Thought Of The Week

Best Laid Plans

Last week we looked at the growing trend of protectionism that many countries are practicing now or are contemplating by either increasing tariffs on foreign-made goods or restricting their use entirely. Here in the U.S. we are witnessing an object lesson that shows that it is much easier to think up and enact protectionist legislation than it is to deal with the consequences. Consequences the lawmakers don’t have the expertise to consider or even imagine.

In February 2009, the U.S. Congress, as part of its Economic Stimulus Program, imposed "Buy American" provisions which bar projects from receiving federal money that buy goods or materials from abroad. The theory is that this will help U.S. businesses. In reality it has created a distributional and logistical nightmare and now has the U.S. in a polite and relatively minor dispute with our largest trading partner and very good neighbor to the North-Canada. Many products in a variety of the industries use dozens of components. Many of these are manufactured in Canada. So a company using or manufacturing products or systems that have one or two Canadian-made parts may lose or be disqualified from receiving federal contracts due to the Buy American program. Also, many products, in the process of being finished have components passing back and forth across our border with Canada. So how is it calculated if these are Made in the USA or not? Many U.S. companies are saying their businesses are suffering huge potential losses (of contracts) due to the Buy American program. They cannot change the complex and highly integrated supply chain systems already in place with Canada. This could affect over 4 billion dollars worth of business in the water and wastewater systems industries alone.

Plus these types of sanctions always provoke retaliatory measures. China has announced it will curb imports of chicken and auto parts to combat the tire tariff. President Obama and Canadian Prime Minister Harper have to sit down and work through such important issues as charter flights for sports teams. If you are a hockey or baseball fan, this is serious business.

For more information on this, international marketing logistics, regulations, market entry strategies, please contact doug@focus-worldwide.com.

Thought Of The Week

Market Alert: Protectionism on the Rise.

International marketers need to watch the current trend of protectionist tariffs that are increasing around the world and coming to a head just before the Group of 20Summit in Pittsburgh, September 24-25.

While no one disputes the need for global expansion and the tremendous lift and leverage it can give any company’s bottom line, trend-spotting and the proper strategic positioning that responds to these trends are critical.

The major headline here has been the tariff the U.S. government is placing upon Chinese automobile tires and China’s reaction of taking this issue before the WTO. The proposed tariff increase of 25%-35% could price out of the market 17% of all tires sold in the U.S. China says this could affect 100,000 Chinese jobs. The price of rubber on world commodity markets and share prices in certain tire companies has already been affected.

U.S. companies are coming under increasing pressure from their unions and labor forces to stem the flow of products flooding into the market from China and elsewhere. The U.S. government meanwhile is walking a tightrope as the Chinese and U.S. economies are so tightly intertwined now. China will be watching very carefully how the Obama Administration reacts as this could set the tone for the remainder of Obama's term.

It may be a hackneyed phrase but “tip of the iceberg” seems appropriate when looking at the global protectionist trend. There is much more to follow. GTA’s research indicates over 100 protectionist measures are due to be implemented around the world. Countries being targeted the most by these measures are China, U.S., Japan, Germany and France. The leading industries seeking protection are machinery, food, financial services, and agricultural goods.

If your products/services may be affected by this, it is time to pay close attention.

For more information on this, international marketing logistics, regulations, market entry strategies, please contact doug@focus-worldwide.com.

Thought Of The Week

China Marketing Update

General Motors announced yesterday that it expects its sales in China to increase by 40% this year. Ford sales have doubled in a year. And many luxury goods manufacturers and consumer goods companies are seeing that China is not as affected by the global recession as other countries.

That’s good news for manufacturers and marketers. At the same time, great strides are underway to create, enhance and improve B2B and B2C databases in China. We at Focus Worldwide are working on just such a project right now. So many factors are lining up favorably to provide greater access to, and response from, the Chinese consumer marketplace.

But like all international marketing endeavors, the road is bumpy, seldom straight and smooth. Those whose nervous systems require tranquility and few surprises beware. International marketing can be hazardous to your health.

China announced earlier this year that it is enacting greater privacy restrictions as it pertains to the access, release and use of personal data. Personal data can be defined as national ID number, mobile telephone number, email address and residential address. So B2C direct mail may need to be addressed to “Occupant.” B2B direct marketing has no such restrictions.

There may also be restrictions on the printing of direct marketing materials that have China as a final destination.

Anyone doing business in China would be advised to check with their experts there.

For more information on international data and analytical solutions, contact me at doug@focus-worldwide.com.