, in a decade they will account for the majority of the world’s economic value. Yet U.S. companies derived less than 10% of their overall revenues from emerging markets: about as little as 7%, according to HSBC estimates for 2010. The 100 largest companies from the developed world overall made 17% of their revenues from emerging markets, according to a McKinsey report; in other words, the U.S. lags not only emerging market firms in capturing share in emerging markets, but it lags the developed world overall. By considering the difference between the “absolute potential” represented by the 36% number or, to take a much more conservative benchmark, the global peer average of 17% and the U.S. share of 7%, we derive two measures of the gap – and the degree to which U.S. industry has not participated in global growth.

There are several reasons the US is being held back. Some are the intrinsic challenges of doing business abroad: Besides language and cultural barriers, there are underdeveloped supply chains, incomplete capital markets, corruption, etc. But European companies earn 25% of their revenues from emerging markets, so these must be surmountable. What’s America’s problem?

America doesn’t have a legacy of colonization. Despite a hefty history of foreign interference, the US didn’t set up the same deep linkages that Spanish and Portuguese companies did in South America or European countries have in Africa or South Asia. Chakravorti, who was a McKinsey executive for many years, recalls European competitors in Africa asking, ”What are you doing in Africa? Africa belongs to us.” Meanwhile, he says, ”the executives I was working with had no understanding of the socio-cultural context of the continent.”

America is actually pretty insular. Because it’s a big country, and has had many decades of consumer-driven growth, US businesses haven’t necessarily had to look over the horizon for new opportunities. After the 9/11 attacks, Chakravorti says, things got even worse, and most businesses stayed home. It doesn’t help that less than 20% of Americans speak a language other than English, while 56% of Europeans speak a second language.

American business is all about standardization. Companies get economies of scale from selling the same product, but many emerging markets are stratified and require different products and price-points in the same country; while American executives want a  ”Brazil strategy,” what they really need is a strategy for Sao Paulo state and another for more rural areas.

Chakravorti argues that American companies do have what it takes to surmount these challenges, and they’ll need to if they want to bring more growth back to the US.

His strategy starts with a focus on sectors where America can compete abroad but isn’t taking full advantage of the opportunities, particularly in consumer products and large-scale services such as education, elder- and child-care. American companies need to start thinking about tailoring their strategies to demand abroad—particularly at the bottom of the pyramid— but the market can’t do it alone: The government needs to work more closely to tailor its foreign policy to America’s commercial needs while opening education to a more international view.

“That gap has been closed completely in China, because the most powerful companies are state-owned,” Chakravorti says. “We are still talking about the Asia pivot as though it is something dramatic and new, while China has been pivoting for a while.”

Original article link: http://qz.com/59506

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How does the U.S. Federal Export Promotion Stack Up to Other Exporting Countries?

Re-blogged from the National District Export Council website www.districtexportcouncil.com.

Export Expenditures

On February 28, 2013, Daniel Ogden, Chairman of the National District Export Council,  testified before Congress during a hearing of the House Small Business Trade Subcommittee on the development by the 113th Congress of a small business trade agenda.

In the Testimony, Daniel Ogden provides a comparison of U.S. federal export assistance programs with government-funded export assistance in other large exporting countries. Highlights include:

  1. The UK’s Passport to Export program for SMEs provides free one-on-one mentoring, subsidized training, and a subsidized visit to an overseas market.
  2. Germany provides support to firms exhibiting in trade fairs abroad.  60 percent of all German firms participate in trade fairs; two thirds of which exhibit abroad.
  3. France’s Trade Missions Overseas program provides up to $3,750 to SMEs and includes French pavilions at trade fairs, products and displays, and other t trade promotions.
  4. The Netherlands and Australia have grant programs that pay (up to $110,000 in the Netherlands) for new exporters’ market development costs.

Ogden’s testimony also includes several useful facts on US export assistance including:

  • An overview of the District Export Councils and their purpose
  • Opportunities and challenges for U.S. small business exporters
  • Current organization and proposed reorganizations in federal trade promotions
  • National District Export Council’s position and recommendations to Congress on federal trade promotion

Click here for a PDF copy of the Testimony Transcript, or see the Testimony video below. (Testimony starts at time marker 8:55.)

For more information on the National District Export Council, please refer to their website at http://www.districtexportcouncil.com.

Re-blogged courtesy of Ray Hays, Member of the Arizona District Export Council

38% Growth in Exports over 3 Years Supports 10 million U.S. Jobs

Reblogged courtesy of Ray Hays, Member of Arizona District Export Council

Recognizing Three Years of Export Growth

An article from the ITA Blog, by Under Secretary of Commerce Francisco Sánchez 

March 12, 2013

Francisco Sánchez serves as the Under Secretary of Commerce for International Trade. 

During the last several weeks, we’ve highlighted a lot of great news in the business of U.S. exports.

From record exports in travel and tourism tosuccesses in gaining access for American companies to foreign markets, 2012 gave us a lot to be proud of in the field of exports. More important than just the dollar amounts is the fact that almost 10 million jobs were supported by these exports in 2012.

This success is the direct result of a concentrated initiative introduced by President Obama in 2010, one that has coordinated the efforts of several U.S. government agencies to increase American exports and create American jobs. Under the National Export Initiative (NEI), we’ve seen U.S. exports increase from $1.58 trillion in 2009, to a record $2.2 trillion in 2012.

We recognize the third anniversary of the NEI this week, so we’ll be sharing some of the successes we’ve seen under this initiative over the next several days.

I hope you will get in on the conversation. How have exports helped your business? How can the International Trade Administration and other government agencies help you increase exports? Follow some of America’s core export-promotion agencies on this Twitter list to learn about the government’s efforts to help U.S. business.

As always, ITA is here to help any U.S. company looking to create or increase exports. It all starts with a visit to one of our Export Assistance Centers or to export.gov.

Source: Tradeology, the ITA Blog

Re-blogged courtesy of Ray Hays, Member of Arizona District Export Council