Archive for March, 2010

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sdl localization roundtable

Wednesday 31 March, 2010

I had lunch with the folks @ SDL who sponsored another roundtable discussion on localization.  There were representatives from a number of the area’s leading companies in attendance, such as GE Healthcare, Johnson Controls, Zebra Technologies, Encyclopedia Britannica, Hyatt Hotels, & Navistar.  A few notable non-profit organizations were there too;  Rotary & Lions Clubs.  Here’s what we discussed:

Localization leads to revenues, i.e. if you translate, foreigners will buy.  By not translating, you lose sales.  In many emerging (& growing) markets, English is not the primary language, so to reach those growth markets, you have to address them in their native tongue.  Speed counts too.  Being able to launch a product world-wide in multiple languages simultaneously has great advantages, but requires a tight timeline.  Translation should be included at the start of the product development cycle to be a deliverable as part of the product release.  Americans try to get away with as much as possible, but that no longer works.

Regulations require many documents in local language & in hard copy in many countries too.  Germany requires everything to be in German.  The Czech Republik requires some but not all to be in Czech.  In some cases, you can’t get products through customs without translations.  There are many translation certification processes & they vary by industry.  Liability can be an issue as well.

Organizations which separate international & domestic operations noticed that they’re becoming too intertwined, so they’ve become closer since the crash.  Localizers need to find a strategic budget champion.

Terminology management should be in place for tier 1 & 2 languages. Use best practices,  style guides, in-country reviewers  content management systems(CMS).  Optimizing the constantly evolving iterative process is key.   Lack of an organized process leads to last minute localization, which rarely works well.  Review & verify the 1st time to avoid costly time-consuming retread errors.  Track reviews over time with back-ups.  Edit before entering information into the CMS.  Make editors explain why they are making changes to keep within standards.  1 word change in 30 languages costs $12/word.

GE used the Interleaf publishing tool in-house in 1999.  Translations took 3-4 months to complete & cost $1M.  Their organizations were silo’ed.  Now they have 1 group of writers & us a Translation Management System (TMS) to streamline their process:  their # of changes has gone down, which has brought their costs way down to $60K.  They now use the automated structure of Framemaker.  (Be sure you own your own Translation memory).

As I’ve said before, many Americans discount the value of language & assume the rest of the world speaks English.  My counterarguement is that everyone is most comfortable conducting business in their native language, so for us to assume something different is simply arrogant.  I don’t see many firms approaching customers & partners in other countries in their own languages & that’s a mistake. We need to start dealing with the world on its own terms rather than trying to deal with them in a way that’s best for us, in English only.

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protection in China

Thursday 25 March, 2010

I attended this presentation organized by the Chicagoland Chamber of Commerce DOING BUSINESS IN CHINA: HOW TO PROTECT YOUR INTERESTS IN DOING BUSINESS IN CHINA featuring Caroline Berube, Managing Partner of HJM Asia Law & Co. LLC.  Caroline 1st noted that many foreign companies don’t highlight their successes in China because it won’t appear politically correct at home. She then took us through a few forms that her firm publishes on legal & credit searches.  She brought up what might seem like simple issues that can become problems, i.e. make sure you have counterpart’s names in Chinese characters to be legal in China; the legal representative must have legal power to sign & get it sealed with a corporate seal.

Starting out-The Chinese government will deny access to the Chinese market if you don’t prove that you have a viable plan & the money to fund it.  If you change the scope of your business in China, you have to file forms with 20 different authorities.  Business licenses are usually valid for 20-30 years.  (On government forms, everyone is married…apparently no 1 gets divorced there & all business card titles are General Manager or Vice-Chairman.)  Some industries are foreign investment restricted-real estate, insurance, banking, /prohibited-exploitation of natural resources.  It takes 3-5 months to obtain a business license, 4-6 months for a WOFE-(wholly owned foreign enterprise).  Start-ups typically take 3-5 years to show their 1st profits.

Financing-Profits can be repatriated as long as you can show that all taxes & customs have been paid.  Foreign shareholders must contribute at least 25% of registered capital in cash or technology transfer to an equity joint venture.  Corporate taxes are 25% as of 2010, but can be negotiated in smaller cities with less FDI.  Hire a Chinese CPA with big 4 & multinational experience, but they are not cheap.  There is stiff competition among mayors in China to attract foreign direct investment so that they can earn big bonuses.

Outsourcing is low risk commercially & financially & a good way to test the Chinese market, but requires a proper contract.  You need to dig to find the details on Chinese partners, i.e. a manufacturer was considering outsourcing a $3M order & digging deeply found that the Chinese company was capitalized with only 30,000 RMB only 2 weeks before the deal was agreed-upon.  You need to find the right city for your industry.  Free trade zones were abolished in 2008 because they were unfair competition to the locals.  Not all Chinese companies have import & export rights-you must get approval from the government.

Legal Structures-If you have a joint venture or WOFE, including privately-owned companies, you have to file financial reports every month or 1/4.    WOFE’s & JV’s have strict & time-consuming, although not difficult, auditing & reporting requirements.   Representative offices are not equivalent to the same here.  They cannot carry on “major business activities” (sales & manufacturing), & cannot earn a profit-they are for promotion only.  They are puppet companies with no signature authority.  They pay taxes on expenses as well as income.  Rep offices must hire its staff through the Foreign Employment Services Corporation & pay a $150-250/employee/month fee to the government.

Legal issues-There is no national database for court filings-they are maintained in every city.  Trademark/patent law did not exist until 2001, so the Chinese are still very new to enforcing these laws.  Beware of negotiation partners registering your trademark if negotiations don’t work out.  It takes 3 years to register a trademark.  Protection is with registration, not use.   Registration with the customs bureau will prevent unauthorized exports from leaving China.  In joint ventures, Chinese contracts & law prevail. It’s best not to involve 3rd parties, i.e. ship to 1 party & pay another.

Labor-Foreign companies/WOFE’s/JV’s pay 150-300% of what local companies pay for labor & it’s difficult to fire employees in China.  Social responsibility is important if you’re acquiring a Chinese company, although most Chinese companies don’t pay the 40% additional social costs.

Safeguards-It’s important to have feet on the street.  Success often comes from having American staff on the ground to monitor operations/partners to keep them on their toes-planned visits don’t cut it.  They need to know you can be in their factory in 2 hours to keep them honest.  The biggest nightmares come as a result of having no presence.

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swedish consul general on chicago culture

Wednesday 24 March, 2010

The Niagara Foundation supported this luncheon speech featuring Kerstin B. Lane, Consul General of Sweden & President of the Swedish American Museum Center, who talked mostly about the Chicago Cultural Alliance (CCA).  The CCA was formed as a non-profit organization for teachers which grew out of the Cultural Diversity Alliance at the Center for Cultural Understanding & Change at the Field Museum 3 years ago.  It consists of 30 ethnic museums, cultural centers, & historical societies  in/around the city.  The organization has grown so much, they’ve had to hire 3 full-time staff.  Over 100 foreign languages are spoken among its members.  The CCA has a focus on ethnic identification with a pithy catchphrase “Leave no child inside.”  Their goal is not only to help immigrants hang onto their heritage, but also to leverage it in contemporary society.  They earned a grant from the Joyce Foundation for capacity building.  (A visit to the website indicates the $25,000 grant in 2009 is for “For salary support of its executive director” for 12 months)  They’re funded by their core & partner dues & individual donors.  They’re holding a fundraiser 29 March.  Click on the link above if you’d like to support them.

Q&A

  • When the Chinese cultural museum burned, the CCA played a big role in helping out & getting it rebuilt.
  • The Swedish, Balzekis, & Cambodian museums offer children’s activities, but many other museums do not have designated space for children.
  • Chicago is the only town in the US with a cultural alliance that brings together so many ethnic organizations in 1 city.

I requested the presentation from the Niagara Foundation, but heard nothing back from them.  While I’m all for learning as much as you can about foreign cultures before you go someplace, learning at home is still no substitute for being there & experiencing a new culture firsthand.  Personally, I was disappointed not to hear anything about Sweden.  I lived there for 6 months a number of years ago & haven’t been back since, so I was curious about what’s new there.  Ms. Lane was very focused on topic, so while I could have asked, I had the impression she had no interest in talking about anything but the CCA.

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m2’s take on the national export initiative

Friday 19 March, 2010

When I listened & watched President Barack Obama’s State of the Union Address, I was shocked & psyched when he set a goal of doubling America’s exports in the next 5 years. My question was, “How does he think he’ll go about achieving it?”  Apparently it’s taken 6 weeks to put together a plan, called the National Export Initiative.  Here are the announcements:

Here’s my take the NEI:

Obviously as a devoted internationalist & service provider who helps American firms grow globally, I think this is great.  It’s been a long time since a President has made exports such a high priority.  I think it’s appropriate.  Elevating this effort to “cabinet level” (obviously State, Commerce, & Agriculture departments already are) raises the level of awareness, which is sorely needed.  My impression has been that previous administrations have simply let the $ fall & assumed that cheaper prices would sell more American products & services.  That’s not our advantage.  As an international business writer, I have to pick at the finer points to evaluate the likelihood of success.  My concerns:

  • trade finance-the Export Import Bank stepped up during the financial meltdown & adding $2B in funding certainly helps.   I interviewed the midwest regional director of ExIm , & the response to that indicated that access to capital is not the problem, rather timeliness is the issue.  In addition to adding capital, I hope they add the human resources to enable ExIm to work expeditiously to provide its financing in the time frames businesses need to compete with foreign competitors whose processes work much faster.  You can’t just throw money at the problem & expect it to work.
  • advocacy-40 trade & reverse trade missions are a good start, but the real test is what results that come out of those trade missions.  The real work comes beforehand & afterwards, when prospects are qualified & followed up upon.  Some can be very successful, but government-organized trade missions have low levels of accountability.  The focus is as much on the signing opportunity for the dignitaries as it is for finding qualified prospects for American companies.  Governments simply aren’t very good at marketing.  The Travel Promotion Act & adding Senior Business Liaisons @ embassies & consulates don’t cut it.
  • assistance-beefing up resources at offices domestically & abroad can only help. I constantly hear how underfunded the Department of Commerce is.  It sounds good, but given our financial situation & so many projects competing for money, I wonder how they can find the funds to pay for this.
  • free/fair access-We need to tear down trade barriers to get reciprocal access.  Our markets are open, so we should expect the same openness from our partners, but many of these barriers are not explicit, so overcoming them is not obvious.  You can’t argue against protecting intellectual property.  The rest of the world should value theirs as much as we treasure ours, but the fact is they don’t.  Lowering export controls should increase our opportunities.  Many have criticized Obama for sounding socialistic by encouraging enforcement of labor & environmental provisions.  The question for all of this is “At what cost?”  We can stomp our feet up & down & scream “Bloody murder!,” but we can’t enforce foreign laws in other countries.  We can pick up our toys & go home, but that’s not productive for us either.  I endorse it, but I don’t know how we can back it up.

The international business person in me wants this to be a huge success, but my experience leads me to expect much less.  A lot of this reeks of more of the same, just bigger & better, (which can have its advantages).  American companies need a significant change in business culture to bring about a change in long-term orientation.  We need to make changes at much deeper levels to have the kind of impact Obama wants.  We need to start learning foreign languages & world history, economics, & politics at much earlier ages.  We need to stop thinking the opportunity in the state next door is “better” than the opportunity on the next continent.  We must stop being scared of the unknowns & plunge right in.  We can no longer think of America as God’s chosen country.  It is not.  Flat-world companies from the rest of the globe are taking advantage of us.  We need to pursue them as aggressively as they pursue us.

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china, mexico, philippines, us doc @ mbda seminar

Wednesday 17 March, 2010

I attended this seminar  MBDA International Day-Global Business Forum presented by the Minority Business Development Development Agency which featured speakers from China, Mexico, the Philippines, & US Department of Commerce.  Last year the MBDA took a delegation to China & they were awarded multiple contracts to MDE’s (Minority Development Enterprises).  Their focus is on Mexico this year.  Their aim is to provide access to global markets.  The MBDA’S model is to provide:

  • preparation-strategy, team-building, identify potential partners
  • orientation-travel logistics, meet prospects, identify barriers, reevaluate
  • implementation-identify personnel, serve partners, integrate the communication process.

The strategies they promote:

  • follow your customers abroad
  • leverage your ethnic heritage to the markets of your ancestors
  • leverage minority supplier status to foreign customers in the US

The MBDA is partnering with

  • US Dept of Commerce
  • Consuls General
  • Chambers of Commerce

Here are the presentations by each of the guest speakers:

Q&A

  • The US Dept of Commerce can provide lists of projects upon which American firms supposedly could have a fair chance.  ProMexico.gob.mx helps there, while the system is not yet very sophisticated in the Philippines.
  • Americans need to better understand the cultures of the countries with which they want to do business.  Localization & hiring locals is also key.
  • NAFTA protects intellectual property in Mexico, & IP must be protected locally in the Philippines.
  • American firms can save 40-70% (10-20% vs. India) on labor costs in the Philippines, while in China labor costs vary by city, & other considerations are more important than labor costs in Mexico, i.e. technology, distribution, etc.
  • Chinese companies need permission from their local chamber of commerce to come to the US, while American firms should simply introduce themselves to the trade commission to meet Philippine firms coming here.IT outsourcing grew in the Philippines as an outgrowth of call centers & progressed into doing data entry for MNC’s.
  • The Philippines offers hotel accommodations & airport service as incentives to exhibit @ trade shows there.

    Comments from a couple of participants:

    • These organizations can only do so much.
    • You don’t want to depend on just 1 party to pursue these kinds of opportunities.

    my $.02 worth & blatant self-promotional plug:  gata can provide more focus on these American export opportunities than these organizations.

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    Ireland-death of the celtic tiger

    Friday 12 March, 2010

    I attended this event hosted by the Chicago Council on Global Affairs IRELAND’S ECONOMY AND THE DEATH OF THE CELTIC TIGER featuring Fintan O’Toole.  Here’s what he had to say:

    Why does Eire matter?  It’s a fitting example of the current status of globalization & its sustainability.  Globalization a very complex phenomenon that is often grossly oversimplified.  Between 1995 & 2002 Ireland benefited greatly from global free trade & became the most globalized economy according to AT Kearney & Foreign Policy magazine.  There were many external effects which led to Ireland’s boom:

    • the weakening role of the catholic church, (which essentially outsourced morality)
    • a baby boom in the 1970’s led to demographic changes which resulted in a younger work force & more women working
    • investment in education was significant
    • social partnership led to less free markets
    • Ireland’s vicious cycle of mass immigration weakened its economy in the past, but when immigrants returned to Ireland, it had a positive effect.

    The problems started popping up when they started to believe the hype themselves.  While lower taxes & fewer regulations added to growth, it was not sustainable.  It crowded out capacity to understand what was happening to society.  The lack of political tension created a transformation that either all had changed, or not.  5 things did not change:

    1. town hall political culture-machine politics expanded, which led to fewer choices
    2. perils of intimacy in a small society-financial corruption with impunity made decision-makers think standards no longer applied to themselves & that they were the kings of the universe
    3. unknown knowns-tax frauds were known, but ignored, which led to an incredible property boom while common sense became inert
    4. understanding of wealth-the assumption was that technology + management leads to wealth, but they returned to feudalism & invested heavily in land/property
    5. aspirations-they still wanted to become doctors & lawyers, but ignored passive recipients

    Ultimately Ireland failed to engage in globalization successfully, which created a property bubble.  The political state failed to create real long term development.

    Q&A

    • thought leaders did not address technology-there were disconnects & massive self-delusion, ex. Ireland sold off its national telecom carrier, but it’s level of broadband penetration still needs lots of investment
    • with the implementation of the Euro, Eire lost control of its own monetary policy, which deprived them of a potential economic tool, but they’re still better off being in the Euro-zone than outside of it
    • re: fiscal austerity, Irish politicians are surprised citizens are not more upset about budget cuts, etc. even if they are not sustainable.  It is anti-Keynesian to cut spending in a recession, which could become deflationary & lead to unemployment & social resistance, but the feeling is it must be done.  Government is still investing in banks that will never lend again.  It’s difficult for the people to sustain sacrifice if there is not justice.
    • Ireland’s 2 political parties are essentially 2 slightly different flavors of Christian democrats, who rarely disagree.  A new dialogue must start from the ground up.
    • The Irish are smart enough not to repudiate their debts.  They’re embedded in the global economy & recognize the consequences could be catastrophic if they did.
    • Lack of accountability is key, but a danger of a single ruling party.  At the business level, the question is “did leaders know what was going on or not?”  Were the duplicit or complicit?
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    what’s new with German taxes

    Wednesday 10 March, 2010

    I attended this seminar organized by the German American Chamber of Commerce in the Midwest & Ernst & Young WHAT IS NEW IN GERMAN/U.S. TAX LEGISLATION AND CROSS BORDER TAX PLANNING? featuring Patrik Heidrich & Ruprecht von Uckermann of E&Y’s München office.  Although 1/2 of the seminar was a German perspective on US tax legislation, (& it’s always interesting to learn about your own country through the eyes of foreigners), I’ll focus on German tax legislation.  Pardon the high level of generality here, but these issues are very detailed & complex, so I can’t go into greater detail in a relatively short blog entry.

    Interestingly, they opened by noting the following:

    • politicians tend to simplify complex tax law issues & trade off tax rate reductions against corresponding decreases in available deductions
    • tax courts overrule poorly drafted tax legislation/regulation
    • tax authorities are required to collect taxes, even on poorly drafted legislation & with resource constraints
    • tax compliance is becoming increasingly cumbersome
    • it’s the taxpayer who is in the eye of the storm

    Apparently tax evasion is a big topic in Europe these days.  Fired Swiss bank employees copied bank information on private customers & are offering to sell this information to foreign governments.  German citizens can escape prosecution if they voluntarily disclose past transgressions beforehand to German tax authorities.  They also told the story of an American doctor in Virginia who tried to avoid having a Swiss inheritance be detected by sending it over in 26 FedEx packages, but the delivery service turned him in.

    re: inbound investments from the US to Germany, the following rules changes are coming:

    • interest barriers-higher deductions are possible, but there are compliance issues
    • changes of ownership-affect net operating losses & loss carryforwards
    • Real Estate Transfer Tax-can be eliminated with group restructuring exception
    • relief for electronic bookkeeping outside of Germany, but only within European Union-German tax authorities must maintain access to tax data 24/7
    • German anti-treaty shopping-requires relevant economic substance for partial/full withholding tax exemptions

    re:  outbound capital from Germany, these issues are changing:

    • repatriation of profits from Germany to US-dividend exemptions & withholding tax reductions
    • foreign exchange-value of assets changes due to foreign exchange (translation) exposures results in windfall profit tax
    • transfer pricing-of German trademarks/brands

    Changes in treaties are leading to reductions in withholding taxes.  Ernst & Young offers planning ideas to address all of these tax issues in Germany.  Consult their website above for specific advice.