Critics of American foreign policy charge that it is characterized by an arrogance that stems, it seems, from a realization that the United States is the only superpower left in the world combined with a sense of moral superiority that equates dissent with disloyalty. But are American-based multinational companies guilty of the same arrogance?
Anti-globalization activists would undoubtedly answer in the affirmative, and the reaction of some U.S. companies to recent international opinion polls suggesting an incipient backlash against American brands suggests they may be right. At the very least, these multinationals seem disturbingly complacent about the threat to their reputations.
Several recent surveys indicate a rising anti-Americanism among people pretty much the world over. For example, market research conducted by NOP World recently found that the familiarity and use of 15 U.S. brands that it studied among 30,000 consumers in 30 countries had fallen by up to three percentage points this year from 2003.
NOP found the number of non-American consumers who “trust” Coca-Cola had fallen from 55 percent to 52 percent, while McDonald’s rating had slipped from 36 percent to 33 percent, Nike’s from 56 percent to 53 percent and Microsoft had fallen from 45 percent to 39 percent. When people were asked about brands associated with “honesty,” Coca-Cola had declined from 18 percent to 15 percent, McDonald’s from 19 percent to 14 percent, Nike from 14 percent to 11 percent and Microsoft from 18 percent to 12 percent.
The total number of consumers worldwide who say they use U.S. brands had fallen from 30 percent to 27 percent, while non-American brands remained stable at 24 percent.
“Attitudes toward the U.S. have deteriorated rapidly over the last few years,” says Thomas Miller, managing director at NOP World. “It’s not like there’s a massive boycott. Instead, it seems to be an erosion of support. It’s not falling off the face of the earth, but it is clearly a warning sign for brands.”
Similarly, a study by the Pew Research Center shows just how far America’s image has fallen. In 1999, for example, 83 percent of people in Britain had a favorable view of the U.S.; by March of 2003, that number was 48 percent; in France, the favorability score fell from 62 percent to 31 percent; in Germany, from 78 percent to 25 percent; in Spain, from 50 percent to 14 percent; in Turkey from 52 percent to 12 percent—and three of those countries were members of the “coalition of the willing,” their governments supporters of the attack on Iraq.
In the Asia Pacific region, meanwhile, almost one in four consumers says he or she has avoided purchasing American brands, according to advertising agency Leo Burnett, which polled people in China, India, Indonesia, South Korea and the Philippines.
International public relations agency Edelman conducts its own research. Says president Richard Edelman, “American corporations and brands suffer from a deep and growing ‘trust discount’ in Europe.”
For instance, 81 percent of U.S. respondents say they are very trusting of UPS, compared to 48 percent in Europe. For Coca-Cola, the scores are 66 percent in the U.S. and 40 percent in Europe, for McDonald’s 53 percent and. 27 percent. In France, 64 percent say they are less likely to buy U.S. products because of the Bush administration’s policies, while in Germany 66 percent said they were less likely to buy U.S. products.
Specific news stories suggest ways in which anti-Americanism is making itself felt. German bicycle manufacturer Riese und Mueller, for example, canceled all business dealings with American suppliers, calling on them to renounce the war in Iraq. Ten restaurants in Hamburg banned Coca0-Cola and Marlboro cigarettes and no longer accept American Express. Meanwhile, consumers in Europe and the Middle East have bought millions of bottles of Mecca-Cola, an explicitly anti-American soft drink.
On a more personal level, “My anti-Americanism has become almost uncontrollable,” says British author Margaret Drabble. “It has possessed me like a disease. I detest Disneyfication, I detest Coca-Cola, I detest burgers, I detest sentimental and violent Hollywood movies that tell lies about history. I detest American imperialism, American infantilism, and American triumphalism about victories it didn’t even win.”
According to a white paper produced by Weber Shandwick Worldwide, “There is evidence that the second war in Iraq represented a tipping point; that a confluence of trends—political, socio-economic, and cultural—puts global brands, particularly those seen as symbols of America, at more risk now than at any time since the Vietnam War.”
But for the most part American companies are—at least publicly—dismissing the possibility that their brands might suffer.
“Our sales and image and market share are things we monitor extremely closely,” says Niel Golightly, a Ford spokesman in Germany. “So the potential fallout risk from Ford being perceived as a symbol of America’s foreign policy is something we’re always looking at.”
But aside from a single incident at a dealership in Italy last year, the company has seen no evidence that widespread anti-Americanism abroad has been aimed at the Ford brand. In Europe, the company’s market share has remained steady.
Others insist—somewhat implausibly—that they are not seen as American. “Unlike some global brands, which might be seen as quintessentially American, Nike’s swoosh sits alongside the national flag on soccer jerseys for example and we are often viewed as a local brand,” says Vada Manager, the Oregon company’s director of global issues management.
And others acknowledge a problem, but believe politicians are responsible. Barry Sternlicht, chief executive of Starwood, which owns international hotel brands such as Sheraton and Westin, acknowledges that the United States is “not exactly loved right now,” and says, “Our politicians must remember that our businesses are global and we rely heavily on trade and tourism.”
Against this backdrop of denial, Keith Reinhard, chairman of DDB Worldwide, has been touring the country trying to persuade companies to take the threat of anti-Americanism more seriously. Reinhard is the founder and president of Business for Diplomatic Action. Addressing a Corporate Communications Institute symposium at Fairleigh Dickinson University two months ago, he argued that business “must take collective action to change perceptions of this country.”
There are two reasons a business response to anti-Americanism is imperative. The first is that business is part of the problem; the second is that if anti-Americanism continues to rise, business will be a prime target.
It’s not just American foreign policy that influences overseas perceptions of U.S. corporations. Many of the causes of resentment against the U.S. are related to business activity, according to Reinhard. Globalization is creating a feeling in many countries of being left behind. American businesses are perceived as exploitive and a corrupting influence.
“All we appear to care about is getting people to buy our products,” he said.
In Europe, for example, American companies have made a series of mistakes. Monsanto’s heavy handed attempt to impose genetically modified food products on reluctant European consumers is one case in point. Other more recent examples include ExxonMobil’s continued denial over climate change (which European oil companies BP and Shell have long accepted as fact); the U.S. chemical industry’s efforts to undermine European safety standards—including the adoption of the so-called “precautionary principle” in some markets; and the American sugar lobby’s opposition to nutrition guidelines developed by the World Health Organization.
From a European perspective (notwithstanding the fact that many European chemical companies and confectionary marketers agreed with their American counterparts) these attempts to put profits ahead of public safety represented an attempt to inflict the more rapacious American version of capitalism upon a region still concerned with the social consequences of business activity, to export American values without regard for the preferences of the indigenous population.
“It’s important to note that negative attitudes towards the current U.S. administration did not start with the Iraqi conflict,” says Richard Edelman. “You can trace the problem between the U.S. and Europe back to disagreements over trade tariffs, the Kyoto protocol, and the introduction of genetically modified foods.” Those are primarily business issues, and they all predate the war in Iraq.
“The kind of anti-Americanism we’re seeing today differs sharply from historic anti-Americanism. In the past, anti-American attitudes have been based on specific policies of the U.S. government; today these attitudes have become far more generalized, applying to almost all foreign policies, many of our domestic practices, as well as American culture, values and lifestyle.”
Most of the world believes American values favor wealth, power, and freedom, says Miller. But according to the NOP research, America, and American business, is viewed as arrogant; indifferent toward others’ cultures; exploitative, extracting more than it gives back; corrupting, because it values materialism above all else; and willing to sacrifice almost anything in the pursuit of greater profits. Honesty, equality and faith were not viewed as strong American values. In Germany, only 31 percent of consumers believed honesty was an American cultural attribute and in Saudi Arabia just 23 percent thought so.
There is also considerable concen about the impact of the U.S. on the culture of other countries. In Spain, for example, 51 percent of respondents to an Ipsos World Monitor survey believed the U.S. had a negative impact on local culture, compared to 20 percent who saw that impact as positive; in France, 52 percent felt the impact was negative compared to 16 percent positive; in Germany 42 percent to 16 percent; in Brazil 41 percent to 20 percent; in the U.K., 31 percent to 26 percent. Only China and (by a narrow margin) Italy, of the countries polled, felt the U.S. impact was more positive than negative.
Overseas observers have four major areas of concern when it comes to America, says Reinhard: the threat global brands pose for local firms that may lack equivalent marketing and managerial resources; the perception that America cares only about America; the threat that American popular culture poses to local cultures and religions; and foreign policy. The first three, Reinhard says, are concerns U.S. business can help address.
As for why they should, Edelman believes any complacency companies might have about the lack of impact on sales is misplaced.
“The immediate problem is not sales, since purchasing patterns of U.S. products do not seem to have been affected,” says Edelman. “The impact will be on the ability of U.S. and UK companies to recruit and retain local talent, engage with regional governments, secure regulatory approval and establish goodwill that they can draw on in a crisis.”
In many ways, the rationale for confronting anti-Americanism head on is the same as the rationale for investing in reputation. The failure to do so is likely to increase the friction of doing business in vital markets, to make recruiting more time consuming, forging partnerships more difficult. The impact on sales, however, may not be felt for months or years, and when it is a cause-and-effect relationship may be difficult to establish, even if the correlation is clear. But in the long-term, the investment is likely to be a wise one as we enter an era of greater transparency and heightened expectations.
“I believe we have entered a permanent era of constant ebb and flow in which the global acceptance of brands will be tempered by backlashes,” says Jack Leslie, chairman of Weber Shandwick. “There is no going back. Much of this ebb and flow will be played out on the small screen in local communities or in certain countries or in specific demographics.
“Sometimes the news will be in the noise of boycotts, protest and graffiti. Sometimes the news will be in the silence—what is not being said as consumers worldwide continue with their habits. The greatest wisdom we can acquire in our business is to know the difference between the two, and understand why the silence is speaking volumes.”
Consumer activism is maturing, Leslie suggests. Direct action against brands may be the most visible form of protest, but what Weber Shandwick calls “passive resistance” also poses a major threat. KRC, the PR firm’s research arm, has conducted research suggesting that a third of consumers have boycotted a brand to make a point—many of them doing so “silently,” without informing the company of their action or their reasons.
Leadership from companies, the largest of which have economic power that exceeds that of many national states, is imperative.
“This problem is too important to be left to government agencies,” says John Quelch, professor at Harvard Business School. “Multinational companies and their foundations need to invest in reversing this trend… It is essential to multinationals’ long-term growth.” Adds Paul Bracken, professor of management and political science at Yale School of Management, “Today, the multinational corporation is the most vital institution in economic development, social change, technology, and let’s face it, dynamism and new ideas.”
Some of those new ideas need to be applied to addressing big issues.
“The political landscape will likely remain unpredictable, which puts the burden on business leaders to take greater responsibility,” says Edelman. “Global businesses cannot wait for attitudes toward national governments to change. They cannot cede public dialogue, particularly on global issues such as trade, drug pricing, intellectual property protection and obesity. This is the environment in which they are operating and they have to be fully engaged in that process.”
At the same time, American companies have a unique opportunity to create greater understanding, Reinhard says. Their representatives overseas as more likely to be locals, less likely to be encumbered by restrictive bureaucracy, and in some cases more likely to take the long view, since they are not focused on a four-year election cycle.
But what should they be doing? Edelman suggests they can learn from overseas companies that also operate on a global scale.
While American brands are experiencing credibility problems in international markets, foreign business have done a better job at building global reputations that transcend their home market, Edelman says. “European firms, because they have smaller domestic market and simply had to be more international, are particularly adept at being involved in local markets,” he says. “Companies such as Bayer, Michelin, and Nissan have thrived because of their strategy of presenting themselves as vital and productive participants in the business of local communities, rather then allowing themselves to be identified primarily as foreign producers.”
They might also learn from companies that have been forced to become more transparent, to confront issues on an international basis.
Interestingly, some of the companies that have seen the biggest turnaround in reputation in Europe are those that faced the most hostile public scrutiny. According to the Edelman Trust Barometer, Monsanto, for example, saw its credibility level rise from 12 percent to 28 percent in recent years, while Nike—targeted because of its use of sweatshop labor in developing countries—improved from 6 percent four years ago to 43 percent today.
While each turnaround is distinct, there are some common traits,” says Edelman. “Not only have these companies taken concrete business action to rectify their shortcomings, they’ve also been conscientious about informing local markets of the upgrades so the communities where customers and employees live and work are aware of the progress. They’ve demonstrated through action their commitment to these communities.”
That kind of engagement will be critical to success.
“Making progress means engaging in dialogue with critics, tapping local spokespeople, including academics and local management, having constant contact with local media and activating local employees so they become catalysts for change,” says Edelman. “Companies can demonstrate leadership by partnering with national governments, being transparent, committing to a high level of integration and a global communications attitude that respects and understands the local community.”
Says Reinhard, “Business must be willing to listen before acting and do a better job of communicating with local citizens. We must share best practices. And we must make ourselves a global listening post.”
Weber Shandwick offers several pieces of advice to companies. First, the firm says, they should emphasize their local roots. “Although very strong American brands are less threatened by the political climate, they should ‘act local’ by emphasizing their strong local roots as employers and community and charitable sponsors. Brands that adopt and respect local cultures through their actions and their marketing communications will fare best today.”
The firm also suggests undertaking concrete and visible social responsibility activities. “In light of the anti-globalization movement’s skepticism of large, multinational companies, businesses must pay more than just lip-service to corporate responsibility. People are growing aware of how brands are behaving in a global context. There will be more pressure on brands to communicate what they stand for on the global playing field, via disclosure of more information about their actions related to the environment, their labor practices, and their broader contributions to society.”
Weber Shandwick also suggests emphasizing global values—family and health—over explicit materialism; showing respect for local cultures; and developing a proactive communications campaign.
Richard Edelman agrees, stressing that companies should engage in two-way communication, which means listening to the concerns of all of their stakeholders in all markets. He also advises companies to move away from paid advertising to more credible earned media.
Above all, “business must make its own way,” he says. “Take the lead on the debate of key global issues, from intellectual property rights to trade to obesity.” That means an active role for CEOs.
“Part of the role of the CEO is to put that human face on the firm,” says Edelman. “Unfortunately, too often American CEOs represent exactly the wrong image when touring global markets. In the past decade they’ve tended to be flamboyant or to engage in backslapping and showmanship. American CEOs should interact, roll up their sleeves, meet the community leaders, go to different towns, and make direct engagement.”
Finally, Weber Shandwick says, companies should either avoid political messages or use them only with extreme care.
“Given the divisiveness domestically of the U.S war against Iraq and its widespread unpopularity abroad, U.S.-based brands should avoid linking themselves to U.S. foreign policy. The separation global consumers make between brands and the foreign policies of the United States is delicate and should not be blurred by marketing campaigns.”