Archive for December, 2008

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lessons from an american in shanghai

Wednesday 31 December, 2008

If you know me, you know that I’m the farthest thing from a fashionista.  Regardless, my dad gave me a subscription to Esquire magazine, in which a recent issued featured this article The New American by Chris Jones.   I think it brings out many things that Americans don’t appreciate nearly as much as they should when conducting international business .

Who changes?“Change has come, but it has come slowly, and while Comiskey remains an idealist, a believer in an almost quaint theory of world progress, inching forward transaction by transaction, Shanghai forced him to develop a more practical streak. He decided, instead, to let the city change him.” My take-this is what happens when you spend a lot of time abroad…learn that America isn’t the biggest & best in everything that we do after all.  Instead of becoming the American business imperialist, you adapt by learning what works locally, based on how things are done there as opposed to home.  It’s a hard lesson to learn, but 1 that’s important if you’re going to be successfully long-term outside of the US.

Business culture: “He is calm in expressing his displeasure, but he expresses it, in clipped Mandarin, and after, the woman retreats to a corner… She has seen how Americans react to Chinese mistakes. She has had Americans treat her and her friends like Jawas, as something less than human.

But Comiskey talks to her some more, in soothing tones, and then he extends his hand, palm down, and she comes to him, slowly, and their hands touch — not in a handshake, exactly, but more tenderly, and whatever he says to her, her surgical mask stops popping in and out so quickly, and her eyes change, and in them Comiskey can see that she’s smiling, and he knows that his precious inventory is gone along with his money, but he also knows that in exchange he has made a new friend who will do her best to understand him from now on.” My take-you can’t learn this stuff in B-school.  You can only learn it by living it & experiencing it in that context.  Americans who parachute in without this local knowledge & experience would never be able to get to this point.  It’s these soft skills that American businesspeople discount & ignore at their peril.

Engaged ex-pats? vs. going local: “It didn’t help that Shanghai’s expatriate community is as insular as the Chinese can seem…. They are in this city but they are not part of it… Then there are those foreigners who have integrated themselves completely — in fact, they have gone over the wall and become Chinese in their hearts and minds” My take-even ex-patriots who live & work abroad sometimes don’t integrate.  It’s very difficult to embed yourself in local business & company culture.  When I lived/worked in Germany, I had a few friends who didn’t speak German & have any German friends.  They lost a lot of the opportunity in that experience.  Even expats place in high positions aren’t respected by their subordinates because they don’t understand what happens & why underneath them.  Alternatively, going local ignores the goals & objectives of foreign-owned headquarters.  It’s a constant battle running along that fine line of going local vs. watching out for HQ interests.

Language: “When he and Jojo first came here, surrounded by so many millions, he was nearly crushed by loneliness. He couldn’t speak the language; he couldn’t read the street signs; Jojo was his single conduit to the world. Everything had to be filtered through her, and sometimes he felt like the boy in the bubble…He probably wouldn’t have made it here without Jojo… She didn’t want to be his translator for life…Comiskey can remember the moment he finally saw clearly… He still didn’t speak the language… He knew what the manager had said. It all made sense. As though in an instant, this seemingly incomprehensible language was English to him. And along with it, this impenetrable country was his, to. He didn’t go over the wall; the wall came down. Suddenly, almost miraculously, his world opened up, and he saw then, in that meeting, this future for himself and for his new country. That’s when he first through, I live in the land of the possible.” My take-Many Americans maintain that speaking English througuout the world works.  I counter that it’s true only at a very superficial level.  If you really want to dig in & learn how the foreign business people with whom you’re working think & make business decisions, you have to learn the local language.  In many cases, it’s a chicken & egg sort of thing-either the language controls how people think or how people think is controlled by the language they speak.  I speak German, which is a very structured language.  That’s how Germans think.  The same kinds of relationships are true for people who speak other languages…& when you get to the point that you can speak almost as well as a local, it can be a mind-expanging experience.  Being respected in foreign business culture is a heady thing.

America’s thoughts on the rest of the world: “Americans have every right to be proud of their country, but maybe we’re not respectful enough of other countries,” he says. “It’s like we don’t care what happens to anybody else. We have to become better integrated into the world and its economy. We have to become more than a destination for products and a source of culture. We have to be willing to make some serious changes in how we see the world and the world sees us.”‘  My take-Americans level of insularity & parochialism continues to shock me.  Their level of interest & engagement with the rest of the world is disturbing.  If we’re going to sell to & source from the rest of the world more successfully than our competitors, we’re going to have to learn more about them so that we can deal with them on their level & not ours.

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Goolsbee named staff director of Obama’s Economic Recovery Advisory Board

Friday 19 December, 2008

As an avowed & unabashed member (leader?) of the Austan Goolsbee fan club, I was happy to come across this article in the Chicago Tribune by Michael Oneal U. of C. ‘s Goolsbee joins advisory board

I only have 1 beef:  journalists should learn more about economics, & especially international economics,  when they’re writing about it.  Oneal says.”When talking about Obama’s platform on trade, for instance, Goolsbee insists that the president-elect has a deep commitment to free markets. But he also recognizes that classic free-trade theory doesn’t account for consequences like job loss.”

Free trade theory does account for consequences like job loss, the difference simply depends on in which time frame you consider it.  Free trade theory recognizes that, of course, unemployment will displace workers as a result of free trade in the short term when markets specialize in products/services in which they have comparative/(like Michael Porter’s competitive advantages too?) advantages.  The other assumption is that there are enough resources to be allocated so that those who are unemployed in the short term are retrained & re-employed in the long term.  How long the short & long terms are is open to debate as a theoretical question, but the policy issue becomes “Are we allocating enough resources for retraining for those who are unemployed in the short term so that they don’t become long-term unemployed?”  My answer is a resounding no.  Governments in Europe do a much better job or re-educating their unemployed, but they pay more in personal income taxes & union dues for the costs of those programs.

Supposed free-trader Obama’s beefs with trade are lack of enforcement of environmental & labor standards, not job displacement.  Enforcing standards is quite different from preventing job losses, many of which are inevitable anyway.  In this case, free trader is a matter of degree.  Obama is not a total free trader because he’s imposing costs that wouldn’t exist in a totally free trade scenario.  When other countries gain unfair competitive advantages by not having to pay for the same environmental & labor standards we do, we incur costs that they don’t in enforcing these standards & consequently become more expensive.  Job losses may result here because our costs go up, but those are indirect or better said not direct results & therefore it’s difficult to link causality.  Banning imports won’t work either because then we’d have no choice but to buy more expensive locally-produced goods, & our consumer-led economy always seeks out the lowest prices of similar goods.  I don’t doubt that Barack is essentially a free-trader, & that may have its social advantages, as long as we recognize that we pay a price for enforcing those standards in either higher unemployment or higher prices.

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Rotarians unite!

Thursday 18 December, 2008

I attended this luncheon meeting Leadership Across Disciplines-Featuring Edwin H. Futa, General Secretary-Rotary International.  The Rotary club is an amazingly international organization with 33,000 clubs in 200 countries.  Bill Gates’ foundation made a $100,000,000 donation (which was matched, but the way), simply because he couldn’t replicate the scope of the organization himself.  Rotary has official observer status @ the UN.  Rotary Clubs are well-known & respected in many countries.  Small businesses can learn a lot from them.  Here’s what Ed had to say:

The organization got it’s name (founded in Chicago) by rotating luncheon meeting locations. It’s a very decentralized organization of autonomous clubs.  Their motto is to be an anchor in the community & work quietly but effectively.  The main community service project is the eradication of polio, which was initiated by a club in the Philippines, filtered upwards, & was adopted by the whole organization.  They only embark upon projects which are doable & measurable. They’ve been successful fighting polio in that 22 years ago there were 1000 new cases/day worldwide, & now there are only 887/year in 4 countries.  They considered trying to be everything to everyone, but decided against risking becoming nothing to no one.  Their next project could be focused on clean water, which would solve 11 diseases, or possibly the education/literacy of women in developing economies.  They are seeking partners to help them achieve these goals, such as working with Coca Cola on clean water because Coke plants can pollute & they want to work together to eliminate their pollution.  Another obvious goal is increasing membership, but a challenge to that is they have to respect the wishes of international clubs.  For example, they need/want younger members, but some clubs want them to remain old boys clubs (some still don’t admit women), so they just let others open new clubs which will admit younger members.

Rotary Clubs have moved way beyond a bunch of old rotund white guys meeting for lunch.  Small businesses can learn a lot from what Rotary has done & how they do it.  This event was arranged by The Young Executives Club.

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former German foreign minister on Europe-US relations

Wednesday 17 December, 2008

The Chicago Council on Global Affairs organized this event America and Europe in the Global Age featuring Joschka Fischer, former Foreign Minister and Vice Chancellor of Germany, whose family almost immigrated to Chicago from Hungary before WW II.  He couldn’t imagine he’d see the end of the cold war in his lifetime, & Frankfurt (am Main) lies 90 km from what could have been Ground 0 for WW III, yet here we are.  Now most of the world is involved in the political process, the exception being China, where the majority (outside of the big cities) still fall outside of the political & economic processes.  Regardless, the center of gravity has moved eastward.  Both sides of the Atlantic have made mistakes in Europe-US relations;  Europe has not restructured & Bush has been devastating.  Europe woke up early (5-6 a.m. their time) to hear America’s election results.  Europe is not unified & can’t be disunited with the US.  Russia, an emerging Middle Eastern war, & terrorism are more threats to Europe than the US.  Turkey plays a big role & we need to keep it on track to join the EU;  London agrees while Paris & Berlin do not.  Enlargement leads to stability, but Europe needs stronger institutions to implement stronger economic governance.  Europe needs the US presence in Europe, but the US-Europe relationship is not promising right now.  In the future, the new administration must determine a strategic interest in a unified Europe. Truman & Eisenhower pushed European unification & that should be revived.  We need closer cooperation between congress & the European Parliment, but Washington is put off by a new European President every 6 months.  Obama got it right in Berlin by saying, “We discuss, decide, & fight together.”  We didn’t invent a political strategy in Afghanistan.  We need to discuss the Pakistani nightmare scenario (nuclear capability) with Europe.  We need to build regional consensus with Iran & Syria on how to end the war in Iraq.  This impacts Israel & Palestine, both of which are split, so we need to engage them too.    Europe should form a common gas market to deal with Russia.  A grid which connects east & west would help.  Germany has had vested interests in Russia since the 60’s.  Nicaragua has been the only ally to recognize Russia’s interest in Georgia.  We need to keep a door open for the Ukraine to join the EU to keep a bridge to Russia.  Finally we may need to wave goodbye to the G8 & welcome a G-something else.

Q&A-success in Pakistan depends on relations with India & how Kashmir is resolved.  We can’t give Russia veto power over missile defenses in Poland against Iran.  We need to work together to avoid Russia taking over Ukraine.  Although some foreign ministers are worried about coming under the thumb of another strong Secretary of State, Hillary Rodam Clinton should be fine.

I’d comment here, but the focus is much more on politics than economics or business, so I’ll just let this stand as is.

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Canadian financial services cos. in the midwest

Tuesday 16 December, 2008

I attended this event ,  Connect2Canada: A Sound Partner for Financial Services organized by Eric Hochstein, the local representative for the Canadian province of Ontario.  He assured me the presentations & video would be put up on the website, so look there for that content.  Otherwise, here’s what I picked up:

from Georges Rioux; Counsel General in Chicago-there are 16,000 Canucks in Chicagoland, Canada is the #1 trade partner of 36 US states, trade has tripled since the inception of NAFTA, 50% of the oil which comes to the midwest is imported from Canada.

from SandraPupatello, Ontario Minister of International Trade & Investment;  Canada’s Technology Triangle (Cambridge, Kitchener, Waterloo) is the 3rd largest ICT cluster in North America, tax credits are now available for 60% of R&D spending, Mayor Richard Daley is invited to Toronto in Spring, 2009.

from the Financial Services Software/Technologies seminar Q&A; R&D tax credits are available on 100% of R&D done in Canada, but it’s rare for 100% of R&D to be done in 1 place, & foreign (American) companies must generate revenues in Canada against which to offset the tax credits, HR Canada ok’s workers with 2+years of experience with L1 visas to fill qualified talent pools, nearshoring to Canada offers language & skill advantages over Latin America since price is just 1 variable, & while attrition has fallen to 9-12% from 30% in India, it’s only 3-4% in London, ON.

from the Insurance Globalization seminar Q&A;  global insurance companies leverage cultural differences in spending, regulations govern collaboration wikis with regulators, web 2.0 will change relatinships with customers when the big guys reach a tipping point, & there is no global sourcing strategy so make small investments & invest wisely.

from the regional showcase;   Toronto has 40% of Canada’s companies & 10% of its GDP, Ottawa has 1800 technology companies with 80,000 employees, the University of Waterloo has the largest math faculty in the world, CNA, Northern Trust, & Synovate are Chicago examples that have opened operations in Ontario.

Picking up on my experience working @ the Canadian consulate in Chicago, Canada should be 1st on the radar of most American companies venturing outside of the US.  There is no other country which is easier, faster, & cheaper with which to do business than Canada.  The Canadian business culture is different, however not drastically so.  Canadians offer particular advantages in a number of technologies, i.e. wireless because of Research in Motion’s Blackberry, graphics/animation because of Sheridan College, & e-learning because of experience educating many people dispersed throughout a wide geographical area.  So head north, eh?

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gata forms partnership with aginsky consulting group

Monday 15 December, 2008

GLOBAL AMERICAN TECHNOLOGY ALLIANCES FORMS PARTNERSHIP WITH AGINSKY CONSULTING GROUP

CHICAGO, ILLINOIS USA & PORTLAND, OREGON, USA-Global American Technology Alliances (GATA) of Chicago has partnered up with Aginsky Consulting Group, (ACG) with headquarters in Portland, Oregon, effective immediately.
Aginsky Consulting Group is an internationally recognized, boutique consulting firm, headquartered in Portland, Oregon, focused on providing a range of management consulting services to mid-size and Global 2000 companies worldwide. ACG’s core competence lies in the ability to help medium-sized businesses maximize revenue, generate growth and develop a sustainable competitive edge through individualized solutions. ACG has considerable expertise in key world regions, especially in the emerging markets of Eastern Europe, and a high level of awareness for the specifics and peculiarities of local business. ACG guarantees that the value it brings to its clients will ALWAYS exceed their fees.

“With GATA’s international connections and years of experience in a wide variety of industries, ACG is very excited to have entered into this partnership, which is undoubtedly going to be hugely successful and mutually beneficial, particularly because it will allow us to add more value to our respective clients around the world,” said Alexander Aginsky, the Managing Director of Aginsky Consulting Group.
Says Michael Muth, Managing Director of GATA, “Building a business in high growth economies is particularly difficult because they don’t have the comprehensive infrastructure the developed economies do. Finding potential partners you can trust is even more important, & commensurately tougher to find. As 1 of the growth economies, Russia has benefited from a rapid rise in incomes, but few American companies have been able to take advantage of that wealth creation because they don’t know the intricacies of the market. ACG has that knowledge & experience. ACG offers a high level of service comparable with some of the best in the business, with a general specialty in emerging markets & a specific focus on Russia & the Commonwealth of Independent States. ACG can virtually guarantee results because their unique model shares risks & rewards with clients, which gives ACG a true vested interest in the success of their clients.”

For more information please contact.
Michael Muth at m.muth@aginskyconsulting.com
+001-312-266-6909/skype id “mskwaird”
http://www.intlalliances.com

Or Alexander Aginsky at a.aginsky@aginskyconsulting.com
1-877-WITH-ACG (948-4224)/1-503-922-0818
http://www.aginskyconsultingroup.com

aginsky consulting group logo

aginsky consulting group logo

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US-Serbia IT business summit

Friday 12 December, 2008

I attended this event US-Serbia IT Business Summit organized by more than anyone Zoran Golubovich & co-sponsored by Serbian Unity Congress, Ministry of Telecommunications & Information Society of the Republic of Serbia, & World Trade Center Illinois.  Links to the presentations, companies from both Serbia & the US that participated are available on the webpage linked above.  Here’s what I picked up in addition to that information provided

from Q&A with Denny/Dragan Arsic, Director of Global Accounts Marketing for Microsoft’s Mobile Communications Business-Serbs are strong in English & math, & new graduates rival those from Kellogg & GSB/Booth.  Microsoft’s Development Center in Belgrade is funded byHQ in Redmond & located in the same building but separately from the  local Microsoft office.

On the political side, Stuart Jones, Deputy Asst. Sec. for European Affairs from the US State Dept. noted the Serbs elected a pro-western government & is a candidate to become a member of the EU.  It’s a transportation hub on the highway to Albania & minority Serb issues must be addressed in Kosovo.

Illinois Congresswoman Melissa Bean, a descendant of Serbian relatives & former IT executive, has led trade missions to Serbia.  In Q&A said the Obama administration is coming up with a template for Free Trade Agreements which will be used to evaluate NAFTA.  We also need to recreate the abundance mentality to create broader middles classes everywhere so we can share in growth.

George Selak, Pres. of Astro Machine Corp. said in some ways Serbia is still in a horse & buggy stage & it’s not easy doing business there.  Regardless, great prospects for opportunity exist there.

Q&A with Samuel Kramer of Baker & McKenzie enlightened us in that jurisdictional issues can be solved simply by good counsel & when seeking the US government as a customer, the government does have procurement roles.

This was a very-well organized event & Zoran was not bashful about making the information presented available, including information on the participating firms.  I like the fact that they focused on successful US firms in Serbia, which many times beats presentations by non-English speakers shilling their wares.  Success stories from local firms who are working in those foreign trenches are much more convincing.  I find it interesting that this event was conceived last year in northern California & took place in Chicago.  I believe the reason is the primary organizer, Zoran, is located in Chicago.  However holding an IT conference here that was formulated in Silicon Valley & happens here is noteworthy.   I’m not a fan of hosting a lot of politicians, but given her former business & IT experience, Melissa Bean was a good addition.  I also question the relevance of trade missions, in that these meetings are only a step in the relationship building process & the expectation to sign an MOU after 1 meeting is a bit much.  It usually requires much more research, analysis, & planning to determine whether or not these foreign relationships make sense.  Granted personal relatinships are still important, even for IT businesses, but if you’re meeting a 1/2 dozen representatives in 3 hours, how focused can you be?  This is not a criticism of this particular event, rather of trade misssions in general.