ANALYSIS: US companies need to be locally minded overseas

With anti-Americanism on the rise, it's tough being a US company with overseas interests. But many are working to protect their image and their employees.

With anti-Americanism on the rise, it's tough being a US company with overseas interests. But many are working to protect their image and their employees.

Nestle faces a potentially huge problem if America and its allies engage in a war with Iraq, due to threatened boycotts against US brands globally. That's right - the Swiss-based company's CEO told Dow Jones that a war in Iraq could lead to a mass repudiation of the Nestle? brand, which has been misidentified as American in anti-war websites urging international consumers to avoid US goods. It's not easy being a global company right now, particularly an American corporation or one strongly associated with the US. Last weekend's worldwide demonstrations against a potential military engagement in Iraq included a strong consumer-movement message. Renouncing American products and companies is considered a highly actionable blow to US domination, a way for every person to send a clear signal of dissatisfaction with the policies and pursuits of the US government. In London, for example, 36,000 bottles of Mecca-Cola were handed out to protesters at Hyde Park. Created by French entrepreneur Tawfig Mathlouthi, the beverage is designed to be the anti-Coca-Cola, even boasting a similar logo. Ten percent of the profits are donated to Palestinian causes. Sales are said to be brisk in France, and the story of the product's creation was news all over the world. Coca-Cola has said little on the subject of Mecca-Cola, outside of a statement that said that Mathlouthi has "identified a commercial opportunity which involves the exploitation in Europe of the difficult and complex situation in the Middle East." The company added that the consumer would ultimately decide which brand to quaff. The prospect of a slew of anti-brands popping up is likely a concern, though a relatively minor one for most companies. Sustained boycotts and potential violence are more worrisome. But US corporations with global operations and brands are generally keeping quiet about the challenges that face them abroad, for a variety of reasons. Like a swan gliding across the water, the real action is happening beneath the surface. The PR head of a major US consumer brand, who asked that his company not be identified, explained the reticence that he and peers in other US corporations have about publicly addressing these issues. It is a problem on two levels. On one, corporations are concerned for the safety of their employees and the security of their facilities around the world. The other consideration is principally financial, related to the impact of boycotts of American products and services on a global scale. It's not a good time for US companies to point out their vulnerability, and to brag about their international reach. Jack Leslie, chairman of Weber Shandwick, says the level and type of anti-Americanism emerging, particularly in Europe, has been on the rise for some time "because of the US' perceived arrogance and hypocrisy." Leslie says that more and more, American business practices are being questioned, not just American politics, even among the country's closest trading partners like Canada and Western Europe. "There is a substantial and growing disfavor for American business practices," he says. "We are seen as cold-hearted and greedy." Communications inside and out Communication across all levels within an organization is a crucial tool for companies as they confront these problems. Thomas Barritt, SVP and global director of Ketchum's issues and crisis network, says that companies are really just starting to realize the implications of this emerging issue. "US corporations have just gone through a year of reputation and corporate-governance issues," he says. "I believe now they are stepping back and saying, 'We've got another situation on our hands - what are we doing about it?'" WS' office in Cairo, Egypt (known as Promoseven Weber Shandwick) has been advising its clients on crafting the right message for tense times. Maha Abouelenein, the office's managing director, says she is helping clients emphasize the fact that even if they are part of an international conglomerate, their operations are essentially local. Investing in the community and being a good corporate citizen is part of the picture. Abouelenein says that focusing on the local level means pointing out the impact of boycotts on the community, not on the corporation's bottom line. It also means proving it. Abouelenein helps companies put together plant tours for local media, opinion leaders, consumers, and boycotters to show just what "local" really means. "Let them go there and see that factory, and try and find even one American working for that company," she says. "It's all about credibility." Another problem that these companies face is the potential pressure put on regional employees by their families and peers, who may object to their working for a US interest. Abouelenein says the problem is exacerbated in Egypt, where companies are not used to implementing employee communications programs. Abouelenein says that convincing local executives to put internal stakeholders first is vital, particularly in a climate where rumors about US companies and the role they play in government affairs - in the US and abroad - abound. Barritt points out, however, that it may be too late for companies to sell the local message if they haven't lived and breathed it before now. Any company that has ignored regional stakeholders will quickly find itself vulnerable. "You can't start to create these relationships now," he says. "You have to have had people on the ground, creating these relationships for years." That includes having local spokespeople, and not flying someone in from corporate HQ to convince regional employees, investors, governments, and media that the company is committed to the community. While some companies wrestle with potential financial fallout, others are preparing for worst-case scenarios. Lexicon Communications, a crisis management firm, has seen a surge in interest in issues planning as of late. "Many of our clients, especially our global clients, have been ratcheting up their crisis management and crisis communications efforts worldwide recently, because of the current state of unrest in the world, the threat of global terrorism, and the drumbeat of a possible war against Iraq," affirms Lexicon president Steven Fink. Fink says some companies have been developing plans for upwards of nine months. "We see companies, smart companies, big brand companies, as well as medium-sized companies, taking this stuff seriously," he says. The point is to anticipate the worst, and prepare for it. Lexicon has created mock crisis scenarios for clients on everything from labor uprisings to a total communications blackout. In one scenario, the team faced a terrorist takeover of a manufacturing facility with 300 workers. "How do you deal with something like that? These are the sorts of questions that should come up," Fink says. Government assistance The US State Department also provides guidance to companies confronting issues overseas. J. Frank Mermoud, special representative for the commercial and business-affairs office, says that his team works closely in an inter-agency process with the Departments of Commerce and Homeland Security to relay security and commercial concerns to the appropriate body. "We host a number of briefings in the State Department, where Secretary Colin Powell and other officials have the opportunity to meet with business leaders," Mermoud says. The office also has an advisory committee made up of VPs of security from major US corporations. Activists, as well as those intent on actually doing harm to American corporations, will likely continue to draw a link between these companies and the policies of the US government. Smart corporations will resist being drawn into the global debate over war with Iraq, and will work hard to avoid taking public positions on the political issues. "Be careful about wrapping yourself in the flag," Leslie warns. "Multinationals will have big problems explaining it outside the US."

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