By Drew Maloney and James W. Moeller
For long-time observers of American politics, the current fear
of foreign-owned firms operating in the United States brings to
mind the classic misstatement of baseball great Yogi Berra: "It's
deja vu all over again."
The United States goes through waves of economic nationalism
every few years whenever the economy is underperforming. Replace
Dubai World Ports or CNOOC with Toshiba in the 1980s or British
Telecom in the 1990s and the situation, as Berra hinted, is
remarkably similar.
The situation heightens the challenge for all foreign firms, not
just Chinese ones, doing business in the United States. However,
there are a few ways companies can effectively position themselves
in this difficult climate.
The challenge for foreign firms seeking to do increased business
in the United States is that they are being caught in a political
squeeze play from both left and right. While government statistics
demonstrate that the US economy is humming along, public opinion
polls show that there is an undercurrent of dissatisfaction. Many
Americans worry that the economy is sluggish.
Key to this is recent data that suggests that growth in wages is
not keeping pace with productivity gains. In short, firms are
asking staff to work harder, but wages are not keeping pace with
gains in output. Add to this the fact that companies are reducing
healthcare benefits, fears over technology and white-collar jobs
moving overseas, numerous companies ending long-established pension
programs, and many American workers are fearful about their
future.
Moreover, with ongoing discontent over the war in Iraq and
continuing fears of potential terrorist attacks, there is a general
sense of public unease on the national security front.
Given this is an election year, both political parties are
trying to benefit from the current situation. On the left, unions
and liberal Democrats continue to convert the fear of fewer jobs
and lower wages brought about by globalization into votes for their
candidates. They are also opposing mergers involving so-called
"critical" economic sectors, such as transportation and energy, to
show that they are tough on national security.
On the right, the Republicans are split into two camps. The
first is a combination of economic nationalists and those who
oppose Chinese foreign and military policy. They wrap their
opposition to foreign firms in national security terms. The other
group is made up of those with more of a global economic, pro-China
view.
Although the Bush administration has supported multilateral
mergers and spoken out against protectionism, the split in his
party has limited the president's ability to speak out
effectively.
In fact, the views of the left and the Republican economic
nationalists are remarkably similar, further complicating the
situation. For example, two of the harshest critics of the Dubai
World Ports deal were former Democratic presidential candidate
Senator John Kerry on the left and highly popular conservative
radio talk show host Rush Limbaugh on the right.
Moreover, this situation will not go away soon. Congress is set
to act to make things tougher for foreign-owned firms. Senator
Richard Shelby unanimously moved legislation through a key
committee that would tighten reviews of foreign investment and
increase the role of Congress in approving these deals. Senator
Charles Schumer has introduced legislation that slaps a 27.5
percent duty on imported Chinese goods until the president
certifies China is no longer manipulating its exchange rate.
In short, it is a daunting climate for foreign firms. But all is
not lost.
As foreign firms attempt to make inroads into the US market,
there are four steps that firms can take to lessen the impact of
the current economic environment.
Demonstrate that you are a global company, not a foreign one. Be
able to point out the amount of US jobs created, sales made and
taxes paid. As an example, the fact that Lenovo employs several
hundred people in the United States and assembles its products in
North Carolina and Mexico makes it a truly global company with an
important US connection. It is these types of stories that
companies need to tell when entering the US market.
Manage your political risks. Obtain the most up-to-date
information on the political landscape in Washington. Develop a
proactive strategy to leverage your US presence by building ties
with key decision-makers. The recipe for success is to establish a
presence and strategy before a crisis, rather than reacting to
one.
Build your brand and reputation in the United States. Proactive
corporate social responsibility and philanthropic projects help
generate goodwill (and sales) and help show you are a responsible
global company.
Be committed for the long term. Relationship building and
communications cannot be a one-off project. It needs to be an
ongoing part of your business plan in the United States.
Many of the problems that foreign firms face in the United
States are out of their control. But rather than viewing the
current situation as an obstacle to investment, it should be viewed
as an opportunity to take the necessary steps to build the firm's
brand at both national and local levels. By taking a few basic
steps now, foreign firms will be in much better shape the next time
these problems re-emerge.
Drew Maloney is a partner at the Federalist Group, one of
the largest bipartisan lobbying firms in Washington D.C.; James W.
Moeller is the managing director of Global Public Affairs at Ogilvy
Public Relations Worldwide.
(China Daily June 7, 2006)
