Afghanistan and the War against Terror: Business can make a difference

Michael R. Czinkota, Gary Knight, Gabriele Suder 

The “War on Terror” was launched ten years ago, on 07 October 2001.  It represents a battle against terrorism, extremism and global geopolitical adversity seen to oppose democracy and freedom of choice. In the intervening years, however, the War has produced various unintended consequences that threaten personal freedom and other liberties enjoyed by progressive societies worldwide. Stringent inspections delay cargo
and personnel at border crossings. In many cities, cameras constantly monitor the
movement of vehicles and civilians alike. Government wiretapping and
surveillance procedures have been expanded. Bank transactions are scrutinized
as never before. Airport security measures are annoying and sometimes even
humiliating. In many ways, such intrusions represent a victory for
terrorists.

An early casualty of the War on Terror was Afghanistan.  During much of the time since October, 2001, Afghans have seen little improvement in their lives and business conditions. Ten years on, Foreign Policy labels Afghanistan a “failed state”, especially regarding security, refugees, and legitimacy of the state. As the United States prepares an acceptable exit strategy, Afghanistan faces much risk and uncertainty. Divided by religious and political strife, the country’s per-capita income remains among the lowest
worldwide.  Adult literacy is below 28 percent and infant mortality is high. Following 30 years of war, Afghanistan’s social, institutional, and commercial infrastructures are in a decrepit state.

The World Bank and World Trade Organization (WTO) have pointed to constraints that
discourage corporate investment in Afghanistan: crime and disorder, inadequate energy
and transport systems, and insufficient access to finance. However, experts also suggest that, with appropriate local knowledge and collaborative efforts, companies can succeed
in Afghanistan. Success requires investments in education and training, creation of networks and infrastructure, and open-mindedness and flexibility towards the unexpected.  Firms with significant experience in troubled regions are most likely to succeed.

Recent changes in Afghanistan have produced significant potential opportunities for early investors, especially in infrastructure development. The World Bank views Afghanistan as a prospective hub for regional trade. The WTO points to significant
improvements in the categories of “Getting Credit” and “Registering Property”.
Thanks to a modern secured transactions law that helps companies obtain loans,
Afghanistan is now well ranked for “Starting a Business”.

Afghanistan’s economy is improving, especially in agriculture, commodities, and traditional industries.  The nation is home to a wealth of natural resources, including natural gas, petroleum, and certain key minerals.  It has benefited from billions of dollars of international aid and investments.  In many ways, Afghanistan is typical of troubled regions around the world.

Experience with Afghanistan and the War on Terror has provided important lessons for Western governments and businesses alike.  Companies now include terrorism as an
important factor in their international planning.  Firms are devising international strategies that emphasize flexibility and the ability to change course quickly, with less
dependence on vulnerable physical facilities. Foresight and skillful management
reduce the risk of loss and downtime.  Companies are putting more emphasis on developing closer relations with governments and other key players in uncertain foreign markets.

Since the launch of the War on Terror, many world regions have experienced attacks and conflict. But companies are fighting back.  Experienced managers are vigilant
and favor approaches that ensure long-term, sustainable success. Simultaneously,
governments are learning to strike the right balance between security and unneeded
intrusions in business and our personal lives.

Educators like us have an important role to play.  Alongside managers and public authorities, we share a responsibility to redefine global commerce. Increasingly, business must emphasize attitudes and behaviors that are not just ethical, but also socially responsible, compassionate, and focused on the long-term stability of nations worldwide.
Perhaps the best hope for a brighter future in troubled regions is business that, in addition to expanding profits, meets the social and economic needs of local stakeholders.

The struggle against terror, extremism and adversity is a long-term effort.  The costs in human and financial terms are extremely important. But hope remains eternal.  Responsible, collaborative business can go far toward improving the social, political and
economic landscape worldwide.  The global business community has both the capacity and responsibility to protect against the terrorist threat and to support development of a more sustainable, peaceful world.

 

Michael Czinkota teaches international business in Georgetown University’s McDonough School of Business and at the University of Birmingham in the U.K. He is a former deputy assistant secretary in the U.S. Department of Commerce. Gary Knight is a professor and expert on international business at Florida State University. Gabriele Suder holds the Jean Monnet Chair at SKEMA Business School in France, China and the USA and is a visiting fellow at ANU’s Center for European Studies.

 

The International Marketplace: Product Innovation May Come Mainly From China

           Since the 2007-2008 global recession, confidence in the American model of economic development has decreased significantly. Economists are eager to draw conclusions from China’s continued economic growth even though the economic slowdown that has affected much of the developed world. Many assert that Chinese economic policy is more stable because of the government’s large role. However, it may also be the demand of Chinese consumers which shapes innovation and supply.

            The American toilet company Kohler has just released the state-of-the-art Numi toilet. This toilet, designed and marketed primarily for the US and China, has many features included especially for the Chinese market. The toilet’s feet warming system is a solution to infamously cold Chinese bathrooms. Other Chinese market features include the Numi’s music system, Skype capabilities, and a bidet. This toilet suggests that even an American company must keep the Chinese populace in mind when developing products. In an editorial in the Financial Times, Christopher Caldwell concluded that the Numi toilet suggests more than just an increase in Chinese-centered goods. He claims that this toilet “is a sign that this era of US advantage is spiraling towards its close.” 

            Caldwell is not alone in his belief that Beijing will soon begin its reign of prominence. The Numi is not the only special global product marketed for China. In 2005 GM’s luxury sedan the Buick LaCrosse was redesigned especially for the Chinese market. Joe Qiu, designer of the Chinese version of the LaCrosse, told Fara Warner of Fast Company how he created a car that would sell well in the Chinese market. The interior of the car is meant to recreate the soft, luxurious environment of Chinese nightclubs and upscale Shanghai homes. The car’s exterior is sleek and trendy, targeting the chicest Chinese clientele. Since then, sales of the LaCrosse in China have outperformed those in the U.S. In 2010, GM released the updated version of the Buick LaCrosse globally. Much to US GM’s chagrin, the car’s interior was designed by Qiu. The US team was took point on the car’s interior, but had to take into account the input and edits from the Chinese design team. This move displayed how Chinese preferences trumped American ones. As a result, China gained more clout within the powerful American company GM. 

            With the second largest economy in the world and an envy-inducing continued growth, China is beginning to rival the United States’ position as the world’s economic leader. Whether the 21st century will become the age of China will be determined over time. Right now, Chinese preferences are beginning to share the lead in the development of new global products. 

Professor Michael R. Czinkota and Sophia Berhie

Sources: Caldwell, Christopher. “Telling Lessons for the Future from China’s Bathrooms.” Editorial, Financial Times (London), June 4, 2011; Waldmeir, Patti. “The Numi Toilet: Chinese Design for a Global Market.” Globe and Mail (Toronto), May 30, 2011. Accessed June 7, 2011. http://www.theglobeandmail.com/​report-on-business/​international-news/​ asian-pacific/​the-numi-toilet-chinese-design-for-a-global-market/​ article2040064/​; Warner, Fara. “Made in China.” Fast Company, April 1, 2007. Accessed June 7, 2011. http://www.fastcompany.com/​magazine/​114/​open_features-made-in-china.html.