Archive for July, 2010

h1

what I REALLY mean by cultural differences in business

Friday 30 July, 2010

I read with interest an article Do Germans and Americans Understand Each Other in German American Trade, the magazine of the German American Chambers of Commerce which highlighted some of the meaningful cultural differences which make a difference in international business.  One of my pet peeves is that many Americans throw up their hands in disgust & write off deals poorly done or implemented due to cultural differences, as if eating a meal with the wrong fork scuttled the deal.  (I was embarrassed to attend an international accounting seminar where they actually hired an etiquette consultant who trained us on table manners in other countries over lunch.)  Many people lump all differences together as if all are equally important & I disagree.  I think there is relatively little research done, (or possibly just reported on), on cultural differences that are important in conducting business globally.  The main differences that stick out in my mind are that business people from different countries place different values on different decision-making criteria (i.e. Americans value speed & convenience while generally Europeans value quality & stability), & that decision-making processes differ by country.  This article focuses on some of the important variables we should focus on for many more cultures so that global business people are better prepared to do business with business people from other cultures & aren’t surprised when a deal or implementation doesn’t proceed in the way they expected.

disclaimer:  I didn’t intend to write about so many German events & issues in July, but they were the only ones doing much this month.  Also, the only problem with the article is the book is in German, so Americans in all likelihood won’t be have access to the depth of content that is available in the book.

These articles focus on difference between Germans & Americans, but there are differences between Americans & businesspeople from many other countries with which we do business as well.  After living in Germany for 2+ years, 1 of the striking differences to me was that despite all of the similarities in demographics, income, technology, etc., the Germans conduct business fundamentally differently from Americans & the German method is no better or worse than how Americans do it.  I admire & respect the way the Germans conduct business for the most part, but understand the strengths & weaknesses of their approaches.  I have lived all of the differences the author brings up & understand & agree with all of them.  The overarching question is:  “How do you as a businessperson address these differences?”  Again a major cultural difference between Americans & other business people is Americans just jump right in & do it, which is usually their 1st mistake.  I wish I could point to resources to find out these business cultural differences on a country-by-country basis, but like this book, you pretty much have to look for them in each country.  The value in this post, like many 12 step programs, is recognizing, admitting, & committing to do something about the problem.  If you’re interested in differences with German business culture or just a good example of pertinent differences, check out the article.

Advertisements
h1

transatlantic climate bridge conference

Tuesday 27 July, 2010

I attended this event Transatlantic Climate Bridge Conference on Renewable Energy & Emission Trading organized by the German American Chamber of Commerce of the Midwest.  The presentations are posted here & here’s what they said in addition to what was contained on the Powerpoint.

Dr. Martin Schoepe, Head of Division, International und European Affairs of Renewable Energy German Federal Ministry for the Environment, said the European Union has decreased its greenhouse gases 30% since 1990. In 2009, Germany generated almost 10% of its energy by renewables, mostly biomass. Hydro-electric power has topped out in Germany & will grow to no more than 4% of all power generation. Germany has benefited from higher turnover, employment (300,000 jobs), exports, & investment while lowering greenhouse gases & oil imports.

Howard Learner of the Environmental Law and Policy Center, God forbid, spoke without Powerpoint, so here’s a summary of his talk. Only 30 U.S. States have renewable energy standards. He’s seeking to reach 20-25% renewable energy generation by 2025. Federal standards are critical & he recognizes public support drives political action. Costs for renewable energy are dropping. Solar power costs ½ of what it did 5 years ago & will fall by ½ in another 5 years. Illinois passed a bill assuring we will generate 600 megawatts of renewable power by 2015. Chicago is becoming a hub of renewable energy headquarters with 11 locating in the area. The U.S. feed-in tariff is complicated. Wind power installations are decelerating while solar installations are ramping up. Electric vehicles will become more important-the placement/location of power sources will be key.

Thomas Cushing said the Chicago Climate Exchange, now owned by the Intercontinental Exchange in Europe, also has offices in Montreal & China, & serves 11% of the Fortune 100, 25% of U.S. power companies, & 17% of Dow Jones companies.

Michael Mehling of the Ecologic Institute admitted Europe’s is not a market-based system & works only by command & control. He surmised our system should include not only the utility sector, but industry as well.

Sylvia Pilarsky-Grosch of the German Wind Energy Association & Jonathan Feipel of the state of Illinois pretty much read their presentations, so check those out to see what they had to say.

Q&A

  • Schoepe explained about Germany’s feed-in tariff. Its rationale is tariffs are based on costs & costs are falling every year, so the tariffs are revised after in-depth analysis every 3-4 years, 9-16%/year.
  • The U.S. Has 70-80% public acceptance of renewable energies. The problem is coal is still so much cheaper.
  • In the near future & @ all times, increasing energy efficiency helps as much as seeking out alternative renewable energy sources. CFL’s, passive house standards, audits, & energy star appliances all help.
  • Cap & trade programs better reflect costs, & are more flexible & market-oriented than implementing a carbon tax. Carbon taxes are easier to implement & are more transparent.
  • Europe shows that it’s possible to go without nuclear power. Illinois illustrates that fossil fuels are inevitable in the short term.
  • Headlines about China’s energy accumulation are dangerous & don’t reflect reality. Even the central government doesn’t have good data.
  • The economic crisis has made more supplies of carbon available, so prices have fallen.
  • Electric vehicles make sense in urban areas where charging stations will be plentiful, but not as much sense in rural communities.
h1

MacArthur Foundation on American fiscal policy

Friday 23 July, 2010

I attended this event America’s Fiscal Future: Making Difficult Choices sponsored by the MacArthur Foundation & Federal Reserve Bank of Chicago featuring Dr.’s John Palmer & Rudolph Penner.  You should be able to see/listen to the panel discussion here @ Chicago Amplified on the local outlet for National Public Radio.  The event was put together to promote a report sponsored by the MacArthur Foundation Choosing the Nation’s Fiscal Future My hope was to be able to put this topic into a global context.  Alas, I was soundly disappointed.

Since you can see/hear the discussion, I’ll add my $.02 worth.  Maybe I’m feeling cranky today (it will be near 100 degrees F), but in my mind, how our government spends our money & manages our national debt is an issue of national competitiveness.  The more we haggle over pork-barrel projects, the less we are able to invest in spending that enhances our global competitiveness.  The greater debt we bear, the less we will be able to finance infrastructure replenishment & growth, plus education.  The discussion points out, our budgeting process is broken & it’s costing us as a nation.  Today the global economy is so closely intertwined, it doesn’t make sense to consider this issue without taking a look at where we fit relative to other countries in how we spend our money.  I sat next to Karl Bushmann, a University of Chicago graduate, so he’s a pretty smart guy.  He wanted to ask how our current situation compares with Japan’s, a real possibility, but never got the chance to pose the question.  Japan suffered for over a decade of deflation, & that’s a real possibility here, as is the threat in the other direction of rampant inflation.  We just don’t know in which direction the economy is going to go.  The speakers hold PhD degrees, so they’re certainly well-educated:  they just didn’t seem to be interested to put this into a global context.

I’ve taken a look through the materials they distributed @ the event, & found it’s disappointing that it doesn’t look like the MacArthur promotes more projects which address more global issues.  Adele Simmons, President of the MacArthur Foundation 1989-1999 & currently Vice Chair and Senior Executive, Chicago Metropolis 2020, “established the Foundation’s global reach, opening offices in Russia to strengthen universities and policy institutes, and launching the Population Program with field offices in Mexico, Nigeria, Brazil, and India.”  1 of its 4 programs looks to be global in scope.  “The Program on Global Security and Sustainability focuses on international issues, including human rights and international justice, peace and security, conservation and sustainable development, higher education in Nigeria and Russia, migration and human mobility, an population and reproductive health.”    It has also supported work in 58 countries.

A website www.ourfiscalfuture.org was created to discuss the topic as well.  The MacArthur Foundation seems to be a very globally-aware organization.  I just wish they’d do more to publicize international issues as much as they did this domestic one.

h1

those German sweeties

Tuesday 20 July, 2010

I attended this reception for German sweets & snacks manufacturers who were in town for the Institute of Food Technologists show @ McCormick Place.  I highlight a few of these firms simply to bring out a few of the differences between German & American business.  1st of all, the exhibiting German firms are all family-owned companies upon which the German economy is based, the so-called Mittelstand, or mid-sized firms.  There are advantages & disadvantages of working with these kinds of firms.  They are private, which means they don’t have to worry about keeping shareholders/investors happy, but that also usually means that they abhor venture capital, so they rarely exhibit fast growth.  Branding each of these products in America could be time-consuming & expensive, so I’d be surprised it many of these firms will go it alone that way.  I was told that they are simply here to explore different strategies, so apparently they are not locked into approaching the market in any 1 particular channel.  Each would do well to ditch the .de domain name in favor of .com

In the German tradition, Päx Food has created a new food category by creating its own drying process different from freeze-drying by working together with the world-famous Frauenhofer Institute to create foods that are dried, but much less so than other dried fruits & vegetables.  It’s commendable that the Germans continue to innovate even in areas as mundane & supposedly already explored as this.

Katjes makes Gummi-Bear type candies, which is exactly the problem.  They use Heidi Klum in advertising @ home, which I’d love to see here, but I’d be surprised if that alone would make a market.  Another German company, Haribo, has built a good business with its Gummi-Bears.  Competing with this entrenched competitor will not be easy.

Many different kinds of bread are staples in the German diet, so there is much to appreciate from the Mack Bakery.  Their task will be to develop the same level of deeply-embedded cultural appreciation for bread in America as they have in Germany, which is no small task.  Bread doesn’t travel well, so I wonder if they’re considering making a direct investment.

The Germans started some of the 1st natural & organic food bandwagons, so it’s not surprising that Maintal wants to bring organic preserves & fruit spreads to the U.S.  Although they apparently already ship to other far-flung markets in the world, I would think transportation would be an issue for products with a limited shelf-life.

Kölln is Germany’s largest local cereal producer, but still behind worldwide leaders General Mills, Kellogg’s, & Post. It’s not realistic to supplant the big guys, but they might be able to build a nice niche business based on oats.

Baur Chocolate might have the most difficult path to establishment in American markets.  I didn’t see anything that differentiated them from other chocolate manufacturers.  They even need to localize their website beyond German.

The German American Chamber of Commerce  has said they may make available a short powerpoint presentation given @ the reception in about 1 week.

h1

lowdown on Mid-America Committee & Illinois Global Partnership

Friday 16 July, 2010

I attended this event sponsored by the University of Chicago’s Booth School of Business international roundtable Doing Deals Around the World: What’s New, What’s Old, What Remains the Same? featuring Tom Miner, a well-traveled Chicago-based international businessperson who founded THE MID-AMERICA COMMITTEE FOR INTERNATIONAL BUSINESS AND GOVERNMENT COOPERATION, INC. and Illinois Global Partnership.

Miner is a native South-side Chicagoan who enlisted in the navy @ 17, & when his program closed was discharged, & enlisted in the Army.   After attending West Point, he enrolled @ Knox College where his worst subject was languages.  He then earned his law degree @ the University of Illinois.  After working @ Continental Illinois Bank, he was recruited away to set-up a manufacturing plant in Mexico for a pump manufacturer.  He spent 3 years there before moving to Europe with a farm equipment manufacturer.  When he jumped off on his own to found his international consultancy THOMAS H. MINER & ASSOCIATES, that firm became his 1st client.

Tom thought kings & queens visiting America should stop in the midwest when flying from coast-to-coast, so he approached the US Dept. of State to get them to encourage these dignitaries to stop & local corporate sponsors to support the Mid-America Committee to fund these visits.  Unfortunately Miner contracted cancer in 2002 & effectively sold the Mid-America Committee to the Chicago Council on Global Affairs, where it has since disappeared.

A few years later he proposed a private/public partnership @ the state level to promote Illinois exports called the Illinois Global Partnership.  He received $6M funding for 5 years, but it only lasted 2 1/2 years before the politicians in Springfield ultimately pulled the plug when they didn’t get the political considerations they expected.

If you had $1B to invest he ranks countries in this order:

  1. China, despite corruption in real estate
  2. India
  3. Brazil, for now-things could change in the next year or 2
  4. Korea-for a country its size, it does incredibly well
  5. Mexico
  6. Turkey

Although he has great respect for Gorbachov, Russia is the easiest country to get in & out of deals quickly, but also 1 of the most corrupt & dangerous.  Nigeria is another treacherous business place.

re: inbound investment, Miner notes that the US government wants equal access & protection for US investors, yet at the same time does not provide the same for foreign investors in the US.

In his own words, “To do what I do, you simply can’t approach an embassy & ask for help.  You have to have someone who knows how it’s done.”  The difficulty is defining what he does.  Today he seems to be simply a global opportunity seeker/deal-maker.   For example, he’s been talking with a Swedish company which has some great alternative energy-wave technology, but it’s 1/3-owned by a university & they don’t want to give up control. Enforceable contracts,  corruption, & political stability are the biggest stumbling blocks for him.  After he helped Beijing get the 2004 Olympics, he became a member of Chicago’s Olympic bid committee, but quickly recognized that they would not be successful because they refused to “play the game.”

h1

b2b marketing in Africa

Wednesday 14 July, 2010

The day after the World Cup ended I received my copy of B2B Marketing with this lead article African ‘Lions’ ready to roar by Sean Callahan.  The article quotes heavily from the McKinsey Global Institutes article Lions on the move:  the progress and potential of African economies.  I was surprised to see Morocco & Tunisia listed along with Egypt & South Africa as the most advanced economies.  Africa is also surprisingly urbanized, 40% & 52 cities with population of 1M or more, which makes accessibility much less of an issue than it’s been in the past.  Africa is on the rise & is more & more worthy of consideration as a viable place to do business.  It’s different, less sophisticated, & in some ways still screwed up, but it’s getting better.  Personal relationships, (as opposed to virtual/e-mail/or even telephone)  are still very important.  Immediate out-of-pocket cost is slowly losing in importance to total cost of ownership.

There is a risk in lumping all of the countries in Africa into the same conversation because the economies in many of those countries vary drastically.  South Africa is the model for others to follow.  Perhaps lumping in the Middle Eastern petro-economies in with the rest of Africa doesn’t make much sense.  Regardless, the economies of the coastal countries is different from those of the interior countries & those closer to the equator differ from those further south.

Currently the way the article portrays it, Africa is still a place where only companies with deep pockets can afford to roll the dice there, or that could just be B2B’s bias.  Siemens is big there & growing in the region.  I worked for Siemens in Germany many years ago, & even though they might not have the cash in the bank they had then, they are still investing in building the infrastructure on the dark continent.  The Chinese are increasingly active there, so if we’re competing with them either for resources or markets, we need to pay more attention to this area.

As a general market, incomes are growing, so Africa is becoming a destination for consumer packaged goods manufacturers.  If they can iron out infrastructure issues, Africa can be a low-cost manufacturing location.  They’re simply bypassing landline based communications systems & are getting increasingly connected wirelessly, which is fueling growth on both sides of the demand & supply equation.

h1

why translation matters

Friday 9 July, 2010

I came across this article in Foreign Policy magazine A New Great Wall by Edith Grossman, who wrote a book entitled Why Translation Matters.  She raises some interesting issues.   Unfortunately, she confirms many reflections of American parochialism.  My concern is that English-speaking publishers are contributing to this parochialism by filtering out great literature by non-English writers.

Americans are lazy enough when it comes to foreign languages, so to expect them/us to learn another language & experience the best writers in their native tongues is probably too much to ask.  For that reason, especially with the shrinking of the world, I’d expect forward thinking editors to be scouring the Earth for new writers in other languages who have something to say.  Apparently this is not the case.  True to English-speaking form, British & American publishing houses are turning their backs on ever-more accessible foreign writers.  It’s particularly distressing that these gatekeepers are not opening up these opportunities, but rather are willfully slamming these doors shut.  We are being denied opportunities to learn about the rest of the world even in our our language.

When learning German @ Thunderbird, we were required to read a book in German & write a book report in German about it.  I read “The Corporal from Köpenick,” a story which provided great insights into the German character.  The protagonist got stuck in the conundrum where he couldn’t get a work permit without a residence permit, so he dressed up like a Corporal & took over city hall.  This story depicted German tendency towards bureaucracy & willingness to fall in behind a strong “leader.”  It was written in the 1880’s, so it confirms that these traits are deeply-seated in German culture.  When I visited East Berlin before the wall fell, I bought a book in English entitled “A History of the United States” which depicted the American civil war as the rising up of the proletariat against the bourgeoisie, a decidedly communistic revision of our history, which enabled me to learn more about America from another’s point of view.   They must have intentionally planted this book for English-speakers, because although it agreed with the East German view of the world, it certainly wasn’t targeted @ Germans.  There is great value in reading foreign authors, whether in their language or translated into our own.

Current trends in media indicate that this head-in-the-sand approach will continue & exacerbate the death spiral in hard-bound literature.  My impression of young people today is that they are exchanging information across borders at a rate most adults have never experienced, & are thus interested & curious about other cultures to the same degree.  I think what readers are interested in is interesting stories, wherever they are written or set.  To ignore good stories from other countries in other languages is closing off prime opportunities to learn about the rest of the world.

From a business perspective, I fully understand that translation can be expensive & despite technical innovation, is not getting any cheaper because it’s still a service which requires human eyes & ears, & is not yet a reliable computer-oriented task.  On the other hand, again from a business perspective, perhaps this spells a great business opportunity, to seek out great writers in foreign languages & have their works translated & published.  I hope some investor goes for it.