The Results of Globalization

I ran across this video that really illustrates the results - and complexities - of globalization. It’s about 6 minutes long, but well worth the time to watch.

Mattel's Apology to China: Cultural Lessons Learned

I was reading another blogger's response to Mattel's public apology to China regarding the massive toy recall that Mattel was forced to implement when it was discovered that its toys being manufactured in China were contaminated with lead paint. His reaction was outrage:

"Mattel's apology should be publicly and vociferously deplored, not simply for the craven act itself, then for its assuredly lasting after-effects upon other foreign firms, who will now find themselves pressured to act similarly, at pain of who knows what sanction."

I think that Mattel's decision confused most Americans, and I still wonder if it might open them up to potential legal liability. HOWEVER, I strongly feel they made the right decision, considering the circumstances.

When the story broke, Mattel laid a good share of the blame on Chinese manufacturers, and by default the Chinese government that represents them. Mattel's strategy was to pass negative press on to a logical scape goat. After all, the Chinese government has no share holders, and to this day no one knows the names of the contract factories Mattel was using to make the lead-laden toys. Mattel saw this as a PR issue and passed the problem to an anonymous Chinese system. This is a typical American response to a PR nightmare like this.

However, the massive publicity the story got was an embarrassment to the Chinese. Those of you who are familiar with Asian culture will recognize the importance of saving "face", especially with the 2008 Olympics right around the corner. (The 2008 Olympics are causing face saving headaches for the communists already).

The communists were backed into a PR corner and had no recourse but to penalize Mattel - and perhaps every other Western business operating in China. In a country of inexpensive labor, government officials that turn a blind-eye to labor laws and no government inspectors to insure the quality of manufactured goods, Western manufacturers operating in China had a LOT to potentially lose. My guess is that other manufacturers got to Mattel before the Chinese government had to formalize a response, their message being: "Don't rock the boat!"

Transparency and "Anti-Marketing"

Transparency is a Double Edged Sword

The internet has introduced a new concept to business: Transparency. Many businesses view transparency as a means to increase customer service. For example, UPS allows customers access to their computer system in order to track the delivery status of packages sent. Or banks offer online banking in order to allow customers greater control over their accounts. But many businesses fail to see how transparency could actually harm their business.

Consider the negative publicity Nike endured when it was discovered (unknown to Nike) that contract factories overseas were using child labor to manufacture Nike shoes. The scandal that ensued nearly crippled the company. In fact, to this day Nike incorporates its experience from that debacle into nearly every one of its marketing campaigns.

Now consider this: no matter what industry, almost every US business has a similar "Achilles Heel". We outsource every conceivable function overseas. From services to manufacturing, the trend is for US businesses to send jobs to where they can be performed by less expensive labor. However, most of the companies that outsource use overseas contractors and may or may not have systems to insure foreign workers are being treated fairly. Even Nike who now champions the cause of corporate social responsibility, performing audits of its contract facilities regularly, still finds instances of horrendous business practices overseas.

Is your business prepared to weather the storm?