|
By
Glenn Simpson
April 4, 2003
As diplomatic tensions over
Iraq peaked at the United Nations in late February
and U.S. patriotic fervor swelled, the South Carolina
state legislature took up a resolution calling for
a boycott of French products.
By vowing to block a U.S.-backed measure on disarming
Iraq at the U.N. Security Council, France gave "aid
and comfort" to Saddam Hussein, the measure asserted.
Under the circumstances, "it makes no sense to
buy French products, goods and services." The
resolution passed the state House, 90-9. The overwhelming
vote in favor of a boycott wasn't surprising: South
Carolina is a famously protectionist and patriotic
bastion of American manufacturing.
If such a boycott gained consumer support, one of
the biggest losers could have been Group Michelin
SA. But then something most unexpected happened: Instead
of deflating the French firm's famous Michelin Man,
lawmakers abruptly backed down. The state Senate never
took up the measure. Many of the Michelin tires sold
in the U.S., it turned out, are made in factories
across South Carolina.
"The global economy is so interconnected today,
you'd be shooting yourself in the foot," said
South Carolina Commerce Secretary Bob Faith. "You
might be putting your neighbor out of work."
Around the world, noisy boycotts and protests are
targeting many multinational companies in the wake
of the invasion of Iraq. In the U.S., those protests
are aimed at the French and Germans, while opponents
of the war are focusing on American companies.
In the Indian city of Calcutta, antiwar protesters
attacked a shop owned by Nike Inc., while in Argentina,
Wal-Mart Stores Inc. outlets are being picketed. In
Bologna, Italy, police this week defused a bomb outside
an office of International Business Machines Corp.
One of the most concerted attacks has been against
Coca-Cola Co., whose competitors in parts of the Arab
world are seeking to paint Coke as the soft-drink
of the infidel.
For all the noise, though, most companies and trade
associations say the protests have yet to bring any
significant dent in sales. The brief life of South
Carolina's anti-French boycott is a potent example
of how multinationals are working to keep a lid on
the threat. Michelin produced a set of responses for
its U.S. employees and managers, and other firms have
quietly begun to mobilize lobbyists, pollsters and
public-relations specialists. Multinational companies
also are employing services that monitor the Internet
for new attacks so they can be countered quickly.
More broadly, these companies are being aided by the
new realities of globalization, which have reshaped
the politics of consumer boycotts. Japanese and German
auto manufacturers make cars in the U.S., employing
thousands of workers. France's Sodexho supplies meal
rations -- made in Maryland -- to the U.S. military.
And even as firms on both sides of the Atlantic fear
that politically motivated boycotts will spread, they
are discovering that consumer support for them is
shallow.
In a recent survey of American voters conducted for
a group of foreign multinationals, Washington pollster
Neil Newhouse found that nearly a third of boycott
supporters said they would abandon their plans to
spurn some "foreign" goods if they knew
that those products were made by Americans in the
U.S. Nudged a bit further, some 60% of those who said
they were inclined toward boycotts agreed that "because
many French and German products sold in the U.S. are
made in this country by U.S. workers, the U.S. economy
would suffer if Americans stopped buying these products."
In the new politics of boycotts, "a little information
goes a long way in changing behavior," Mr. Newhouse
said. "When you link this to jobs, given the
state of the economy, it's a very powerful motivator."
In the U.S., Europe and Asia, there have been huge
increases in foreign investment over the past two
decades. In the late 1980s, multinationals greatly
stepped up their efforts to buy or build manufacturing
and sales facilities in foreign target markets. By
2000, foreign firms, excluding banks, employed 6.4
million U.S. workers with a payroll of some $330 billion,
the Commerce Department says. Some 45% of all U.S.
private investment abroad goes to the European Union,
and the EU invests an equal proportion in the U.S.
At the same time, sales by U.S. affiliates in 2000
totaled $236 billion in Germany and $137.5 billion
in France, a Johns Hopkins study found.
In South Carolina, Michelin has invested more than
$2 billion in factories and offices, employing 6,000.
Bayerische Motoren Werke AG of Germany is another
major South Carolina employer.
If political passion overwhelms reasoned appeals to
economic self-interest, one U.S.-based fast-food giant
is using an old-fashioned tactic: a big sale. In Indonesia,
where KFC Corp. is under siege by Muslim students
protesting the Iraq war, the firm has responded by
adding deeply discounted chicken balls to its menu.
"No matter what, at the end of the day, customers
here look at price," said Mario Ledres, general
manager of finance at PT Fastfood Indonesia, the local
franchisee of KFC, itself a unit of Yum Brands Inc.
of Louisville, Ky.
Like other American fast-food chains in Asia, KFC
has always strived to highlight its local ties. It
has long served rice with its meals, which Indonesians
prefer to mashed potatoes, and all of its food is
prepared according to strict Islamic dietary laws.
Wal-Mart has seen antiwar activities at its stores
in numerous countries, including Germany, Argentina
and Mexico. At some outlets, protestors plaster leaflets
on cars in parking lots saying: "Don't Buy American."
In Germany, activists have taken the idea of a walkout
a step further. They fill shopping carts with merchandise,
stand in line and then once a cashier scans the items,
they walk out, leaving the products behind and chanting
antiwar slogans.
Wal-Mart hasn't taken any steps to counter such tactics,
a spokesman said. And despite the disruptions, the
demonstrations haven't hurt sales, the retailer said.
"It's antiwar sentiments, not anti-Wal-Mart,"
said John Menzer, chief executive of Wal-Mart International.
Multinational companies also are banding together
to protect themselves. The chief trade association
in Washington for foreign firms, the Organization
for International Investment, is working to assemble
an antiboycott coalition with the U.S. Chamber of
Commerce, the National Association of Manufacturers
and other U.S. business groups, and it recently commissioned
Mr. Newhouse's political research firm, Public Opinion
Strategies, to track consumer sentiment.
Todd Malan, the foreign multinational group's executive
director, said that Americans' anger toward the French
is understandable, but punishing French companies
simply isn't effective.
U.S. executives are just as worried as their European
counterparts. "They are aghast that the economic
waters are being roiled by some political actions
that clearly haven't been thought through," said
Willard Workman, an international-trade specialist
at the U.S. Chamber. Mr. Workman has distributed "talking
points" that help U.S. firms seeking to calm
angry war opponents by disavowing any influence over
President Bush. Boycotts targeted at foreign companies,
the chamber says, "historically have never changed
their governments' policies."
Michelin's experience suggests such a message may
work. After the firm began to be targeted by angry
politicians and consumers in February, it quickly
drew up a response. "A boycott of Michelin products
in the U.S. wouldn't be a boycott of French products,"
the firm's North America division told inquiring consumers.
"It would be a boycott against American products,
made in 17 U.S. factories, located in seven states."
-- Cris Prystay, Ann Zimmerman and Erin White contributed
to this article.
Copywrite 2003 Dow Jones & Company
|
