Archive for January, 2010

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history/future of free trade in the Americas

Friday 29 January, 2010

I lunched with visiting professor Ralph Folsom again when he talked about Nafta & Free Trade in the Americas: Prospects for the Future @ his 9th annual lecture @ John Marshall law school.  Here’s what he had to say:

The Andean Community kicked off the free trade movement by bringing together Bolivia, Colombia, Ecuador, & Peru in 1969, but broke down under political conflict.  Its main goal was to reduce dependency (dependencia) on capital, investment, & technology from the US.  Decision # 24 imposed foreign investment & mandatory joint venture controls by foreign investment commissions on foreign direct investment coming into those countries.  Controls were imposed on technology transfers as well.  Governments regulated contracts, required mandatory exports, & even levels of royalties.  Ancom appears to be collapsing.

Brazil brought together Argentina, , Paraguay, & Uruguay to form Mercosur in 1991 in an attempt to clone the European Union.  It’s a customs union with a common external tariff & common trade agreements.  Chile & Bolivia joined in 1994 & Venezuela has been knocking on the door for years, but Lula of Brazil doesn’t want to let Chavez of Venezuela in.  Led by Brazil’s strength, Mercosur seems to be strong.

GHW Bush’s hope for a Free Trade Area of the Americas had not materialized.  Chavez put together the ALBA group consisting of Venezuela, Cuba, Bolivia, Ecuador, Nicaragua, & Honduras.  ALBA has grown due to lots of barter trade between its members.

NAFTA came out of the Canada-US Free Trade Agreement when Mexican President Salinas was rebuffed by the Europeans for a Mexican-European free trade agreement, so he approached GHW Bush with the concept.  The Canadians saw it as a threat & opportunity to renegotiate some terms of the US-Canada FTA.  Many NAFTA terms have preceded World Trade Organization terms by 12 months, such as the TRIPS intellectual property guidelines, which has worked to the benefit of the Americans many times over.  NAFTA’s local content requirements have led to many factories & jobs being located in North America.

CAFTA (Central American Free Trade Agreement) was proposed (& authorized by a very slight majority in the US congress) in 2005 including Costa Rica, Dominican Republic, El Salvador, Guatemala, Honduras, Nicaragua, & the USA.  It improves upon NAFTA by including intellectual property, but does not allow for the free movement of people between countries.  Foreign investment is protected against government acts “tantamount to expropriation.”  Metalclad, Ethyl, & Methenex cases have resolved/arbitrated a few disputes to clarify what is meant by “tantamount to expropriation.”

The US has yet to ratify free trade agreements with Colombia & Peru in the region.  Presidential fast-track authority for these treaties has expired, so progress towards their conclusion is slow.  Given the lack of support for trade in the current downtrodden economic situation, it’s questionable how high a priority these treaties are for the US government.

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IVCC tour around the world

Wednesday 27 January, 2010

The International Visitor’s Center of Chicago hosted an evening featuring a tour around the world with Dieter Klagge, an intrepid traveler who has visited 119 countries. Dieter gave an old-fashioned slide show which whirled us around the globe in rapid fashion. Here are tidbits I pulled from his presentation:

  • Kanchatka in Russia has 29 active volcanoes to which you can get very close
  • a volcano erupted in Montserrat, so there’s nothing/nobody left to see there anymore
  • Le Paz, Bolivia is the world’s highest city, altitudenly
  • Antarctica was 57 degrees in January with no darkness
  • the wife of Spain’s former king was German & spoke Deutsch with Dieter when he was there
  • the famous minarets in Moscow are now a museum
  • Muslim women wear no veils in Uzbekistan
  • a lake encountered on the Siberian Express from Moscow to Urtusk contains 1/6 of all the fresh water on the Earth
  • the Chasa palace in Tibet has 6,000 rooms
  • wandering sand dunes swallow trees in Dubai
  • North Korea has springs which emit effervescent water & the Chinese have built a lot there
  • Namibia is a former German colony where residents lived better then compared to now
  • Greenland is 5 X as big underwater
  • Vlad Dracul (Dracula) kills in Romania
  • Slovenia is beautiful

Q&A revealed:  North Korea & Cuba are misrepresented by the media & are not as bad as the media portrays them to be. The people in both countries as are nice as in any other. Although Dieter travels with 2 passports (German & American), & the North Korean police did take some of the photos (& x-rayed others) he took there, he maintains these countries are misunderstood.

To catch more of Dieter’s slide shows, keep your eyes on the event calendar @ the Wilmette Library.  fyi-I worked with Dieter @ my 1st job out of college many years ago @ Xerox when we were both account managers.  He was responsible for Sears & all of its subsidiaries @ the time.  We’ve crossed paths many times the past few years @ events @ the Goethe Institute, IVCC, & others.  Dieter is a great guy & he tells great & amusing stories @ his presentations.  Check them out when you can.  The IVCC needs hosts for foreign visitors, so register with them as well.

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Kraft’s acquisition of Cadbury

Thursday 21 January, 2010

I caught with interest this article on Kraft’s acquisition of Cadbury Kraft’s bid has Brits cheesed off by Henry Chu.  I find it somewhat amusing how all this posturing goes on that really doesn’t make a difference.  It’s ridiculous that on 1 day a transaction is labeled a “hostile takeover,” & a “sweetheart deal” the next.  Chu claims that Hersheys in America is a corollary to Cadbury in Britain, but I don’t get the warm & fuzzies from Hershey’s, which makes me wonder if the same is really true about the Brits.  When you get right down to it, all of the politicians, workers/unions, consumers don’t matter when an acquisition offer is on the table.  Everything that’s said is simply for negotiation purposes.

I will admit that there truly are differences in chocolate from country-to-country.  When I was living in Germany & flying home to the US, & perhaps stopping in Belgium, I would pick up some M&M’s in each country & do a comparison when I got home.  I’m a bit embarrassed to admit that American M&M’s are sweeter than the European variety, but I do have a sweet tooth, so I still prefer the American version.  The European chocolates are smoother, but I like my sweets strong & fast, & American chocolates smack you in the face with their sweetness by comparison, so I remain by my native tastes.

Perry Yeatman, author of Get Ahead by Going Abroad & whom I interviewed last year , is in charge of investor relations for Kraft.  She has been ecstatic that Kraft is finally expanding its footprint globally.  Typically conservative Midwestern Kraft had been slow to approach the rest of the world, but with the Cadbury acquisition will have access to many markets with 1 fell swoop that would have been much more difficult & expensive to build on their own.

Granted, maybe Cadbury is a British icon, but they all still fall prey to economic realities.  The bottom line is this deal makes business & financial sense.  The distribution networks are complementary.  All that matters is the British shareholders held out for more money, & as soon as they got it, they were satisfied.  For better or worse, with global M&A, it’s still the numbers that matter more than anything else.

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google exiting China?

Thursday 14 January, 2010

The potential of Google exiting China has raised a furor lately & begs for my comment.  Here’s the announcement which started the firestorm:  A new approach to China 1st:  we need answers to many questions this post raises:

  • what other large companies were attacked?
  • whom does the evidence indicate conducted the cyberattacks?
  • how long have Chinese human rights activists’ gmail accounts been accessed by 3rd parties & by whom?
  • what specifically were Google’s objectives when they entered China?

Aside from this blog entry, there are a few other issues relevant to this incident:

  • Google’s market success & profitability in China & prospects for the future
  • Google’s U.S. executives familiarity with China

At the risk of commenting before all of the facts come out, here are my thoughts:

  • The implication is the government is behind these cyberattacks, but this should be no surprise, though it’s doubtful explicit links can be proven. That whoever led these attacks went after gmail accounts outside of China is the most egregious act.
  • While these attacks in all likelihood were intended to silence Chinese human rights advocates, attacking their e-mail accounts is a bit tardy. The e-mail messages have already gone out.  Since it’s so easy to open free gmail accounts, hacking these accounts won’t prevent them from speaking out in the future either.
  • Hat’s off to Google for trying to get the Chinese government to loosen its restrictions on free speech on the internet.  But in some ways, I think this is simply grandstanding on Google’s part to exit a marginally profitable market.  They put on the presentation that they are taking the high road, but the situation remains that Baidu holds the same market share over Google in China that Google holds over everybody else in the U.S. & that’s not changing much.
  • I have no doubt that Google’s executives are pretty familiar with how things work in China, but even they should know they probably won’t win when confronting the Chinese government.  I think Google could have much more positive influence by working within the system than trying to buck it.  If Google does leave China, the government will have won, & have 1 less venue to censor.  In some ways, the US government should even lobby for Google to remain.
  • The biggest losers could be Google.cn users in China.  If Google leaves, they’ll have little choice but to revert to the dominant local competitor Baidu.com  Google should stay in China & try to work more closely with the Chinese government to foster change from within rather than from the podium.
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international search interview

Thursday 7 January, 2010

I caught this interview in B2B Marketing magazine International search offers opportunities which I think is very helpful for a lot of technology marketers.  Here are a few highlights in my eyes:

  • I’m not sure that pay-per-click advertising rates have necessarily reached their ceilings in English-speaking markets.  I’d like to learn his source for that.  I think there’s still lots of room for growth in terms of numbers of customers as well as how much they’ll pay.
  • translation tools are of limited value, because translations still need to be seen by human eyes, even native speaker eyes.  I still speak pretty good German, but would not want to take responsibility for naming keywords in German.  I don’t know if it was the interviewees mistake or the editor’s, but they didn’t even translate some German in the interview correctly.
  • when I interviewed John Lee of Hostway for the eprairie.com Q&A: Founder John Lee of Chicago’s Hostway on Web Site Localization ,he verified the difference in Asia’s proclivity towards more busy webpages.  It might seem “foreign” to us, but it’s very comfortable to them.  I suspect it might have something to do with the fact that they use kanji characters instead of the roman alphabet & thus they look at their verbiage differently than we do.

In general, internet search is all about finding the right words, & just translating the words directly from language to language is not enough.  All those words are most effective in context, & translating them without context wastes money by ending up with the wrong words in translation & many times missing the correct words, which costs you in lost opportunities.

This simply underscores the fact that even technology firms which depend on 0’s & 1’s/bits & bytes have to pay attention to language differences, break down, & pay specialists to translate stuff.