Can U.S. Based Companies Overcome Anti-American Sentiment?Published: July 18, 2007 in Knowledge@Emory
The Edelman Trust Barometer annually tracks the attitudes of 1,500 opinion leaders about what global companies and institutions they trust the most and why. The sixth annual Trust Barometer surveyed the U.S., Europe, Canada, China, Brazil and Japan. The findings were presented last month at the World Economic Forum in Davos, Switzerland. In both 2004 and 2005, Edelman noted that Europeans and Canadians have come to distrust U.S.-based multinational companies much more than Americans do. What Edelman calls the “trust discount” for U.S. firms stems from a number of factors, but at the top of the list is European and Canadian anger at both U.S. foreign policy and American culture and values. According to Edelman, 55 percent of Europeans (British, French and German citizens) say they are much less likely to purchase U.S. products because of their dislike of the Bush Administration and its policies. At the same time, 32 percent of Europeans say they are much less likely to purchase U.S. products because they dislike American culture. Edelman found antipathy toward U.S. products is strongest currently in France, where 61 percent of consumers say they are less likely to buy American. Things are improving some in Germany, where the number of Germans who said they were less likely to buy American fell from 61 percent in 2004 to 49 percent in 2005. Another poll of 8,000 consumers worldwide reported nearly 20 percent said they would avoid buying U.S. products because of unhappiness with U.S. foreign policy. Global Market Insight, Inc., a market research firm in Seattle, conducted the poll in late 2004. The GMI World Poll is taken in each of the G-8 industrial countries: U.S., Canada, U.K., France, Germany, Japan, China and Russia. The GMI World Poll shows nearly 80 percent of European and Canadian consumers polled saying they distrust the U.S. government, 50 percent distrust U.S. companies and 39 percent distrust the American people. “The kind of anti-Americanism we are seeing today differs sharply from historical anti-Americanism,” says Richard Edelman, president and CEO of Edelman. “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 policy decisions, many of our domestic practices, as well as American culture, values and lifestyle,” explains Edelman. How does the trust discount play out for some well-known corporate names? McDonalds is trusted by 58 percent of Americans versus just 25 percent in Europe. Coca-Cola shows a 69-45 trust gap between the U.S. and Europe. Nike is 62-46. As a comparison, a similar trust discount does not exist for European firms operating in the U.S. “The trust discount issue goes beyond the dislike of the current Administration to a more serious question of American culture and values,” says Michael Deaver, vice chairman of Edelman. However, not all the trust news is gloomy. Consumers in markets like Brazil, China and Asia display much more trust in U.S. firms than Europeans and Canadians, says Edelman, and that has held true in both 2004 and 2005. Trust levels in Brazil and China are 65 and 64 percent respectively. And more than 50 percent of consumers in those three markets still find American culture a positive attribute that makes it more likely they will purchase products from U.S. firms. Broader implications for business
With a re-elected White House pledging to stay the course, the business community can’t expect a sudden foreign policy shift. How should multinational companies protect themselves from association with unpopular political decisions and go about winning the hearts and minds of foreign customers? “American companies must particularly focus on building credibility in Europe and Canada, by being as local as possible in their face to the market, while engaging in continuous dialog with [the local community],” says Edelman. According to Dr. Mitchell Eggers, chief pollster at GMI, “Some American brands become closely connected to their country of origin and are quintessentially American. They represent the American lifestyle, innovation, power, leadership and foreign policy. Unfortunately, current U.S. foreign policy is viewed by international consumers as a significant negative, when it used to be a positive,” Researchers like Tom Miller, managing director of NOP World, a global market research company, says just because there are no serious boycotts doesn’t mean global public opinion is just hot air. Sales, Miller says, is a lagging indicator, and attitude change is what drives behavioral shifts. And it may be that the most long-lasting effects of widespread unhappiness will be less visible but more difficult to repair. For instance, U.S.-based corporations may come to be seen as less desirable place to work, making it difficult to recruit and retain talented employees in the future. Regulatory approvals may be harder to obtain. Or, U.S. companies may end up with less leverage internationally in addressing problems like intellectual property protection, according to Edelman. Strategies for success
One company with several decades of global experience is UPS. The company went international in 1976 and now employs 40,000 people overseas, serving 200 countries and territories. UPS started with the familiar bumper-sticker slogan “Think Global and Act Local” but gave it a twist, says Kurt Kuehn, senior vice president for sales and marketing at UPS. UPS found it had to think local first, Kuehn says, by learning the local business culture in each market – carefully doing more listening than talking -- and adapt to it, as well as figure out how consumer values differed from the U.S. “A good example is corporate sustainability reports,” Kuehn says. “It is much more important for a company in Europe to document its environmental, social and financial policies and communicate it formally than it is [in the U.S.].” What constitutes a good corporate citizen can be quite different overseas. Making a quality product and listening to customers rank higher than cause-related activities in many countries. “Stakeholders don’t expect a leading technology company, for instance, to donate money to buy school textbooks. They would be more impressed by a partnership with government to develop educational software specific to the region or country,” says Edelman. The fact that UPS often entered new markets through joint ventures or partnerships with existing firms helped solidify another of its overseas goals: demonstrating long-term commitment. Allyson Stewart-Allen, an American-born author and market analyst now based in London, says U.S. companies get accused of aggressiveness and arrogance when they insist on imposing the American way of doing things on their international markets. Kuehn says UPS was guilty of this early in its international ventures. “Unfortunately our first impulse then was to behave more like commandos than teachers or partners. Our attitude was ‘You stand over there and watch how we do this, then do it exactly the same way.’ In short, it was the UPS Way or No Way. It didn’t work and our business suffered.” Things improved, Kuehn says, when the company found the right blend of UPS culture and local market knowledge, a process hastened by the hiring and training of local managers. “It’s much better to find people who will be totally at home and give them the incentive to grow the firm and create jobs in their own communities than to use expensive expatriate managers,” says Jeffrey Rosensweig, professor of finance and associate dean for corporate relations at Emory University’s Goizueta Business School. “It is incumbent on U.S. firms, if they have visions of global growth, to invest in talent throughout the world.” He notes as an example Helen Shu, a Goizueta MBA student from China, who was hired by UPS. “They identified a talented person, respected in her home country, who wants to return. After she rotates through enough business divisions to learn the business, she will return to China.” And in markets like Europe, where trust in friends and neighbors is quite high, local employees constitute a valuable communications resource that can put a local face on a company’s corporate values. “For a company with as many employees as we have, it is critical that our own people become ambassadors of globalization and can communicate that even though there are dislocations and strains it is still a healthy process,” Kuehn says. According the 2005 Edelman Trust Survey, UPS enjoys an extraordinarily high 89 percent trust rating in the U.S., up from 81 percent in 2004. Their rating in Europe also improved year over year, from 48 per cent to 52 percent. That puts UPS ahead of Ford and Nike, both at 46 percent in Europe, but behind Microsoft and IBM, which are at 61 percent and 62 percent respectively in Europe. “Local managers should be like the fingers of a hand, always taking the pulse around the globe. What they hear should then be the basis for a dialogue with headquarters. The smart chief executives today know the action is in the field,” according to Rosensweig. Forging a global image
Stewart-Allen believes that U.S. based global companies should distance themselves from their American heritage. The only way to win, she says, is to be carefully aligned with their customers and embrace the differences and idiosyncrasies of each market. But the question of just how far a U.S.-based global firm should go in distancing itself from America during tough political times is a tricky one. Some experts argue that products whose primary selling point is the chance to possess a little bit of the American culture are likely to have a hard time when the U.S. policy provokes unhappiness overseas. Visa is often cited as a company that has built an international brand that is largely detached from association with the U.S. It was identified by only 17 percent of consumers most hostile to U.S. brands as extremely American, while the same number for American Express was 64 percent, according to GMI polling. The difference may lie in the fact that in Germany, Visa issues its credit cards through German banks. Or it may simply be the company name, something American Express can do little about in the short term. Companies that can find a way to embody still-admired Americans traits like creativity and generosity and can demonstrate a sincere commitment to quality products that serve the needs of their local markets will likely weather short-term political storms. “There is still a lot of admiration for innovation and thought leadership,” says Kuehn. “You just have to take advantage of the good things America helped shape and at the same time be sensitive to those areas where people may take issue with U.S. business practices. A lot of the smart companies are immersing themselves, investing deeply in all the markets they serve, so exactly where your corporate headquarters are [located] may not be the most important attribute.”
Originally published in 2005.