If you happened to read a news item about a company that wanted to be Chinese, you might logically think that company was headquartered in Asia. You’d be wrong. This is the strategy of network-equipment maker Cisco Systems Inc. as articulated by its CEO John Chambers in 2004.
Chambers’ comments are indicative of attitudes found among those heading multinational companies. And those attitudes have become a hot button in this era of big corporate bailouts and sending U.S. jobs to foreign countries.
There is no question that company managers have changed their views over the years about where they owe allegiances. Corporate leaders were once expected to fulfill obligations to society and particularly to the country in which they resided. But globalization has eliminated any such sense of duty. In fact, it has increased the chance that heads of U.S. companies are advocating policies that aren’t in the overall interest of Americans.
The situation is illuminated by Clyde Prestowitz, a one-time U.S. trade negotiator in the Reagan administration. He points out that U.S. CEOs may be influential in the U.S., but have no political clout in authoritarian countries like China or Russia. CEOs who do business there must maintain good relations with the powers that be, which often means being more responsive to the wishes of authoritarian countries than to those elsewhere.
Prestowitz says this is why in 2009 a group of big-name American CEOs advised against including any “buy-American” provisions in the economic-stimulus package then being voted into law. (All of which would have been allowed under World Trade Organization rules.) The irony was that China, Japan, and many European countries were in the process of enacting buy-domestic policies themselves. “The CEOs were, in effect, arguing for sending more of our stimulus money to help create jobs overseas, while our trading partners were doing the opposite,” he writes.
No wonder, then, that people who have been paying attention to these events increasingly distrust corporations. “We must be alert that when American CEOs advise the president or lobby Congress today, they may unwittingly be acting, in effect, as emissaries of foreign governments. In any case, we cannot be sure that they are speaking on behalf of America’s overall prosperity,” says Prestowitz. Participants in the Occupy Wall Street movement couldn’t have said it any better.
Epitomizing the kind of cockeyed view of the world many CEOs have today is a comment from one who Prestowitz declines to name. The man opined that he ran an international company that just happened to be based in the U.S. Its headquarters, he claimed, could as easily be situated in a Boeing 747, from which he could comfortably run the company while circling the globe.
This is the kind of remark U.S. legislators should keep in mind the next time a multinational company comes looking for favors. There are increasingly few reasons not to drive the same kind of hard bargains as countries less “enlightened” about trade. One bargaining point that immediately springs to mind is that companies wishing to sell goods in the U.S. had better figure out how to make them here.
— Leland Teschler, Editor