Balance trade by boosting exports through government promotion

Image

import_tax_0The Trump administration is attempting to lower imports in order to rebalance trade after decades of U.S. neglect toward economic relationships around the world.  Rebalancing should not only be done by applying the stick of import reductions, but also by export promotion.

Exports make a firm’s markets grow and change its home nation’s currency value. When U.S. exports increase, the dollar typically goes up in value.Shrinking exports tend to weaken the dollar. Exports also shape public opinion of globalization and offer the opportunity for economies of scale.Higher production volume often means a lower cost of production.Since high exports also make imports cheaper, a firm may achieve lower costs and higher profits, both at home and abroad, through exports.

Continue reading

A Wall: Constrain, Protect, or Lead

Source: ChinaDaily

Picture Source: ChinaDaily- Cracks appear in the Great Firewall of China

“God created the world, the rest was made in China,” sings Lourd de Veyra. The concern about the Asian factory has lingered for decades. Overlooked has been its gradual strategic transformation from imitator to integrator, or even innovator.

Will China overtake the U.S. and become the new No.1 economy of the world? This anxiety seems as misplaced as earlier forecasts such as Japan’s economy surpassing the U.S. by 2000.

Continue reading

Michael Czinkota on Japanese economy, preparation for 2020 Olympics

On August 22nd, Professor Czinkota had a real-time interview with CCTV America’s anchor Jessica Stone to discuss Tokyo’s progress in preparing for the 2020 Games and the impact of Tokyo’s first and newly-elected woman governor Yuriko Koike.

Read more information on this topic here.

Shame Curbs Bad Behavior

In China, no one is safe on March 15th, World Consumer Rights Day. An Evening Gala is hosted every year by CCTV, China Central Television since 1991. The purpose is to name and shame companies for their misconduct against consumer interest.  In decades past, firms like Starbucks, LG and Hewlett-Packard have been called out when offering poor products or irresponsible customer service. Many Chinese companies and state-owned enterprises like China Mobile have been inducted in this Hall of Shame as well.

This year, the Evening Gala aimed mainly at the misconduct in E-Commerce and Social Media. According to the State Ministry of Industry and Commerce, during this gala, Elema, a billion-dollar food delivery company, was shamed for making food under unsanitary conditions; Yipai (Easy Pass), China’s leading online automobile marketing platform, was accused of hurting consumers by providing personal   information to outsiders; Taobao, the biggest online shopping website founded by technology giant Alibaba, was  named for fraudulent consumer reviews which influenced product  rankings.  The Gala quickly became a battle cry for corporate PR teams, who had to come up overnight with explanations and damage control.

Will these allegations curb bad behaviors in companies and individuals? The answer seems to be “yes”. A new law prohibits indoor smoking in Beijing.  Individuals breaking these regulations can be fined $30, restaurants up to $155. In addition to the fines, repeat offenders see their names posted on a government website for one month, alongside a list of their offenses. Witnesses to infractions are urged to notify the government. Social shaming pressure is expected to make the new law more effective – and it works!

Shame can be used to focus attention on some “bad apples”, especially when it comes to major collective problems. It helps to be creative and focused when choosing targets. Companies, such as British Petroleum or SeaWorld, do not feel guilt. However, the people working in these corporations do. Their thoughts and behavior can be influenced by public disapproval and even mortify them. Public opinion can be essential for companies, especially if they are producing consumer brands, such as IPhones or agile Orcas. Reputational risks are a concern, and public shaming can be most effective if targeted at ”friendly” corporations and their employees.

One must ponder the question: can “shame” really work in implementing government policy? Jennifer Jacquet, author of Is Shame Necessary?, claims success for a website run by the state of California that lists the names of people who have not paid their taxes. The site targets only the top 500 delinquents, and the state has retrieved more than US$395 million in back taxes since it was launched in 2007.

Another possible and very helpful area for “shame policy” is immunization of a country’s population. Typically, 90 percent of people need vaccination for there to be true immunity. People can opt-out and get a “free-ride”, since everyone around them is taking the needle for them. However, with reduced compliance, immunization doesn’t work anymore. That’s where shaming can help encourage participation.

Another example is the Rainforest Action Network and its shaming campaign against banks which financed coal companies doing mountain-top removal in the Appalachia region. After a five-year campaign, two of the nine banks have changed their policy of lending to coal companies. Two out of nine may seem like limited success, but every march starts with the first step.   Shaming can act as a stop-gap for the period when people are concerned about something and when actual change comes about.

Working to avoid shame can lead to better weights and measurements. Who wants to be ridiculed by competitors or lose a long-developed fine reputation. Particularly in fields such as marketing, where the brand and personal perceptions are paramount, shaming can become a major influence if not the rationale for the curative marketing approach which aims to heal relationships between business, government and consumers. Avoiding shame by reducing, eliminating and making up for past mistakes, can strengthen a company’s unique selling proposition and let it emerge as a seasoned competitor.

Religions, Christmas and International Marketing

Historically, the religious tradition in the United States, based on Christianity and Judaism, has emphasized hard work, thrift, and a simple lifestyle. These religious values have certainly evolved over time; many of our modern marketing activities would not exist if these older values had persisted. Thrift, for instance, presumes that a person will save hard-earned wages and use these savings for purchases later on. Today, Americans take full advantage of the ample credit facilities that are available to them. The credit card is such a vital part of the American lifestyle that saving before buying seems archaic. Most Americans feel no guilt in driving a big SUV or generously heating a large house.

Christmas is one Christian tradition that remains an important event for many consumer goods industries in all Christian countries. Retailers have their largest sales around that time. However, Christmas is a good illustration of the substantial differences that still exist among even predominantly Christian societies. A large U.S.-based retailer of consumer electronics discovered these differences the hard way when it opened its first retail outlet in the Netherlands. The company planned the opening to coincide with the start of the Christmas selling season and bought advertising space accordingly for late November and December, as retailers do in the United States. The results proved less than satisfactory. Major gift giving in Holland takes place not around December 25, Christmas Day, but on St. Nicholas Day, December 6. Therefore, the opening of the company’s retail operation was late and missed the major buying season.

From a marketing point of view, Christmas has increasingly become a global phenomenon. For many young Chinese, Christmas is not regarded as a religious holiday but simply represents “fun.” Fashionable bars charge up to $25 for entrance on Christmas Eve, and hotel restaurants charge $180 for a Christmas Eve function. The week around Christmas is the top grossing week for movie theaters in China, as young Chinese head out to theaters together instead of watching pirated DVDs at home. Santa Claus is increasing in popularity in the predominantly Sunni Muslim country of Turkey. In Istanbul shopping centers, children stand in line to sit on Santa’s lap and ask for gifts. Stores sell Santa suits and statues.

With billions of people celebrating Christmas and exchanging wishes of peace, perhaps we will see at least some of the inspired and faithful take personal steps which reduce the barbarities which humanity commits against itself in the many ongoing wars. Also, a time of remembrance of the difficult travels of Joseph and Mary, with Jesus soon to be born, might help us soften our stance against refugees and migrants in the world. Remember, we all – but for the mercy of God- could be the ones looking for succor and support.
 abc
MERRY CHRISTMAS
signature block

Michael R. Czinkota