A blunt news analysis of the challenges multinationals face in pursuing globalization raises serious questions about this growth strategy for both the private and nonprofit sector.
Writing in the Washington Post, Jeffrey Rothfeder recapped the official future for globalization then debunks its promise point by point. Here’s an edited recap of how he says globalization was pitched “as the strategic imperative du jour nearly two decades ago”:
[Globalization] lifts all boats in poor and rich countries alike. More factories are needed in emerging markets to meet the demand, further raising local standards of living and handing non-domestic companies a vast and enthusiastic new customer base. United States and European consumers have their pick of inexpensive items and trade barriers drop to support more multinational expansion and economic gains while geopolitical cooperation flourishes.
He claims most CEOs are reluctant to tell the truth about what is really happening to them in global markets. I know many nonprofits and association CEOs also want to buy into creating a global presence. So it behooves us all to pay attention to the evidence Rothfeder offers on how this official future scenario is working out for those on the bleeding edge.
Multinationals expanded into China, Brazil, Russia and India, where the greatest GDP gains were anticipated, and also have tried emerging nations such as Thailand, Malaysia, the Philippines and Nigeria. But few have experienced big returns from these markets. Instead they went up against crony capitalism by state owned enterprises and somewhat arbitrary regulatory enforcement in countries like China. Global foreign direct investment is now declining; those vast consumer markets among a rising middle class have yet to materialize. There is some evidence US companies are reshoring: US manufacturing is having a stronger post-recession rebound than in other countries. Those that are staying in emerging markets are trying to localize their approach to offer more customized solutions in those markets.
Rothfeder says multinationals can make money if they rethink their global strategies. Then he takes direct aim at what many people hoped the preferred future scenario would be:
“Though presented as a way to eliminate economic disparities and magically expand multinational revenue streams, globalization is, simply put, still a barely profitable and perplexing strategy for most companies.”
This analysis confirms that nonprofits and associations are fortunate they didn’t have the resources to go fast into globalization. There are still many good reasons why a US-based association or nonprofit should pursue a global presence, including fulfilling their mission in an interconnected world. They just shouldn’t trust any official future scenario that promises more than globalization can deliver.