Harding Place: The Forest Thru the Trees

Perceived and Posted by Jerry Schwartz

Crisis communications. Why are so many “experts” trying to do it? If there were five pharmacies on one block and you wanted to start a new business, would you open another pharmacy? Of course not, too much competition. Not a strategic move, but what can you expect from grandstanders who initially advised Tiger Woods to be forthright and admit his mistake. Had he listened, what would he have said after the 3rd, 5th and 15th affair popped up, “I’m sorry, again and again and again”? The best thing he did was hide for several months. The best thing Walgreens did was acquire Duane Reade. So much for competition.

Globalism. Now, there’s the hottest new sector for PR firms, widely overlooked. This is not the globalism of old, it’s different. At G.S. Schwartz & Co., we define globalism two ways -- inbound, referring to foreign companies doing business in the U.S., and outbound, referring to American companies doing business overseas. The globalism I’m expounding here is inbound. Everyone has at least one client offshore and probably not in an English-speaking country. Some of us have a lot more. In fact, inbound globalism is exploding, or is about to.

For 50 years, as the dollar has declined, yes, more and more foreign companies’ products and services have been sold in the U.S. Once upon a time, “Made in Japan,” meant poor quality. Then, in the 1960’s, Nikon changed the game with its precision cameras and gradually foreign-made meant quality. We went from enemy to envy as German and Italian housewares occupied American cabinets. Few products manufactured by foreign companies today are even made in their homeland. Amazingly, their national flagship auto brands have major plants in the U.S. Who would have thought, Toyota in Kentucky? Actually, less and less is made in Japan because it’s too expensive. Most everything these days seems made in China, which itself is getting more expensive. Where’s the next low-cost producer, Antarctica?

Years ago, only multi-billion dollar corporations, like IBM (nee International Business Machines), were international. “Global” wasn’t even a popular term back then. “Multi-national” and “world-wide” were more common, though both sound slightly archaic today. Even the word “foreign” is so, well, foreign. Then, along came and went Global Crossing, a billion-dollar telecommunication company cobbled together and disassembled almost overnight. Today, global crossings can have sales of a mere few million dollars by using the Internet and networks of dealers and other resellers to reduce staffs and overcome cultural obstacles. Few people use the terms “wholesalers” and “distributors” anymore. Storefronts are brick and mortar. We input and download. We “cc” without carbon paper.

A favorite science fiction film is the original 1975 version of “Rollerball” starring James Caan, where corporations fight on a playing field instead of countries fighting on a battlefield. It’s not plastics, Benjamin, it’s economics, certainly not politics, more likely heretic, as marketing moves goods and services from one regime to another.

The opportunity for PR firms, this phenomenon of inbound business, is due to several factors that will continue for the next decade:

• A distinctly capitalist tool, the power of public relations is understood by everyone everywhere. Even monarchs have ministers of information and they know credibility increases as governmental control decreases. They also all know the cost

• The dollar is cheap, so it has never been more cost efficient for companies over there to come here. And they love coming here, literally, which is good for all of us. At the very least, it shifts the balance of payments and makes PR more affordable for them

• Despite China’s tremendous growth, surpassing Germany and about to out-do Japan, the U.S. remains the #1 market for both business-to-business and consumer products and services. And it’s a big, rich market by any standards, particularly the middle class

• English is spoken everywhere by clients, by the media and by all sorts of influencers. That’s why there are call centers in India and not China. Incredibly, French once seemed destined to become the global language of business. Everyone studied it in school. Despite the numbers, Spanish was for emerging markets, another newer term rarely used in those days. It seems like nothing is third-world anymore

• Technology, including computers and cellular phones, has simplified and improved communications. Some of us still remember dialing an operator to place an echo-filled foreign call. There were no emails nor faxes, but there was Telex

• Other countries have emerged as leaders in certain sectors, but they are too small for their industries to grow exponentially. Companies in places like Japan, Netherlands and Vietnam, particularly publicly-owned businesses, have found new growth in the U.S. Ever wonder why many Dutch speak four or five languages?

Consider, for all its technology prowess, the whole country of Israel has only 7.5 million people as compared to 8.3 million in the city of New York alone. The Negev is not a major market and terrorism kills tourism. Besides, how much orange-flavored kosher chocolate can they sell before intellectual capital becomes the leading export? Many Israelis also speak four or five languages.

Speaking of New York, there’s little manufacturing anymore on this small island off the coast of America. We are the world’s media and financial center almost by default -- and PR center, too, for all the same reasons. It’s a good time and place to be, almost equidistant from one side of the world to the other. Sure, Hong Kong and London are serious competitors, but they can’t print money like we can. The dollar is still the reserve currency. Also, clients want their PR agencies near the media and Wall Street. G.S. Schwartz & Co., for example, has only one office and it’s in Manhattan, yet we have clients in China, Hong Kong, England, Ireland, Holland, Israel, Moscow, the Caribbean and Argentina, in addition to cities across the U.S. Fully 25% of our business is offshore in some way -- all inbound and a real trend. Definitely, not a fad. Certainly, more tangible then “reputation management.” Our first client of 2010 was based in Los Angeles but the next three were offshore. They came here because we can walk down the street and demo a product live to a reporter or investor. Hard to do if you’re an agency based in Tulsa.

As for Woods, “crisis experts” need to see the forest through the trees.

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February 26, 2010

The Forest Thru the Trees

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