Sign of the Times

In perhaps the most significant recognition of the beginning of the new world economy everyone should take note of a Newsweek Article, Where the Jobs Are.

Foreign companies, via various internet placement agencies, are hiring contract workers in the US at a rate that is four times greater than just a year ago—and I would bet, a fraction of what it will be in five years.  As foreign corporations in Russia, Brazil, India, China, etc. , strive to meet the incredible growth opportunities in their own countries, good ‘ole American know how, skills and work ethic will be in ever-increasing demand.

Today these overseas jobs are being accepted mainly  because of  the current US recession and, as such, the wages paid may also be comparatively low, but that won’t be the case in the very near future. What is now termed as “reverse outsourcing” will become as impossibly mainstream as it seemed home computers would be two decades ago when (as  popular legend has it, Bill Gates) was informed by investors that personal computers were a great idea, but that they would never catch on.

Those people  lucky enough to be gaining priceless experience working for foreign companies (not traveling anywhere, mind you—they’re working from ordinary places like Tampa, Florida and Flint , Michigan)–including their cultures, their logic and more—will definitely have a huge head start on understanding how to succeed in the new world economy.

As I’ve said time and time again, EVERY PERSON who is in business  or who is carving out a career path in this day and age will need to learn how to work and communicate effectively with other cultures in order to be  truly successful.  Whether you’re a global entrepreneur or a graphic artist living in Omaha, the insights from the book Lies, Bribes & Peril will prove invaluable!

FORD IN BRAZIL

As if more proof of the speed and “nowness” of globalization is necessary—on top of the likes of McDonald’s, Yum Brands & Caterpillar—this video provides a fascinating look at what Ford is doing in one of the world’s fastest growing and “regulation friendly” foreign markets.

Not only is the whole idea brilliant,  it also provides a look at a fundamental change in business philosophy about today’s global marketplace (one that has brought Ford out of the automotive Middle Ages). The main underlying reason why this plant could never be built in the United States (given at the end of the video) is a genuine wake up call!

No matter what global market or markets one may work in, reading my book, Lies, Bribes & Peril, will assure a leg up on success. Check out Ford in Brazil: http://bit.ly/fordinbrazil

Organizational Corruption is Rarely Isolated; It’s Systemic.

In one of the largest criminal fraud cases to be brought by the US Government in recent years a Kuwaiti owned logistics firm, Agility, was indicted last February for multiple instances of fraud and other crimes totaling (what has been reported to be) as much as two billion dollars.  Yes, that’s billion—with a “B”—dollars.

The criminal indictment issued by the US District Court in Atlanta is public domain and is available on many web sites.  It includes two conspiracy counts alleging (in simple terms) fraudulent large-scale over-billing, fraudulent large-scale concealment of distribution fees into item pricing, fraudulent retention of rebates from vendors, and fraudulent  large-scale repackaging of items. The indictment counts detail a time-line of fraudulent behavior from June of 2003 to December of 2008 and lists dozens of instances, meetings, communiques, and transactions covering contracts totaling about 8.5 billion dollars (whew, now it’s easy to see how the fraud could be a much as two billion). It’s a pretty damning document.

This week the indictment was amended to include the major US subsidiary, Agility Defense and Government Services (DGS) headquartered in Alexandria, Virginia, that seems to have been the contracted and operational entity. Lawyers for Agility DGS have pleaded ‘not guilty’ even though recent news reports suggest there are negotiations underway between the US District Attorney’s office and Agility that would have Agility pay 750 million to avoid a trial (now—in my understanding of the world—no organization pays three-quarters of a billion dollars if its’ innocent).  Also see Article in Atlanta Journal-Constitution.

Agility is a competitor in my industry so I have been closely watching the events unfold from a couple of viewpoints. First, as one of the largest competitors in my industry their demise would certainly be a boon to not only my company but other logistics companies as well; so I can’t say I’d be sad to see them crippled by their own folly.

Secondly, I’m keenly interested from an international corruption standpoint how the USG resolves the matter—I certainly hope it’s with greater impact than the 2008 Siemens corruption scandal.

In the Siemens matter no one went to jail and—incredibly—Siemens was not barred from doing business with the US Government.  ((I wrote a Letter to the Editor about the Siemens incident that was published in the Wall Street Journal on December 24, 2008:  If You Do the Crime, You Should Do the Time.)

Roughly half of Agility’s revenues come from business with the US Government and if any non-trial resolution of the indictment allows Agility to continue to do billions of dollars of business with the USG–well, there are very important reasons why that would be an incredibly bad outcome. To begin with (like the Siemens case), it would present no deterrent. If Agility is only “fined” 750 million dollars then, and from any knowledgeable cost assessment, they are way ahead—no question they probably profited much more than that penalty amount. Most importantly, if one looks back over large corruption scandals like Siemens as well as the great UN Oil for Food incident—the most notorious in recent memory—the similarity that cannot be ignored is the corruption was not isolated within those organizations; like a metastasized cancer it was systemic.

Best new jobs (in the not so distant future)? Inquire with the companies playing in the world’s emerging economies…

At the beginning of the year I wrote about the tremendous growth that will occur outside the US. Both business (Goldman Sachs) and world policy institutions (International Monetary Fund) have  presaged the new world financial order that will have the rapidly growing emerging markets like Brazil, Russia, India & China (BRIC) equaling the GDP of the current G7 within the next fifteen to twenty years.

An indicator that American business has embraced this thinking are the actions of two of the US’s preeminent fast food chains, MacDonald’s and Yum Brands (Taco Bell, Pizza Hut & KFC).

Yum Brands has just opened its first Taco Bell in India while it has already established roughly 230 Pizza Hut & KFC outlets there. With a heady adherence to cultural issues in India, the company is making its offering spicier with a large selection of vegetarian foods and will not serve beef—which many Indians will not eat for religious reasons.

With 230 of its 250 non US outlets in India (is that an eye-opening stat, or what?), Yum is targeting to have over 1,000 total  restaurants there by 2015—that would be over 400%  growth in just five years—wow.

MacDonald’s has had a foothold in mainland China for twenty years now (60,000 employees in over 1100 outlets) and has just established its first Hamburger University in Shanghai (first in China & seventh worldwide) to train and develop new generations of managers.

Why in China? Well—not surprisingly—China is MacDonald’s fastest growing global market with the fast food market there expanding at an annual rate of over 10% compared with just 2% here in the US.

With that kind of market expansion MacDonald’s is hoping to double its restaurants in China to over 2000 in just three years—double wow.

And just what kind of opportunity does this present for American jobs? You guessed it—Huge! As I have noted before, the best new jobs  in America (offering the greatest possibilities for advancement and salaries—not to mention excitement and satisfaction) will come from those companies, both US and foreign, looking to capitalize on the incredible growth in the world’s emerging economies.

Want to be a part of this new global order and establish a fabulous and interesting career? Silly question, huh? Besides having or getting a good education what should you be aware of and know? Well, both Yum and MacDonald’s have a keen focus on cultural issues and so should you. No matter if you might wind up in India or China—or any other global market—my book Lies, Bribes & Peril will be a critical guide to  success.

About “Face”—Ottoman Style

If anyone has any doubt about the extent of the “face” issue and how it is playing out in today’s world (both political and business), they  merely have to read the latest news about the vote by the House Foreign Affairs on the 100-year old Turkish-Armenian controversy.

The House committee has voted to pass a resolution that states that in the early 1900’s the Turks committed genocide by killing approximately 1.5 million Armenians. The Turks are so upset (even though the atrocities occurred during the Ottoman era) they’ve threatened to recall their US Ambassador. The Turkish pressure to stop the resolution from passing was so intense that President Obama even reneged on one of his campaign promises that stood on the side of Armenia. Apparently, getting Turkey to agree to sanctions against Iran is enough justification to break a campaign pledge.

Secretary of State Clinton weighed in last week warning the committee chairman that the resolution could harm reconciliation talks between Turkey and Armenia. Maybe the secretary has a new found respect for the issue of “face” after her Pakistan and China forays that created tension and controversy. In Pakistan she accused the government there of not wanting to catch the Taliban and the China/Google hacking issue is still making news.  This is not to say Secretary Clinton isn’t a good and capable chief diplomat; she definitely is, but her American-style bluntness—or disregard for  “face”—has had its shortcomings.  

The Armenian lobby in the U.S. Congress is very powerful and is part of a larger global effort to have the Ottoman era killings labeled by governments worldwide as genocide.  A similar resolution, pushed  by the influential Armenian lobby efforts was passed in 2007, but was prevented from getting a full House vote by the Bush White House (during that time there was a fear that the Turks would prohibit use of a certain military base that was key  to the U.S. Iraq war effort).

This century old issue has not been this hotly debated since the tragedies occurred—it’s an issue that is certainly a resonating indicator of the omnipresent and enduring influence of the concept of “face.”

For a greater understanding of “face” and its global cultural impact, pick up a copy of my book, Lies, Bribes & Peril.

Child Trafficking or Incredible Cultural Naivete?

The current situation involving the 10 jailed members of the Southern Baptist Convention religious organization has a number of root causes. First and foremost, what I like to believe was a well intended group, the cultural ignorance shown by the religious group was pretty astounding.

Not only did the group attempt to move roughly thirty children across an international border without any of the proper paperwork (this in a country that suffers from the blight of real human traffickers), but the most recent development about yesterday’s postponed court date highlights the fact the group embarked on their overzealous mission without possessing an ability to speak French!

Basically, the group ignored any and all cultural, legal, and communications issues. Geeze!

How the situation will evolve and what the outcomes will be is anybody’s guess–as well intended as the group may be their naiveté borders on arrogant indifference. At first blush I thought this might be a case of corrupt Haitian officials making a mountain from a molehill—but the facts are otherwise. This group, whether inadvertent or properly intended, are in real trouble—and unfortunately they should be. Any thought or preparation about what the group might need to succeed in their international endeavor would surely have served as a harbinger.  It’s way too late, but a copy of my book would have certainly kept them from this fate.

Now, I alluded to other causes and they certainly are there. This group’s fervor and zeal was most certainly stoked by the hopelessness and ‘blame oriented’ media coverage beamed out by the likes of Anderson Cooper, and others:

Instead of the coverage recognizing the insignificance and futility of man’s abilities in the face of nature’s awesome—and at times awful—power, there was the wringing of hands over what was inferred as ‘avoidable’ delay and mismanagement of the Haitian rescue effort. There have been many stories from knowledgeable media sources about this ‘blame’ phenomenon and the resultant well doers—like our Southern Baptist group, spurred to ineffectual action, that actually cause more harm while desperately intent on trying to do good.  

Let’s remember, there is no evil at work here—nothing like the needless human tragedy that continues to exist in Darfur.  In Haiti, there are thousands of trained, professional disaster relief personnel struggling to do their very best in a place that is a ‘perfect storm’ of obstacles and challenges.

Doing Business Internationally – BNN Interview August 2009

Trading Day : August 17, 2009 : Doing Business Internationally

Business News Network (Canadian CNN) interview with me about the book “Lies, Bribes & Peril: Lessons for the Real Challenges On International Business“:  http://watch.bnn.ca/trading-day/august-2009/trading-day-august-17-2009/#clip204256

Haiti Needs Our Help; But Let’s Keep the UN Far Away from Donations.

Haiti 7.0 Earthquake Aftermath

I had just arrived in Dubai when I saw the news about the devastating earthquake in Haiti (it’s always interesting to hear foreign viewpoints on breaking world events).  Having been in Haiti and being in the logistics business, I knew the poor infrastructure in Port-au-Prince would present severe challenges to the relief effort; both sea port and airport are tiny with most roads small and poorly built–leaving them almost impassable in the best of times.    

With rubble everywhere and extensive damage from the 7.0 quake, as I listened to that the very first report, I knew that the roads were going to make the logistics of both search and rescue and disaster assistance very, very difficult.    

Later in the week I was in London watching the now 24 hour Haitian earthquake relief coverage when I was presented with a visual oxymoron–two mutually exclusive concepts occupying the screen simultaneously.  Sky News was showing an interview with the Haitian musician and actor, Pras, who (from what I could gather) was in the United States to join forces with a watchdog group that has been set up to make sure that all donated monies will go directly and completely to Haiti. As Pras was speaking, a news scroll presented the oxymoron and diverted my attention.   

The news scroll at the bottom of the television screen announcing:  United Nations (UN) appeal for 560 million dollars for Haiti. Okay, now I believe everyone should try to give as they are able to the Haiti disaster assistance, but I think donating to any UN organization should be the last thing a person should do!  My personal experience is limited, but my company was one of the first to stumble into chilling evidence in Iraq of the UN’s intricate complicity and outright collaboration with Saddam’s goons in the multi-billion dollar Oil for Food scam. I’ve also personally witnessed UN staffers more than double the cost of a major US Government operation with effortless chicanery.     

In the September 2005, when the last report of the Volcker Commission Oil for Food Program Report came out it stated that the UN needed thorough reform–and it needed it urgently. The Report also went on to estimate that perhaps one-third of all UN contracting activities were compromised by corruption. Using that guideline and my experience means that about half of any 560 million dollar UN fund will be wasted–WASTED (Pras certainly will need a lot of help here).    

People need to remember that since the special UN anti-corruption unit, called the Procurement Task Force, was established in 2006 it has uncovered many, many other major schemes within the UN.  A recent AP article, by John Heilprin (Jan 12, 2010, “UN cuts back on investigating fraud“) lays out the ugly, troubling facts about the UN disbanding this unit leaving the reader with the inevitable implied conclusion that the UN is returning to its old corrupt ways with a flourish.   

There are a lot of excellent charitable organizations out there; The Red Cross, CARE, Catholic Relief Services, World Vision, The Clinton/Bush Haiti Fund, and many others.  Even if we all give to one of these fine charities we will never be able to erase the horrendous memories or incalculable grief suffered by the Haitian people, but we will be able to help put country of Haiti back on its feet even better than before.    

There is one thing that I do want to impress upon though:  Let’s stick together and keep the UN from pulling in any money that will “supposedly go” to the Haiti Earthquake Relief effort.

The Future is Now–And It’s Moved. Hang on for a heck of a ride.

Entering this New Year and this new decade there are two pieces of information. One is a “factoid” and the other a researched fact and when deliberated together, they yield an undeniable conclusion about the future of the global economy. 

First of all, consider the fact that Goldman Sachs recently issued predictions that included a forecast that’s a major league world changer; Within the next two decades (note: 17 years was the precise prediction) the major emerging economies of China, Russia, India, and Brazil (or “BRIC” countries in the wisdom of the acronym makers) will eclipse the current G-7 (U.S., Japan, UK, Germany, France, Italy, Spain) in terms of Gross Domestic Production or GDP. The estimates for 2009 by the International Monetary Fund had the U.S. creating about one quarter of the world’s GDP and the G-7 comprising almost 55% of it. The IMF figures assessed the BRIC countries as producing just over 15% of the world’s GDP. Wow, if Goldman Sacks is correct then what’s ahead is sure to be one hell-ova financial switcheroo’!

Next, take into consideration reports of the highest returning money funds over the last decade. While the S&P index was losing about 3.3% annually for the last decade, the most lucrative funds were all emerging market funds and each of the top five returned over eight times their investment.

The top fund, East Capital Ryssland, returned 1524%…..double WOW. To put this in tangible terms, if you had put $10,000 into a S&P index fund in early 2000 you would now have, oh around $7,000 left in that fund to date (inflationary adjustments would just add insult to injury!). Contrast that with an equal investment in the Ryssland Fund for that very same time period: you’d be looking at about $152,400 by now. Any third grader can do the math there.

Where would you have wanted your investment?

Well, in one way or another, you’re going to get an opportunity to face that kind of decision. Assessing these points together can lead to only one conclusion–this kind of humongous market disparity will continue (and YES, Webster says “humongous” is a definitely a word).  If the mercurial pace of growth in the BRIC occurs as forecast (the IMF, World Bank, etc. —all divine similar growth) then not only the best investment opportunities will be in found in these emerging markets, but these countries will be the proverbial ground zero of global commerce for at least the next two decades. Unimaginable opportunity and wealth will certainly be created.

The next Microsoft, Wal-Mart, or Toyota will almost certainly not be from a G-7 country.  And NOTE: If historians ever point to any single corporate event that could be considered to have presaged the decline of the importance of the U.S. in the global economy, it just may be GM losing the place as the #1 Global Auto Maker to Toyota in 2008 (a spot GM had held for over 70 years!).

The widely forecasted colossal GDP growth in emerging markets will result in U.S. companies focusing their attention to those countries in a way that is historically unprecedented. 

Lastly the top careers within most U.S. corporations will be built by specializing in and mastering all the emerging markets–regardless of industry.  Corporate hegemony will inevitably see U.S. companies acquired by foreign companies in far greater numbers than ever before.  No matter where you live in the U.S. and regardless of your endeavor, your life and its rapidly changing challenges will be significantly affected.

A new economic world-order is upon us. What should these revelations tell anyone who is in college now (or anyone under 40 for that matter) where their careers will most likely revolve and where their fortunes will most likely be found?

Two guesses (and the first one doesn’t count).

What skills will an individual need to compete in what is sure to be a wild, woolly, exciting and tumultuous commercial free-for-all?

The primary countries in play couldn’t be more different: history, religion, languages (India alone has 28 different dialects) and the geography literally stretches to the four corners of the earth! How in the heck will the entrepreneur, the thrill and fortune seekers of the next twenty years succeed in such diverse areas?

Traditional business acumen will be important of course, but there will be much, much more necessary to have in place and in play achieve success. Suffice it to say that new skills (perspectives really) that are not required now or even necessary in the current American marketplace will be critical.

A good start on what those perspectives are and how to develop an understanding of them can be found by reading my book, Lies, Bribes, and Peril: Lessons for the REAL Challenges of International Business. Read it and think about it and learn this: there are NEW skills and perspectives required in the future Marketplace of Now.   Add a dash of ambition, a peck of dedication and a bushel of perseverance and we are all off on an intercultural economic adventure of a lifetime for the next few decades.  Enjoy it people–it’s going to be  one heck of a (wild and exciting) ride!

Brazilian Custody Fight = All Accommodation – UPDATE to 12/22/09 post

12/22 and 23/2009- CNN:  Brazil high court lifts stay, allowing boy to return to U.S. Brazil high court lifts stay, allowing boy to return to U.S. 

Thank goodness the latest turn of events (as of yesterday 12/22/09) has the Brazilian Chief Justice overturning the ruling last week by his counterpart and requiring the boy (Sean) be returned to his US father David Goldman. While anything can still happen, Face issues—brought by the combination of the absence of any legitimate legal basis and the very serious US political pressure—in this case have outweighed the obvious Accommodation. 

http://www.cnn.com/2009/WORLD/americas/12/22/brazil.custody.battle/index.html?eref=rss_topstories&utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+rss%2Fcnn_topstories+%28RSS%3A+Top+Stories%29&utm_content=Google+Feedfetcher

Read my book Lies, Bribes & Peril to get a better understanding about the concept of “Face” and “Accommodation” and other Lessons for the REAL Challenges of International Business.

Happy Holidays!