Archive | December, 2011
export-growth

U.S. Trade News: 2011 Success Highlights Provided by DOC/ BEA & ITA

Commerce’s BEA Keeps Its Finger on the Economy’s Pulse.  BEA’s Four Big Numbers to highlight in 2011 are:

  • $15,180,900,000,000 (That’s $15 trillion). That’s the total size of the U.S. economy as of the 3rd quarter of 2011 on an annualized basis.
  • $1,977,400,000,000 (That’s $1.9 trillion). That’s the value of corporate profits as of the 3rd quarter of 2011. Profits of corporations in the United States climbed to the highest level on record stretching back to 1947.
  • 2.3 percent. That’s the real growth rate of consumer spending in the 3rd quarter of 2011. Consumer spending, the goods and services which we all buy on a daily basis, accounts for roughly 70 percent of all economic activity in the United States. The growth rate is the fastest seen so far this year. Consumer spending on services–like haircuts, sports tickets and going out to bars and restaurants–grew by nearly 3 percent, the strongest pace since 2006.
  • 15.6 percent growth in business investment in equipment and software. This rate of investment is at its strongest pace in a year, and this is crucial as these investments are critical in supporting economic recovery and driving growth.

The International Trade Administration’s Four Big Numbers for 2011.  The ITA has compiled Four Big Numbers to highlight our biggest successes.

  • 25 – The percentage of growth in exports since the launch of the National Export Initiative in January 2010. Just in 2011, we’ve seen six record-breaking months of exports (January, March, April, July, August and September). This is a trend that will continue as long as American companies are finding buyers and partners in markets such as Brazil, India, Korea, and Russia.
  • 9.2 million – The number of jobs supported by U.S. exports in 2010. This represents seven percent of total non-farm employment in the United States. Additionally, exports contribute, on average, an additional 18 percent to workers’ earnings in the U.S. manufacturing sector.
  • $148.1 billion – Our U.S. trade surplus in services through October 2011. In dollar terms, through the first ten months of 2011, growth of U.S. services exports are double the growth of our services imports. Through October, services exports are up 10.6 percent or $48.2 billion from the same period last year. In 2010, travel and tourism accounted for 26 percent of our services exports, and business, professional, and technical services combined for 24 percent.
  • 15,555 – The number of foreign buyers who traveled to the United States to participate in 35 designated International Buyer Program (IBP) trade shows. The IBP recruits thousands of qualified foreign buyers, sales representatives, and business partners to attend U.S. trade shows each year, giving exhibitors excellent opportunities to expand business globally.
tariff

Trade News: Important Revisions to the Harmonized System of Product Classification

From Datamyne: By the Numbers. With the New Year, an updated 2012 edition of the 6-digit Harmonized System (HS) of product classification codes overseen by the World Customs Organization (WCO) goes into effect.

It’s the fourth such update, the culmination of a five-year process of review and amendment to ensure the global system of nomenclature for trade goods clearly identifies what’s actually being bought, sold and subjected to tariffs. Some 40 subheadings are being retired because trade in these products has slipped below a defined threshold (currently US$50 million) – although the banishment of HS 530810, coir yarn, has been stayed by appeal.

On the other hand, distinct codes will be available for the first time to identify water pipe tobacco (240311), lithium-ion batteries (850760), and quinoa (100850). Changes in trade volumes, new inventions and/or product evolution can signal the need for reclassification.

In the US, in anticipation of HS 2012, the International Trade Commission (ITC) adopted many of its classification changes with the 2011 edition of the 10-digit Harmonized Tariff System of the US (HTSUS). Among the notable additions are codes to identify separately fruits, vegetables, coffee, and grains (under headings 0709, 0804, 0808, 0810, 0901, 0902, and 1201) that are “Certified Organic”, an increasingly important subset of trade in these products.

From U.S. Census -Global Reach: India is seeing rapid economic growth, a growing middle class, and increased urbanization. India’s GDP in 2009 was the 11th largest in the world and 4th-largest in purchasing-power parity terms. GDP growth is expected to reach approximately 8% each year through 2015. Between 2002 and 2009, U.S. goods exports to India quadrupled, growing from $4.1 billion to more than $16.4 billion. India has large potential for investments in infrastructure in order to continue its growth: over $1 trillion in infrastructure development needs between now and 2030 including energy (renewable and civil nuclear), health care (medical technology, pharmaceuticals, and health IT), defense and homeland security, civil aviation (aircraft and infrastructure), retail and franchising, and ICT.

PIERS: PIERS Data Shows U.S. Containerized Exports Drop 3% in October – Struggling European Markets Led Losses. U.S. containerized exports contracted in October for the first time in 4 months as European markets softened markedly. Overall U.S. containerized exports fell 3.0% Year-Over-Year in October totaling 1,008,273 TEUs, after climbing 10.3% in September.

Year to date, through October, overall U.S. containerized exports were still up 7.1%. However, PIERS/JOC, Economist, Mario Moreno’s recent updated forecasts point to a 5.8% growth for full year 2011, and slower growth for 2012 at 3.8%. On a month to month basis, exports rose 1.3% in October over September.

Demand from Europe continues to decline as European economies struggle with ongoing sovereign debt problems and decelerating manufacturing activity. On a country level, Brazil led the losses driven by a marked slowdown in economic activity, which led policymakers to reverse tightening policy. Exports to Brazil plunged 25% to a total of as demand for miscellaneous plastic products (-59%), wood pulp (-40%), and unclassifiable chemicals (-32%) reversed sharply. Italy and Hong Kong followed, each dropping by 34%  and 11% respectively.

costa-rica

Country Focus: Intercultural Nuances of Doing Business With Costa Rica, Part 2

Though Costa Rica shares quite a few cultural similarities with the U.S., one thing that seems to permeate throughout Central America is the importance of family. Perhaps not so surprising in this collectivist culture, many decisions are based on the effect they have on the family. In this peaceful country, Ticos believe in peace through negotiations. However, just because peace or an agreement is the end goal does not mean that you have to sugarcoat your ideas. Ticos are more concerned that honest opinions are expressed than the need to “save face” due to negative or unpleasant opinions. Ticos encourage open dialogue. By no means be disrespectful, but be honest in your opinions and ideas.

Men typically wear conservative suits (where the jacket is kept on until the Tico counterpart removes his first), while women wear dresses or skirts and blouses (pants are not typically worn). Men usually shake hands during greetings, while the abrazo greeting (patting each other on the right forearm or shoulder) is done between women. Kissing is only done between people who know each other well.

Good times to visit Costa Rica are February and March and between September and November. Vacations are usually taken during December and January and for Christmas and Easter. In the public sector, the fiscal year is the same as the calendar year. Make appointments in advance and reconfirm before arrival. Do try to visit Costa Rica before making business arrangements, as face to face contact is preferred over telecommunications.

Costa Ricans have a strong work ethic and tend to focus on the process of accomplishing the goal as much as the result/goal itself. By preferring to take their time with the process, they are attempting to avoid risks and anxiety. Costa Rica may be a monochromatic society, they also like to take their time to complete projects and generally try to avoid precise commitments. They avoid these precise commitments because of their “high uncertainty avoidance” established in their strict rules and policies in the legal system and societal norms. Ticos are more formal and serious than their neighbors. It is advisable to have local legal representation in addition to a local advertising agency.

During these meetings and presentations, everyone involved is encouraged to share their views and ask questions, so to put up a united front each member of your team or delegation to Costa Rica should take part in the presentation. Decision makers in Costa Rica are highly accessible and are willing to participate in frank open dialogue and discussions. The high ranking individual may make the final decision, but usually only after input from almost all involved with the decision, group consensus (group culture). And while a monochromatic society, decisions take time and thought (especially if group consensus is the goal), so try your best not to display any signs of impatience, as that may lower your credibility. Let the decisions stew over a business dinner, perhaps.

costa-rica

Country Focus: Intercultural Nuances of Doing Business With Costa Rica, Part 1

During the age of Imperialism, many of those who settled in Costa Rica were seeking land and mercantile opportunities. This “rich coast,” named Costa Rica by Columbus, is barred physically with mountain ranges and water, from instability and hostility that plagues the region, and promotes civility and neutrality within Costa Rican borders. Costa Rica has no official army to guard its borders, a history of peace, a relatively stable democratic republic, one of the highest literacy rates in Central America, and a sound economy.

Though Costa Ricans feel a strong affiliation towards the U.S. ideals of hard work and individual effort, their attitudes towards the U.S. and its citizens is ambivalent. In fact, like Belize, you may feel more comfortable in Costa Rica than other Central American countries. Though sharing in the Central (and Latin) America tradition of being relatively conservative and risk averse, in addition to the dominance of the Roman Catholic Church, Ticos are monochromatic (punctuality counts here!), they are probably the most punctual people in Central America. Other Tico distinctions include negotiating patterns in markets, where bargaining is considered a game and an expected practice, it is simply rare in this Central American country. In general, Ticos welcome affluent foreigners, however they do not encourage poor immigrants, for they cite them as the cause of petty crime, loss of civility, and other social ills.

Like the United States, Costa Rica, leans more egalitarian than hierarchical. Costa Rican prosperity, general ethnic homogeneity, and commitment to widespread education contributes to an egalitarian society. While there are various social classes, there is a strong emphasis on the equality and dignity of work regardless of social class. There is no need to tip taxi drivers in this egalitarian culture. Following the egalitarian pattern of Costa Rican society, machismo is not as strong as in other Central American countries. There are lower levels of gender discrimination in Costa Rica. For example, women keep their own identity apart from their husbands in all legal and business matters and there is a greater acceptance fore women in business. “Sharing the wealth” is a government mandate that encourages egalitarianism and enforces the preexisting humanitarian, democratic, and group culture attitudes. This “sharing” culture also extends to Costa Rican mentality—they are open to discussion on almost any topic.

Ticos are also similar to U.S. Americans regarding their demeanor. They are more subdued and detached in their communications styles, similar to U.S. American businessmen and women. Ticos are more reserved, non-emotive, proud and self-respecting. They have strong beliefs and are not easily persuaded. It is these beliefs more than rules that can determine decisions—rules are guidelines, most things are taken on a case by case basis. While they may have a strong self-image, because of the egalitarian mentality, they have a strong distaste for arrogance and expect all, even those in high positions, to display humility. Status is not as important in Costa Rica, and even if you have a lot of accomplishments, tooting your horn here is not exactly smiled upon.

belizeheader

Country Focus: Intercultural Nuances of Doing Business With Belize, Part 2

Belize is also different than its neighbors concerning the concept of time. While many of its neighbors have a relaxed view about time and punctuality, Belizeans are more monochromatic like their founders. Punctuality is expected for all business appointments, and while there is some flexibility concerning social occasions, certainly not half an hour or more. While Belizeans are firm believers in punctuality, the pace of life is slightly slower in Belize and like many of you would agree, big decisions need time. They do not have a clear aversion to risk, but actually have a high tolerance for ambiguity and uncertainty. Unlike Guatemala, Belize is past oriented with a concern for a better future. When a good opportunity presents itself, you will find that individual decision makers can move rather quickly.

Though hierarchy is flexible, start with formality and titles and then ease your way into informality, like the saying, “better to be overdressed than underdressed.” Like mentioned before, outsiders can quickly become involved in a group, so in large groups pluck up the courage and introduce yourself.  Don’t expect personal introductions.

Dress in business situations is expected to be formal (dress pants, shirts, skirts, dresses, etc.), but often accommodates the heat and therefore tends to be more casual. Before your arrival in Belize, it is best to make your appointments at least one week in advance. Then, upon first meetings or introductions, since relationships are key in this country and hierarchy is flexible, make quality (over quantity) connections with people through extended conversations. In the business setting, decisions may take a long time, but punctuality is very important. Since Belize has primarily British roots, many business practices and business laws are similar to those in the United States. Since Belizeans follow many of the British and United States protocols for business, it also means that contracts are exactly as stated, unlike most of Central America, where contracts are flexible. It is also recommended that, like other countries where you conduct business, you have a local contact on the ground to help you conduct business in Belize. However beware that Belizean citizenship can be bought.

Other facts about Belize:

  • To find a particular address, get directions from a well-known landmark.
  • Breakfast is referred to as “tea”.
  • Lunch is referred to as “dinner”.
  • When invited to a home for “tea” or to “drink some tea” you are having what we usually consider “dinner” but also known as “supper”.
  • Belize has a distinct style of popular music and dance called Punta, where the feet remain stationary and the rest of the body (especially the hips move; popular among the Garifuna). So get your dancin’ shoes on!
  • Taking coral or tropical fish out of the country is illegal.
belizeheader

Country Focus: Intercultural Nuances of Doing Business With Belize, Part 1

Belize is one of the most unique countries in Central America straying from the cultural norms of her neighbors. Belize, actually has British pirate (arrgh) and African (slaves brought to develop the timber-cutting industry) foundations. It is the youngest independent nation in Central America, achieving its independence from Great Britain in 1964, and abandoning the colonial name British Honduras in favor of its current name: Belize. English, not Spanish, is the official language of Belize, and while there is no official religion, the national prayer has Christian references. Another unique characteristic of Belize is that it is one of the most peaceful countries in Central America. Though its relationship with Guatemala has been strained, it has not suffered a single coup, major uprising, or guerilla war, which have plagued much of Latin America. “The British of Central America” is really an accurate description, given the political system and membership in the Commonwealth of Nations. Belize is a parliamentary democracy and constitutional monarchy with the Queen (of England) as the monarch and chief of state, represented by the governor general, a native of Belize and the prime minister the head of government. Once political parties gain power, they tend to be relatively cooperative with outside business people and investors. The primary industries for business in Belize include tourism, agriculture, forestry, and recently, banking.

Isolated behind a barrier reef, Belize has been ignored, for the most part, by outside forces allowing unique cultures to develop. Caribbean influence is predominant among the business class and along the coast. Creoles formed the backbone for Belizean urban society for decades. However, while the coast and urban areas are very much Caribbean influenced, towards the interior, a majority of inhabitants are Spanish speaking Mexican and Guatemalan. Society itself is male dominated, and women still play traditional roles, though the situation is changing. Women can inherit businesses, but women are infrequently seen in executive roles, and are especially rare in government. However as business grows and women attend university this is changing.

Belize is not necessarily a collectivist society, nor is it an individualist one either, it is rather in between the two paradigms. Social roles maybe strict, however class distinctions are more fluid and hierarchy does not have the same importance as in Belize’s neighbors. Outsiders can be easily and quickly involved in the group, when there is a reason for them to be. So though there may be some cultural stigmas towards women, these are changing, and since hierarchy is not as important, there is more access to all sectors and levels of business. Relationships are also highly important in this society; rules may be respected, but the priority is in honoring social responsibility toward one another.

Recovery

The Christmas Grinch- Global Economic Recovery Outlook for 2012 from Euromonitor

From Euromonitor: Special Report: 2011 World Economy in Review.  In January 2011 Euromonitor International released a Special Report on Global Economic Prospects in 2011. In this report Euromonitor identifies how 2011 played out in five keys areas.

  1. World growth will slow in 2011; rebalancing remains the key. World growth did indeed slow in 2011 but to an even greater extent than predicted in January. Latest projections for global real GDP growth for 2011 as a whole stand at 3.9%;
  2. Commodity markets should be relatively stable with upward pressure on prices being moderate. As expected, food prices continued to remain high – with some exceptions, such as poultry and palm oil. The IMF Food Price Index was 22.8% higher in January-November 2011 compared to the same period in 2010
  3. Unemployment will continue to be a problem in the developed world. Global unemployment has been a key issue facing the global economy in 2011, and has emerged as a weak link in the recovery – particularly in advanced world economies. With the economic outlook deteriorating in the second half of 2011, it now looks like the unemployment rate in advanced economies will not return to 2008 levels until 2018;
  4. Tighter fiscal policies will slow the recovery in the most advanced economies. Sovereign debt and government budget deficits have dominated the news in 2011, particularly in the eurozone. The state of government finances in advanced economies is widely recognised as the key challenge facing the global economy.
  5. Growth of world trade will moderate but global imbalances remain wide. We said: “World trade fell at a rapid pace during the Great Recession but the recovery was also swift.”  BUT “A full recovery of the global trading system will probably be even more protracted than the admittedly slow recovery in world output.”

What will 2012 bring?  The world economy faces exceptional – perhaps even unprecedented – uncertainty as it enters 2012. The rebound in output among developed countries has proven feeble, yet fiscal austerity is being launched, especially in the eurozone. The collective austerity of developed economies will likely bring on one of the most severe fiscal contractions in many years. These effects will be partly offset by developing countries, although growth is moderating as global financial conditions deteriorate.

The world economy will grow by 3.8% in real terms in 2012, down from 3.9% in 2011 and 5.2% in 2010. The slowdown is a consequence of financial instability and fears of sovereign risk, which threaten to spread beyond a few European economies. In other developed countries (such as the USA) policy indecision exacerbates uncertainty. As a result, stimulus programmes launched in 2010-2011 are being replaced by austerity measures. The outlook is brighter for developing countries. External demand is weakening but in most emerging economies domestic demand should propel growth until the world economy becomes healthier. However, the outlook for developing countries is not risk-free. A few countries with especially open economies and dependence on demand in developed markets could struggle. Policy makers in larger developing countries generally have more flexibility than is available in the advanced world, meaning that the possibility of a soft landing is more likely than a hard one.

china

Trade News: The Big Picture & Little Picture of U.S. – China Trade Relationship

The Little Picture-From PIERS: ‘Tis Not the Season to Be Jolly… for China’s Toy Manufacturers. Recently reported in The Guangzhou Daily, China is calling this Christmas “the worst” for Chinese toymakers ever. Guangdong province, where 60% of China’s exported toys are made, are feeling the sting from plummeted orders from the US, down 25% from last year. China’s toy manufacturers say soaring cost of raw materials and strict American laws are to blame. But Chinese government officials blame a stronger Chinese currency and the high cost of complying with stringent safety standards imposed by the U.S. and EU for compounding the problems and forcing them out of business.

More than 80% of the toys sold around the world come from China, but with U.S. safety laws putting more pressure on the Chinese government to upgrade and improve their toy manufacturing, China is struggling to stay afloat.

The Big Picture-From DOC: U.S. and China Conclude 22nd Session of the Joint Commission on Commerce and Trade.  Established in 1983, the JCCT is the main forum for addressing bilateral trade and investment issues and promoting commercial opportunities between the United States and China.  The work done at JCCT this year will help boost U.S. exports and jobs through:

  • the removal of important barriers related to electric vehicles,
  • strengthened measures to eliminate discriminatory indigenous innovation policies,
  • and stricter enforcement of intellectual property rights in China.

“Both sides worked hard to produce some meaningful progress that will help provide a needed boost to U.S. exports and jobs,” Secretary Bryson said. “This is a step in the right direction. But we must continue to actively engage our Chinese counterparts to open additional opportunities for U.S. businesses.”

During JCCT, China also confirmed that it does not and will not require foreign automakers to transfer technology to Chinese enterprises nor to establish Chinese brands in order to invest and sell in China’s fast-growing market. China also confirmed that foreign-invested enterprises are eligible on an equal basis for electric vehicle subsidies and other incentive programs for electric vehicles.

Investment issues were a source of serious discussion as well. According to published reports, in the next five years, China plans to invest $1.5 trillion in its strategic emerging industries which China defines as high-end equipment manufacturing, energy-saving and environmentally-friendly technologies, biotechnologies, new generation information technologies, alternative energy, advanced materials and new energy vehicles.

In conjunction with the JCCT, U.S. companies signed commercial agreements that will result in nearly $40 million in U.S. exports and support jobs for American workers. The U.S. and Chinese governments also signed agreements related to intellectual property, high-technology trade, statistics and tourism and agreed to public-private partnerships in the areas of energy and U.S. export promotion

Honduras

Country Focus: Intercultural Nuances of Doing Business With Honduras

Before the popular GAP owned clothing store came along, the original “Banana Republic” was in reference to Honduras. Bananas, coffee, and wood are the main exports of Honduras. Located on the east side of Central America, the name Honduras was derived from the Spanish word la hondura, referring to the deep water off the country’s Caribbean coast.

The Roman Catholic Church, with about 97% of the population, influences Honduran society by providing structure through Catholic precepts and various holidays. Family, like in other Central American countries, is also highly important here and can be the deciding factor in individual decision making. There is an inherent trust in people because of the network between families, extended families, and friends. In addition to the influence of family and friends, Honduran society is a highly subjective society that bases its decisions on its own feelings, precepts of the Catholic Church, and Mayan cultural heritage. Hondurans, in general are more flexible and willing to see new options and ways of doing things—don’t be afraid to present new perspectives and ideas. Honduras is an open society that readily accepts change.

Honduran society is generally a more egalitarian society, in comparison with other regions of Central America, due, in part, to its relatively homogenous society. The homogenized mestizo society developed without institutionalized slavery, providing the foundations of pluralism in society. Many Hondurans, however, want to seek their prosperity and security elsewhere. There is a inscription above the jail in Trujillo stating, “La ley is duro, pero es la ley,” meaning more or less that the law is the law and that there is no changing it and really no escape from it. The upper classes may believe differently, but in this sense Honduran society is somewhat resigned to their situation, and play their part in respecting the hierarchy of it all.

Honduras is considered to be the pariah state due to its dependence on the U.S. and decreasing power within the region. Since 1990, Honduras has tried to reduce its dependence on the U.S. by encouraging investments from other nations with tax advantages and cheap labor. Honduras has many resident foreigners from Asian and Arab countries who have come to take care of tax advantages. These groups, however, do not have much political influence, mainly due to their lack of cohesion. When choosing foreign representatives for your company, choose someone local and check out their credentials. Make sure to build up confianza and simpatico and a personal relationship; one is less likely to betray a friend than a detached business professional. Harmonious interpersonal skills can compensate for lack of expertise. When purchasing, price may be the major deciding factor, but customer service is the next factor, remember they are buying your personality with the product.

nick

Country Focus: Intercultural Nuances of Doing Business With Nicaragua

Nicaragua is the largest country in Central America (not including Mexico) and has been considered as a possible site for a sea level canal that would complement Panama’s. Though predominantly an agrarian culture (60% of Nicaragua’s exports), increases in the tourism industry has influenced foreign direct investment in Nicaragua by about 79% from 2007 to 2009. Although Nicaragua shares many of the cultural norms and values of most of Central America, it still has a distinctive culture.

Nicaraguan culture is divided between a more traditional Hispanic formal culture and a new revolutionary egalitarian and informal culture. Like most of Central America, the Roman Catholic Church also holds the majority of supporters here and minimal political influence, giving society structure and hierarchy. However, many of the ruling conservative elite actually subscribe to a form of Neo-Pentecostal Protestantism, which provides justification for the wealth of the ruling elite as evidence of their faith and poverty the lack thereof. The role of religion in justifying wealth and poverty also contributes to the traditional formal culture. This formal culture is often at odds with the newly emerging egalitarian society. Despite the fact that individuals of different classes are treated differently, which one can argue is true of any country, the universal application of the law tends to be a sensitive topic, implying that Nicaraguans are not satisfied with their current state and strive for equality. Unlike many Central American countries, conspicuous display of wealth or distaste and avoidance of manual labor, seen as a sign of privilege, can generate strong negativity, another sign of the struggle for an egalitarian culture. One of the ways that this revolutionary egalitarian culture has begun to take root is in gender roles, there is a higher percentage of women enrolled in school than in most of Central America.

Just because a new egalitarian society is starting to emerge does not imply that Nicaraguans are not a proud people. They are proud of their heritage, their beliefs, and their position within society. When greeting Nicaraguans, handshakes are the accepted norm,and kissing is a common greeting once you have an established relationship. Most of the ruling business elite speak English, but Garifuna is spoken by the coastal African population. In terms of communication, Nicaraguans are less concerned with loss of face and also less inclined to sugarcoat bad news or avoid confrontation. It has been said that Nicaraguans can be direct and blunt in their communication style, but will filter how much or little of their true sentiments to express depending on the rank and status of those present. Despite various mechanisms to “save face,” silence is generally uncommon but used for formal situations or when avoiding confrontation is necessary. Remember, when communicating, remain logical, formal, respectful, and diplomatic…but don’t be a robot! Be warm, open, and personable too!

Though known for Flor de Cana rum, tobacco and beef, Nicaragua’s other industries—tourism, banking, mining, fisheries, and general commerce—are expanding. Nicaraguans tend to look to the future and are inspired by the possibilities that change can bring. Nicaraguans, though typically risk averse, have been known to make fast decisions and swiftly seize opportunities when they are presented with one. The process for decision making mimics the pace of Nicaraguan culture, which is more relaxed, and while punctuality is expected, you may find yourself waiting. Note that time is more monochromatic in the capital city of Mangua. As with many Central American countries, personal relationships with the right people are very important. Known as enchufado in Nicaragua, this is an important business intermediary in your Nicaraguan ventures. You will find that the traditional Hispanic hierarchy exists in the rigidly layered workplace. However, in less traditional, liberal organizations and businesses, there is a strong egalitarian spirit throughout the entire organization.

panama

Country Focus: Intercultural Nuances of Doing Business With Panama – Part 2

Panama is the bridge between the Americas, home of the famous canal connecting two Oceans, and the wealthiest country in Central America. Due to the United States’ involvement in the construction of the Panama Canal, Panamanians are very familiar with U.S. culture. However, attitudes towards U.S. influence and involvement are mixed. The country is ruled by a small military right wing elite, which is receptive to U.S. interests, perhaps adding to the tension between the two countries.

It is highly important to establish personalismo—personal relationships and to become part of the Panamanian family (the basis of Panamanian society). Panama shares many of the general business practices outlined in earlier articles concerning the region, such as expected punctuality from foreigners and strong work ethic. Status is important here as in many parts of Central America, and even those with a Bachelors degree are acknowledged with the title licensiado.

When making appointments, initial scheduling should be done far in advance, through direct contact (not intermediaries), and confirmation at least a week before your arrival. Though formal business attire is appreciated, weather in Panama usually dictates a more casual (and comfortable) attire. The lack of jackets and ties are acceptable (and expected), though those in high positions don suits or camisillas—an open necked shirt typically worn untucked. Women typically wear skirts and blouses, or dresses. Women should avoid revealing clothing including shorts, and wearing pants in some rural areas of Panama may draw some attention. Greetings resemble greetings of other Central American countries, with the handshake being the primary gesture of welcome or greeting, and kissing between women is done when they are familiar with each other.

Some negotiations are held at the office, while others are held over lunch at a restaurant (business dinners are rare). Lunch usually takes place around noon, and is an affair that lasts about an hour and a half. Though Panamanian women are still rare in business, their presence is growing. Foreign businesswomen may include their spouses in the invites to business dinners. Wait to be seated, as the host usually sits at one end and the honored guest at the other. Men are expected to stand when women enter or leave the room. And while many business conversations begin with small talk about family, hobbies, or sports (avoid talking about the Canal, race problems or politics), sometimes the host, especially if pressed for time, may dive right into shop talk.

Gift giving in Panama is not expected, but meals of thanks are acceptable. Gifts are appropriate if invited into a Panamanian home or in the rural areas. Gifts should be from the your home country or state, perhaps a local craft or an illustrated book. The latest electronic gadget or expensive liquors, chocolate, wines, and Scotch are appropriate and appreciated.

Respect for others and knowledge, even a precursory knowledge of culture and society of different countries will put you in a more favorable position to do international business.

panama

Country Focus: Intercultural Nuances of Doing Business With Panama – Part 1

“The U.S.-Panama Trade Promotion Agreement will support American jobs, expand markets, and enhance U.S. competitiveness by eliminating tariffs and other barriers to U.S. exports and expanding trade between our two countries.” – Panama Trade Promotion Agreement

With a growth rate of 6.2 percent in 2010 and a similar annual forecast until 2015, Panama is one of the fastest growing economies in Latin America. The U.S. Trade Agreement can result in the liberalization of trade in goods and services where U.S. firms will have better access to Panama’s services sector. With an increased interest and support from the U.S. government for increased trade relations with Panama, Panama may be the next market to break into.

Like many countries in Central America, Catholicism is the dominant religion (80% of the population) and gives society structure, emphasizing reverence and respect for hierarchy—seniority, the elderly, and status. Just because respect for hierarchy is important in this Central American society does not mean that there is no respect for those of lower classes or the youth, in fact Panamanians believe in the inherent worth of every individual and therefore avoid public criticism. Panamanians like to maintain an image of harmony, so while people are not publicly criticized, it does not imply that they are never criticized (out of hearing of others). Though traditional Panamanian society dictates a high respect for the elite, young Panamanians are less sympathetic to many of the privileges awarded to the elite. While Panamanians are followers of strong leaders, the Panamanian youth are not as compliant with the extent of elite privileges.

There is a large disparity between the wealthy and poor, and while different races and groups exist, there are rigid class distinctions. Los Rabiblancos (whitetails)—the white urban Panamanian elite—hold most of the country’s wealth and are most likely the same people who run the business sector of Panama. Though Spanish is the official language of Panama, the familiarity with U.S. customs has led to the spread of the English language throughout most of the region and certainly anyone you plan on doing business with.

While Panamanians are open to all sorts of information, they tend to be very subjective and somewhat politicized; for example, if a Panamanian has anti-(U.S.) American views, he or she may reject any information from the United States. Panamanians rely on their gut instincts, and unless educated abroad, will rarely let objective facts stand in the way of their true intentions and desires. Younger Panamanians tend to be more objective. The family is just as important here in Panama as in many other countries in Central America and is the single most important social unit. Decisions are made with the family in mind in this collectivist culture, so when negotiating or pitching ideas, keep in mind that your Panamanian business associates are looking to benefit their family and extended family/families. The family (and extended family) provides stability and protection against a sometimes hostile and more often unpredictable world. These personal relationships, built on mutual trust, are maintained at all costs.

Barbie

From TI Providers: Thailand Flood, High-End Gifts, Pirates & Barbie

From Datamyne: Here’s the Beef. Cattle outnumber people more than 3 to 1 in Uruguay.  That’s because Uruguay, a country with just 3.3 million people but nearly 11 million cattle, is one of the world’s leading beef exporters.  But the US is a relatively small market for Uruguayan beef. Russia has the biggest appetite by far, buying $288 million of frozen beef, compared with $56 million for the US, out of $862 million in total exports during the first 11 months of 2011. Uruguay notched another $280 million in exports of fresh or chilled beef with the US buying $12 million. In addition, the US bought $41 million of cooked beef, for a combined total $111 million, nearly half of the $228 million in total imports from Uruguay, according to Datamyne statistics.
From PIERS: A Deluge of Challenges in Thailand.  Since October 4, historic flooding in Thailand has been responsible for a ripple effect of problems in the Asia-Pacific supply chain. In a recent article for The Journal of Commerce (JOC), PIERS data showed the percent change in containerized trade drastically declining in a number of areas from 2010 to 2011. With these numbers in the red, and Secretary of State Hillary Clinton’s estimate that losses from natural disasters in the Asia-Pacific region could surpass $200 billion this year, experts in the industry are questioning the reliance on Thailand for everything from auto parts to microchips.

From Panjiva: 2011 Holiday Trade Trends – Fewer Expensive Gifts on Shelves. In early November, we took a look at imports of toys into the US and noticed an interesting trend:  overall imports were down by 9.8% year over year.  Another look at our data showed that some categories of high-end gifts were even further off 2010 levels showing retailer’s anticipation of conservative consumer spending this holiday season.

From Global Edge: Pirates Do Exist. Most people view pirates as bandits dressed in funny outfits who sail around the world stealing treasure and stashing it on small, hidden islands. This may be a fun way to imagine the world, but modern day pirates are a real concern for shipping companies. Instead of stealing golden treasure, pirates commandeer ships with precious cargo and demand large ransoms from their owners. Chevron was the target of a recent attack off the coast of Nigeria. These attacks, mainly carried out by Somali pirates and outlaws from countries with dysfunctional government regimes, are costing the global shipping industry more than $9 billion each year through higher shipping costs and ransom payments.

Another from Panjiva: 2011 Holiday Trade Trends – Barbie Reigns (again). As we’ve tracked a decrease in shipments of high-end items like cashmere sweaters and video game consols, we’ve tracked an increase in shipments of less expensive, classic children’s toys.  This season, shipments of Barbie dolls have been 17% higher than shipments in the 2010 season.  One influence is retailers importing fewer toys overall – see the 9.8% decrease in shipments reported in our previous post –  and the toys they are importing this year are known, classic toys that they’re confident they can sell this holiday season.

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U.S. by the Numbers: Export Growth, Agriculture, State Revenues and GDP

From DOC: The International Trade Administration’s Four Big Numbers for 2011. The International Trade Administration (ITA) is very proud of its efforts to improve the lives of our fellow Americans by moving toward it’s goals of doubling exports by the end of 2014, supporting well-paying jobs tied to exporting, helping U.S. service companies find new markets, and pursuing new venues for U.S. companies to connect with overseas buyers.  Toward their stated ends, they have compiled our Four Big Numbers to highlight their biggest successes.

  • 25 – The percentage of growth in exports since the launch of the National Export Initiative in January 2010. Just in 2011, we’ve seen six record-breaking months of exports (Jan, March, April, July, Aug and Sept).
  • 9.2 million – The number of jobs supported by U.S. exports in 2010. This represents seven percent of total non-farm employment in the United States. Additionally, exports contribute, on average, an additional 18 percent to workers’ earnings in the U.S. manufacturing sector.
  • $148.1 billion – Our U.S. trade surplus in services through October 2011. In dollar terms, through the first ten months of 2011, growth of U.S. services exports are double the growth of our services imports.
  • 15,555 – The number of foreign buyers who traveled to the United States to participate in 35 designated International Buyer Program (IBP) trade shows.

From ERS/USDA: Agricultural Outlook Statistical Indicators. The latest numbers on the U.S. AG industry.  These tables include data on individual commodities, the general economy, agricultural trade, farm income and expenses, farm prices, food prices and expenditures, and other statistical indicators of the food and agriculture system.

  •  Zip - A Zip file containing all AO tables in Excel spreadsheets
  • Pdf - A single Adobe Acrobat PDF file (recommended for printing)
Individual Tables in Excel Format can be found via the general link provided besides the article title.

From U.S. Census: State Government Revenue Up 79 Percent in 2010.  Total state government revenue increased to $2.0 trillion in 2010, up 79.0 percent from $1.1 trillion in 2009, resulting mainly from large increases in social insurance trust revenue, according to the latest findings from the U.S. Census Bureau. After a substantial loss in earnings in 2009, trust systems showed earnings of $450.5 billion in 2010, a gain of 218.2 percent over the year before.  Two major sources make up these trust systems: (1) employee retirement systems and (2) federal and state social insurance trust systems, which include the unemployment compensation system, state government worker’s compensation programs, Social Security, Medicare, veteran’s life insurance and railroad retirement.

From BEA International Economics Accounts: Gross Domestic Product by Industry, 2003 – 2010 (Revised). Recoveries in durable-goods manufacturing, wholesale trade, and professional, scientific and technical services industries were the leading contributors to the turnaround in U.S. economic growth in 2010, according to revised statistics on the breakout of real gross domestic product (GDP) by industry from the Bureau of Economic Analysis. Overall, 16 of 22 industry groups contributed to real GDP growth.

Manufacturing value added—a measure of an industry’s contribution to GDP— rose 11.2 percent, a sharp return to growth after two consecutive years of decline. Durable-goods manufacturing rose 17.0 percent in 2010 after declining 14.9 percent in 2009.  Six of 22 industry groups contracted in 2010. The largest contributors were real estate and construction, which fell for the sixth consecutive year at 3.2 percent.
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Country Focus: Intercultural Nuances of Doing Business In & With Guatemala

The Mayans of Mexico also inhabited what is now known as Guatemala, labeling it the “Land of Tree;” in fact Guatemala was the first country to have uncovered the ancient ruins of the Mayan astrological calendar computation. So according to the Mayan calendar, we need to make 2012 count! Like Mexico and many countries in this region, Guatemala also adheres to many of the cultural norms outlined in previous articles concerning communication, business practices, hierarchy, meeting etiquette, etc. However, as many countries share similarities, they also differ significantly establishing them as unique cultures.

Like Mexico, the precepts of the Catholic Church give structure to life and have little influence in the government. However, unlike Mexico, Catholicism is not the official religion; over the years, the Church lost popularity amongst the wealthy. The Catholic Church and the family, like Mexico give Guatemalans a sense of structure and consistency throughout Guatemala’s troubled history of revolutions and military coups. Wealth and family give the individual status and security for the future. The general outlook of Guatemalans tends to be fatalistic, accepting their prescribed role in society, though hoping for better futures. Hierarchy here plays a part in the structure of society and tends to be rigid in some respects, such as women’s roles (only women may be charged with adultery) and lax in others, such as interactions between high ranking business executives or government officials and foreign sales people.

Perhaps it is because Catholicism, and consequently precepts of rigid hierarchy, have fallen out of favor with the wealthy (i.e. those in power, executives of companies, high ranking government officials) that reaching high ranking officials is easier than in Mexico, i.e. there are not as many hoops to jump through in Guatemala to see the boss. These executives, however, perhaps because of their rank are not afraid to say what they feel and tend to be open and speak bluntly. Other nuances of Guatemalan business culture is the fact that since Guatemala is a small market, one bad word or opinion of you, or your company, can go a long way, unfortunately. Well, good thing you are reading this…now you have a heads up! When it comes to results or process, the inclination is towards progress. The process itself may take a particularly long time, so as to ease those who are opposed to change into the new situation or processes. Similar to Asian countries, Guatemala is a collectivist country (thinking in terms of the group or family) and Guatemalans are opposed to change for the heck of it; in fact you will find many Asian owned manufacturing companies in Guatemala. When selling to Guatemalans, price may be the single most important factor in the purchasing decision.

Some other unique characteristics of Guatemala:

  • Business is not discussed in a home or around family
  • Loud voices are not met kindly
  • Military clothing is illegal
  • Mexican food is still typically spicier than Guatemalan food
Mexico

Country Focus: Intercultural Nuances of Doing Business In & With Mexico

Chilies, corn, chocolate, and culture…Mexico has it all.  Mexico city is built upon the ancient Aztec capital of Tenochtitlan and is one of the largest cities of the world. Mexico itself has the 11th largest economy in the world and shares the second largest border in the world with the United States. John Rice, President & CEO of General Electric Growth and Operations, cites that one of the most compelling reasons to do business in Mexico is the “opportunity and quality of the people” and the fact that you “can find just about anything here.”

While many of Central America’s customs and cultural traditions mentioned in previous articles are also shared in Mexico, including responsibility to the group, traditional gender roles, communication patterns, business practices (meetings, negotiations, etc.), Mexico itself has a unique culture apart from these shared characteristics.

A primary figure featured throughout Mexico is the Virgen de Guadalupe, who is a symbol of unity between the Aztec and Spanish cultures. She also serves as a symbol for Mexican nationality. The Catholic Church has a strong presence in Mexican society (90% of the population) and also serves to reinforce social hierarchy. One’s role in the social structure, and the presence of responsibility to extended members of family (which, as a business associate, you are attempting to become part of) give a sense of stability to life. Because hierarchy and reputation go hand in hand, it is also important as a high-ranking business professional not to cause humiliation by publicly criticizing; remember to try and preserve relationships.

Not only is Mexico one of the United State’s largest exporters, but Mexico also has the largest upper middle class of all Latin American countries. John Farrell, Country Director of Google, notes that Mexico has a “young population” which will result in a large workforce in the future.

Other nuances of Mexican culture include:

  • The “thumbs up” hand gesture generally means approval.
  • The “thumbs down” hand gesture is seen as obscene and vulgar.
  • Though taxi drivers are not generally tipped; tips for drinks and food in Mexican restaurants is about 15%, perhaps more in tourist cities.
  • When making appointments in Mexico, make them approximately two weeks prior to your arrival, via e-mail or phone, then confirm a week before your arrival.
  • Genuine cantinas in Mexico are visited by men, a woman’s presence is considered scandalous.
  • Do not drink the tap water, except where officially noted; this applies to ice as well.
  • Lunch is the main meal of the day and can be an extended affair; business lunches are popular.
  • Business meals are not typically the time to make business decisions.
  • The most common toast in Mexico is ¡salud! to health and prosperity.

¡Salud! to your business plans in Mexico!

Recap2

Selected, Previously Published, WorldTradeDaily.com Articles of Special Note

Included in the original vision and mission when we launched WorldTradeDaily.com last May was offering advanced technologies and databases to the trade community at large (free of charge) with the idea of expanding the understanding and innovation within the field.  Unfortunately, since “free” still requires considerable financial and technological resources to launch and maintain, this aspect of the original vision and mission have yet to be fulfilled.  The expansive database repositories and advanced technologies still represent retained CenTradeX Assets that still possess tremendous intrinsic value.  In 2012, I will attempt to better represent and promote these resources.  To those interested in learning more, I suggest the following:

Along those lines, we published a series of articles that represent the story behind WorldTradeDaily and the development of the innovative CenTradeX applications, acquired and now marketing by PIERS /UBM Global.

One of the most interesting series of articles that I developed over the last several months was an in-depth review and analysis of the Trade Intelligence providers that work with the U.S. Customs Data.  I focused on what I named the five “top tier TI providers” as as well as a cursory review of the dozen or so other “second tier” ones as well.  I dedicated the better part of a week on each, the first part of each week’s series is linked below.
Various Trade Data Sources and Value propositions offered by their products and services. Since the most likely prospects out there to purchase retained CenTradeX assets and contract my service are those who are in the business, particularly those who utilize U.S Customs data, I have dedicated many articles to them, their products and their particular strengths and weaknesses.  In fact 6 full weeks (4 articles each week) were dedicated to the players.  This is optional, but potentially valuable reading (for quick review) to understand the nuances of the value proposition that U.S. Customs data provides.
Recap1

Selected WorldTradeDaily.com Articles on Trade Intelligence & Business Applications

As we near the close of 2011, I thought it apt to publish and review and recap of some of the articles that focus on particular interest areas requested by readers in the past.  One of the frequent topics is on the nature of the often referred to but usually misunderstood term, “trade intelligence”.

Another important area is how trade statistics are utilized within business to make a real difference; i.e. application.  What can you do useful and important with trade data?

First, on the nature of Trade Intelligence and understanding Trade data.  Trade Statistics present a great “big picture” but impersonal view of trade activity.  Company data sources give profiles of the “traders”, but U.S. customs data can provide a container by container, day by day in-depth “pixilated” high resolution portrait of trade, trade patterns, trade partners and many specifics of the supply chain.  Therefore, IMHO, it is the most valuable resource available in the data arsenal, especially when connected with the other types and kinds of data. Articles of interest may include:

On the various business applications for Trade Data I present links to a few of the ones I found interesting.

The exciting (and valuable) thing is to use the various types and kinds of data available to create “three dimensional” (if you will) portraits of trade.  Once you can craft such a story, the treasures of understanding and prosperity that such understanding may yield, become more evident.

Deficit

Trade News: The Latest on U.S. Exports, Imports, Trade Deficits and Trends

From ITA Tradeology: October 2011 Trade Facts and Figures – Autos and Europe. The Commerce Department announced the figures for international trade in goods and services for the month of October. Year-to-date, exports have grown nearly 16 percent. One area that has had particularly strong growth in exports is the auto sector. Exports of passenger cars in the first ten months of 2011 are nearly 25 percent over the same period last year. Those vehicles are finding homes in driveways and garages in Canada, Germany, Saudi Arabia, Mexico and the UK.

As Secretary Bryson remarked:  “Today’s numbers clearly show the positive impact of exports on the American economy. So far this year we have seen six months of record-breaking growth of exports. Our initiatives are working for the American people. Since the President implemented the National Export Initiative in January 2010 monthly exports have increased 25 percent.”

Exports continue to be a bright spot in our still recovering economy.  Europe and the EU have been in the news constantly and it’s worth noting that in 2010, exports to the 27 members of the European Union still represented nearly 19 percent of U.S. merchandise exports.

From U.S. Census /Global Reach: Trade Deficit Decreases in October. Decreases in both exports and imports led to the Nation’s International Trade Deficit in goods and services decreasing to $43.5 billion in October from $44.2 billion (revised) in September. “Exports decreased $1.5 billion to $179.2 billion in October and imports decreased $2.2 billion to $222.6 billion.”

The decrease in imports was primarily due to decreases in imports of crude oil (down $1.5 billion) and passenger cars (down $0.7 billion). Imports from China rose $1.4 billion in October to a record $37.8 billion, eclipsing the previous record of $37.4 billion set two months ago. Exports to China reached their highest level so far in 2011, at $9.7 billion. The record for exports to China in a single month is $10.1 billion set in December 2010.

More on the above from the DOC/ Bureau of Economic Analysis: U.S. INTERNATIONAL TRADE IN GOODS AND SERVICESOctober 2011.

The September to October decrease in exports of goods reflected decreases in industrial supplies and materials ($1.3 billion); consumer goods ($0.6 billion); foods, feeds, and beverages ($0.1 billion); and automotive vehicles, parts, and engines ($0.1 billion). Increases occurred in capital goods ($0.5 billion) and other goods ($0.2 billion).

The September to October decrease in imports of goods reflected decreases in industrial supplies and materials ($3.6 billion); automotive vehicles, parts, and engines ($0.6 billion); and other goods ($0.1 billion). Increases occurred in capital goods ($1.1 billion); consumer goods ($0.7 billion); and foods, feeds, and beverages ($0.2 billion).

The October 2010 to October 2011 increase in exports of goods reflected increases in industrial supplies and materials ($8.5 billion); capital goods ($3.8 billion); automotive vehicles, parts, and engines ($1.5 billion); consumer goods ($0.8 billion); and foods, feeds, and beverages ($0.1 billion). A decrease occurred in other goods ($0.3 billion).

The October 2010 to October 2011 increase in imports of goods reflected increases in industrial supplies and materials ($12.0 billion); capital goods ($4.4 billion); automotive vehicles, parts, and engines ($2.2 billion); foods, feeds, and beverages ($1.7 billion); and consumer goods ($0.9 billion). A decrease occurred in other goods ($0.1 billion).

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Recent Blog Articles from Panjiva, PIERS, Datamyne & Import Genius

From Panjiva: Trendspotting: The Q3 Report is Now Available.  Libby Fortier, Marketing Communications guru for Panjiva, was nice enough to send us their latest comprehensive third quarter report.  The report contains a quantitative analysis of the macro trends shaping global trade during Q3 which helps sourcing executives figure out which geographies are trending “hot” for the products they seek across the globe.  It provides a clear view of how some of the most rapidly changing product categories performed relative to the same quarter one year prior. Interestingly:

  • Toy imports to the U.S. are down.
  • Guided missile exports from the U.S. are down.
  • Trade with NAFTA countries is up.
  • Trade with Libya and Egypt is down.

Download, review and enjoy the entire (.pdf) report.  Thanks Libby

From PIERS: Correspondingly, Jesse Case from PIERS sent along a note to a recent interesting and unusual article the crafted looking at movies as exports: International Box Office Sales or Another U.S. Export? How Do Hollywood Movies Stack Up?  Just for fun we decided to look at some of the top grossing films in 2011 and see what it would take to ship these movies abroad assuming they were physical goods. To make this comparison we took PIERS Estimated Value for all containerized U.S. exports through Q3 2011, and divided this number by total TEUs exported, to come up with an average value per TEU shipped in 2011 ($77,543/TEU).  Using these assumptions we’ve found that this year’s blockbusters (if they were physical goods) would have generated some pretty impressive container volumes.  Fun with Data. 

From Datamyne: Peru Eyes Blueberries. Planting in the mountains for export markets in US, Europe, Asia.  The Peruvian government’s Sierra Exportadora agency announced that its demonstration blueberry plantation in Pichupampa should be shipping its first crop next year. The economic development program will be ramping up investment to expand the fruit’s cultivation throughout all 17 regions of the Peruvian Andes and gain share of the lucrative winter market for the berries in the Northern Hemisphere. Blueberries can fetch $30/kilogram in the US, where the buying season is about to open for trade dominated by Chile.  Singing the Blues. 

From Import Genius: Using Shipping Records to Research Suppliers.  Finding reliable suppliers can agonizing. You may be separated by more than just thousands of miles. Language barriers, cultural obstacles and time differences can make it difficult to build trusting relationships with overseas vendors. And that’s not to mention the huge number of scammers, amateurs and middlemen that abound at trade shows and, especially, in online marketplaces.

Nothing can replace face-to-face meetings and in-person factory inspections. You should trust nobody until you’ve seen the facility with your own eyes. But trips overseas can be extremely expensive and enormously time consuming, so before you go you should perform as much due diligence as possible on the factories you’re thinking about working with.

One great way to check up on a factory you’d like to work with is to tap into their actual history of shipping goods to the U.S. and other countries using public records. As it turns out, the shipping manifests for ocean cargo entering the U.S. and many Latin American countries are considered public documents.  Helpful advise from Import Genius. 

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Mexico and Central America, Part 5: Meetings and Negotiations

There are two different types of business meetings in Mexico and Central America: a meeting between peers and a meeting between unequals. Both have different goals and are conducted differently.

Between Peers: With the high status of participants having been established, meaning that all the formalities of going through lower channels of subordinate communications, these business associates can communicate openly sharing ideas. These meetings act as forums for sharing ideas and making decisions, and everyone is expected to contribute to the general decision making process (as the need for group consensus dictates). Discussions may be loud and vibrant with everyone talking at once with all comfortable with their position to pay attention to formalities. In these meetings questions are common and interruptions expected. Imagine this as different heads of households coming together to, say, make a decision about a city ordinance that affects your neighborhood. Each is comfortable and secure in their position as head of house and sees each participant as his peer, and feels like (s)he can speak freely.

As opposed to meetings…

Between Non-Peers (or Unequals): Meetings between subordinates (of all different levels) are typically more formal as it is the beginning of relationships that hopefully culminates in the dialogues mentioned above. These meetings are usually called by the decision-makers to gather information, clarify goals, and/or formulate action plans. There is no real sharing of ideas or efforts at problem solving. This first meeting is to really size up the other company. Your goal should be to establish compatibility and mutual respect (simpatico), be warm and dignified, and make a good impression. Similar to parents sending their children to play with other children on the street, collect basic information and get a general idea of compatibility and intentions, in other words lay the groundwork for heads of house to meet.

Once in the position to present proposals come well prepared. Your presentations should be carefully planned, logically organized, and beautifully presented with interesting visual aides (charts, graphs, and handouts)—remember how important it is to look successful, make yourself a force to be reckoned with! Bargaining is an expected way of negotiating, as ingrained in society and present in small shops and markets. Bargaining is an instrument to building trust so be reasonable, don’t divulge information easily, and don’t overcompensate (you don’t want to appear easy!). Bargaining is a tool used across the world as a way to build a relationship where both sides seem to appear to win. It’s a game and you are expected to play! Like contracts in China, contracts in Central America are seen as legal formalities, which can be altered if there is a need. Families and their extended networks help each other out, they take care of each other, you are marrying into the Central American family and the business!

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Mexico and Central America, Part 4: Tempo, El Jefe, and Notarios

While it is expected that new business associates will arrive at the appointed time, “la gringa” or “Norteamericano,” meetings typically won’t begin until everyone arrives, or at least the decision makers. Though this is not the standard for social gatherings, where it is acceptable to be late up to an hour. (Arriving sooner at these social events may interrupt the host’s own prep time.) Time is organized around what has to get done for the day, and it is usual that workers will stay past the typical workday to get projects done. Since decisions are made with the group (family) and relationships (obligations to friends) in mind, the clock takes a backseat. It is this same approach to projects and deadlines that put relationships over the rules of the clock. It matters how things are accomplished just as much as the final result. Central American cultures are more risk averse than risk taking, and would rather it “measure twice, cut once,” hence the tedious decision making process. The decision process is a subjective one, deriving from gut instinct to personal beliefs, and relationships.

Subordinates’ attention to detail and the perfection of form, which elongates the completion of projects and meeting of deadlines, is exacerbated by the creative use of resources and the navigation through bureaucratic hoops. Hierarchy dictates, subordinates are to follow decisions of their superiors and provide detailed information. Bosses or “los jefes” are expected to disseminate information, provide guidance, and make decisions. As the father, the head of household is the primary decision maker and the children are the subordinates; the Central American business organization operates in a similar manner as a household. The rigid hierarchy also dictates that proper protocol must be followed if you are to speak with the senior business associate, provided that you are deemed important enough. So first begin with becoming acquainted with the children (subordinates) then proceed to addressing the second in command (the wife or woman of the house) and then proceed to pursue a meeting with “el jefe” (head of the house).

Due to the penchant of Central Americans distaste of saying “no” to requests, in order to prove their ability (and preserve their pride), it is best to have a trusted contact on the ground before departing for home. Notarios are responsible administrators who serve as local intermediaries; they act as liaisons between you and the people you are meeting with. If we want to talk about it in terms of the family, consider this a mutual friend, who acts as an intermediary with you and the family and is willing to give you an honest opinion (with both interests at heart).

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Mexico and Central America, Part 3: Favors, Relationships, and Status

Mexico and Central America are both relationship and status driven societies. It’s really about who you are and who know and how they “take care” of you. The wait staff may serve a table that arrived after you because they know the diners, or because they are aware of the diners’ statuses. Additionally, if you are one of three business proposals and the Central American company has a personal relationship with an associate of another company, well, which company do you think will be chosen?

It is important to network as much as possible and lay some groundwork before attempting to conduct business with Central American companies. By building these relationships, you build confianza (trust, special treatment or personal favors) and simpatico (establishing compatibility). Realize that people in Central America like to do business with those they trust and are essentially on good personal terms especially family. Many of us do not hesitate when family asks for favors and we do anything in our power to help out family.  Centro Americans are similar, knowing that their families would take care of them and they would take care of their family (or extended kin). The long and short of it, build relationships and network, pay it forward (treat them like family and stress compatibility), and present yourself as the friend (i.e. extended family) who they know will grant a favor should they ask.

So establish relationships with company associates before proposing business deals… if they will have you. Along with paternalism in Central American society is the importance of reputation. Not only do you need to be wary of the hierarchical structure and what you say, but you have to present yourself as someone worth caring about. Central Americans want to conduct business with important people, with top people at your company, therefore putting your best foot (or sets of feet) forward for important business deals is extremely important. In Central America, wealth and power are synonymous and shown through an ostentatious display of wealth with luxury items and status symbols. They dine at fine establishments, wear luxury brands, drive expensive cars, physically displaying their success. As a potential business associate of these Central American companies, it is also important for you to portray yourself as an equal, by staying in fancy hotels, dining at fine establishments, dressing well, pretty much going the whole nine yards. By living somewhat extravagantly you imply that you are successful, like how in medieval times skinny was considered ugly and heavier was beautiful as it meant rich and bountiful, i.e. successful. Put your full title and all the advanced degrees on your business cards, act the part, dress the part.

The dress for business occasions is typically formal. The fashionable look to Europe. Men dress in stylish (dark) suits, white shirts, interesting and sophisticated ties, polished shoes, stylish accessories (watches, cufflinks, ties, etc.). Women dress fashionably and accessorized.

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Mexico and Central America, Part 2: Introductions and Communications

As with most cultures, in Centro-American culture it is best to be introduced through a third party like a friend of the family. Being well-connected is an admiral trait in Central America. Women are introduced first, then men, usually according to seniority and importance. Unlike Asian cultures, which stress the importance of business cards with introductions and greetings, it’s more casual in Central America where a soft hand shake or kissing (air kisses please!) will suffice. Business cards may be exchanged, but they are used mainly as a resume device indicating your rank in the company, so be sure to put your full title and any advance degrees you hold, because they care. Oh, and Spanish on one side of the card, please and thanks.

Just because there is less hype about business cards in Central America than Asia does not mean that the culture is informal. On the contrary, titles and hierarchy create a formal culture. Hierarchy dictates who is spoken to first, as well as communication styles. Due to respect for hierarchy and dependence on others in making decisions, watching what you say is highly advisable. Though there is a desire for smooth interpersonal working relationships, silence is uncommon in communications. There is more a of a penchant for multiple conversations simultaneously and frequent interruptions.  Think of a huge family party with lots of conversations, laughter and raised voices. Many businesses in Central America want to prove that they are capable of conducting business and will rarely shoot down a reasonable request, even if they lack the means to accomplish it.

In the United States there are certain norms, or rules, when it comes to space between people.  Personal space, which is typically indicated as a bubble around your person… well that’s going to be popped real fast in Central America. People in Central America tend to stand closer to others and the whole (air) kissing thing is not a typical greeting in the U.S. but it is part of the culture. Once again, think of this like a family gathering or greeting, where the mother usually offers a hug to any of her children’s friends or acquaintances (well, my mother does at least). It is not necessarily an invasion of personal space just a gesture of welcome. Similarly winking and whistling is not necessarily a “come hither” gesture, but more of a reaction to what you may be saying, so don’t take it personal. And while eye contact indicates paying attention, ladies beware of machismo, and limit eye contact as it may encourage further advances. Central Americans are usually more “touchy” than us here in the U.S., but we are so used to being detached when it comes to business that we can come across as distant and rational, maybe even cold, so try to change it up a bit and be a little more personable and warm…remember you want to be part of their family, accepted into their society, gain their trust.

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Mexico and Central America, Part 1: Family Culture and Traditional Roles

When considering how one would want to ingratiate oneself into Mexican and Central American cultures, collectively hereafter referred to as Central American, I find that it is similar to how one would try to be a part of another family, in fact a lot of cultural norms are similar to the family structures, mi amigo.

Individuals in Central American societies operate as part of a larger machine or group. While there are select individuals who have the power to make decisions, these choices are made with the whole of the group in mind. Going back to the family analogy of Central America, the father or “padre” of the family (society)makes decisions based on what he thinks will be the best solution for the entire family. There is an affinity in Central American societies for group affiliations; meaning, in order to be “accepted” into society as a whole, one must identify with a group, business, association, etc. While individuals exert some independence from society, like that family, individuals will always look to their families or groups for stability. Hierarchy in groups is also reflected in society as a whole, where deference is given to bosses and subordinates, consequently fall in line.

Many Centro American societies, especially Mexican societies, are very paternalistic, which is often reflected in their political systems. Paternalistic societies indicate that the man is the head of the household and therefore has an obligation to the family to care and maintain it. Basically these societies will look after their own families and friends. Keep in mind while dealing with Centro American societies, there is a strong commitment to caring for their family (read: business organizations).

Since it has been established that many Centro American societies are paternalistic, this implies that there are distinct gender roles in these societies. A woman’s expected role is to care and nurture the family. There are very few women who serve positions other than administrative work in the business sector. Women who are looking to do business in this part of the world, be aware of the machismo! Comments that are made in these countries made be thought of as “come ons” to those of us in the United States, but should not be taken personally. Generally they should be ignored, and it is best not to encourage these advances. Additionally, women have to work harder to maintain the respect of her Central American male colleagues, treading a fine line of not being too aggressive and not too soft where authority can be questioned.

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Excerpts from the MSU- Global Edge Series Focusing on Global Entrepreneurship

Global Entrepreneurship Week Part 1 – Introduction. Global Entrepreneurship Week is designed to inspire, establish idea sharing, and celebrate the successes of entrepreneurs worldwide. So much of global growth is stimulated by small businesses, that leaders from many countries are eager to encourage a spirit of entrepreneurism in their economies. A large portion of future jobs will come from businesses that are just bursting onto the scene and the entrepreneurs behind them.

Global Entrepreneurship Week Part 2 – Small Business Growth Abroad. With increased globalization, small businesses led by entrepreneurs can play an important role in global growth. In today’s world of interconnected markets and easy technological access, entrepreneurs have increased opportunities to expand their business abroad. Many entrepreneurs around the world have already expanded their small businesses overseas providing economic success and new jobs for many.

Global Entrepreneurship Week Part 3 – Entrepreneurship in Emerging Markets.  Entrepreneurship is the key, long-term growth driver of any country’s economy. Not only do small businesses, in aggregate, add more jobs than large corporations, they are usually the companies leading technological breakthroughs. These small businesses are clearly very important to every country, but they face different challenges and rewards when operating in developed and emerging markets. In developed markets, small businesses must compete against large, successful firms, but enjoy a stable government and well-established business guidelines. Small business in emerging markets, on the other hand, encounter political risks and many times security threats in order to have the opportunity to profit from a vast, untapped business potential. Regardless of the risks, small businesses in emerging markets are attracting capital on a global scale and taking advantage of these key growth markets.

Global Entrepreneurship Week Part 4 – Microfinance.  Microfinance is nothing new; it can be traced back to the 18th century, when banks began lending small amounts of money to local farmers to purchase equipment, livestock, and seed. Microfinance can be described as lending small sums of money to borrowers with little or no collateral. In effect, these loans allow entrepreneurial minded individuals the money necessary to start their own small business. The goal of microfinance is to create a world where entrepreneurs are free from the limitations of poverty.

Today, microfinance is a growing industry with countless opportunities for expansion. There are many non-profit organizations supporting microfinance, as well as a few large financial institutions that have started to invest in it. Microfinance increases entrepreneurship in developing nations by allowing innovators to create and expand business. The main benefit of microfinance is that it is not just quick fix for developing nations, but a model that provides the basis for systematic change in impoverished communities. This is crucial for global entrepreneurship expansion opening the gates for millions of entrepreneurs to start their own businesses.

Global Entrepreneurship Week Part 5 – Policies Enabling Entrepreneurship.  Government leaders around the world are hoping that business start-ups will fuel economies still struggling since the global financial crisis.  To stimulate such growth, policymakers are shaping programs to promote the development of new business ventures. With struggling economies all around the world, new approaches to job creation should center on the promotion of entrepreneurship.  While some business ventures may fail, those that succeed have the potential to revolutionize industries for hundreds of years.  Jobs and wealth creation will rise out of the enormous growth potential of innovative new companies.  World governments may take a variety of approaches to supporting entrepreneurs, and they will gladly reap the economic rewards of those who find success.

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Selected News from Euromonitor: Petcare, Spirits, Stevia, Population, Diabetes, Libya

The Pet Healthcare Market. A downloadable podcast.  Emily Woon, Head of Pet Care Research, discusses the pet healthcare market and the challenges faced by the pet healthcare industry, with topics addressed such as:

  • The overall performance of Pet Care in recent years
  • The largest markets for Pet Healthcare products
  • Challenges to Pet Healthcare manufactures, including educating pet owners on preventive healthcare

Spirits in India: How Can One Country Eclipse an Entire Region?  India’s rising star has been casting an increasingly heavy shadow over the spirits category, gradually eclipsing established regional powerhouses in the process. Beyond the still labyrinthine legislative environment and the minefield of the country’s chaotic tax regime, the Indian spirits market has been expanding rapidly on the back of favourable demographic trends, aspirational consumers and the rapid growth of an indigenous middle-class. According to Euromonitor International’s latest research, the Indian spirits market overtook its increasingly tired looking Western European counterpart in 2010 and is on course to overtake Eastern Europe as early as 2014.

The Benefits and Disadvantages of Stevia for Soft Drinks in Europe. Another downloadable podcast:

Ivan Uzunov, Senior Research Analyst at Euromonitor International discusses the impact of the European Union’s recent approval of the natural sweetener Stevia. Uzunov focuses on how the soft drinks market in Europe is using Stevia since the approval. Learn about:

  • The history of the approval of Stevia by the European Union
  • The advantages of Stevia for soft drink manufacturers
  • Which soft drink companies are using Stevia
  • The disadvantages of using Stevia


The Challenges and Prospects of a Seven Billion Global Population.  On 31st October 2011, the UN announced that the global population had broken the seven billion people barrier, ushering a new age of challenges and opportunities. Changing demographics, scarcity of resources and environmental issues are some of the challenges of an expanding human race, while rapid urbanization and expanding consumer markets present opportunities.  The previous milestones had come in 1987 (five billion) and 1999 (six billion).  The world median age rose from 28.0 in 2005 to 29.2 in 2010 driven by better healthcare, nutrition and rising living standards. However, greater numbers of the elderly stretch state finances and contract the labour pool.

An Undesirable Trend: The Global Outlook on Diabetes.  The IDF estimates that in 2011 366 million adults (20-79 years) have diabetes. By 2030, the number is expected to increase to 552 million, or approximately 10% of the global adult population. Several million more are also at risk for developing the disease. Just as discouragingly, diabetes is becoming increasingly common in developing countries and regions previously less affected by the disease. In fact, 80% of diabetics live in low- and middle-income countries.

Post-Gaddafi Libya Offers Opportunities for Investment. The civil war in Libya negatively influenced the development of the travel and tourism industry in the country. However the end of the 42 year Gaddafi era brings both challenges and opportunities for the war -torn nation for travel agents and other tourism operators. In 2010 arrivals to Libya reached 1,245 thousand trips. The vast majority of arrivals were for leisure purposes accounting for 80% in 2010, as the country was only slowly opening up to the rest of the world for business. Pre – conflict, arrivals from Egypt and from Tunisia continued to dominate in 2010, accounting for 42% and 38% respectively of the total. Still not my first choice for a vacation. 

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Global Economic News: Recent Portents of More Choppy Waters Ahead

From PIERS: Warning: U.S. Recovery Could be Derailed by European Crisis. The Organization for Economic Co-operation and Development (OECD) warned on Monday that the financial crisis in Europe shows little sign of being self-contained and could pose a great risk to the growth of the U.S economy in 2012.  Reuters reported OECD predicts “Negative spillovers from the turmoil in European markets could be greater than expected,” contradicting previous down-played concerns from the Federal Reserve, and dampening predictions from economists earlier this year that showed an “Energizer-bunny-like” trade scenario between the U.S. and Europe.

Speaking of which, directly from OECD: OECD calls for urgent action to boost ailing global economy.  “Prospects only improve if decisive action is taken quickly,” said OECD Chief Economist Pier Carlo Padoan. “In the euro area, the risk of contagion needs to be stemmed through a substantial increase in the capacity of the European Financial Stability Fund, together with a greater ability to call on the European Central Bank’s balance sheet. Much greater firepower must be accompanied by governance reforms to offset the risk of moral hazard,” he said. Improved prospects would also depend on the enactment of a credible medium-term fiscal programme in the United States.

A wide range of structural measures to boost jobs and economic activity, all desirable in their own right, will become urgent. Effective labour market policies are needed to tackle unemployment which risks turning from cyclical to structural, thereby sapping potential growth, hitting confidence and weakening public finances.

From PIERS: JOC Reports A Whole Lot of Rolling and Bumping Goin’ On. PIERS sister company, The Journal of Commerce’s recent cover story points to market uncertainty and a reversion back to difficult Great Recession business decisions when it comes to the future of capacity utilization. The JOC article alludes to predicted severe cut-backs on global capacity that are sending freight rates to new lows only seen in 2009 during the Recession. According to PIERS’ recent capacity utilization report, load factors have tumbled between 2010 and 2011. “The imbalance between supply and demand in the second quarter of 2011 fell 4.3 percentage points below the Q4 moving average, which suggests further weakness moving forward.”  Not a good sign overall. 

For those interested in exactly how we got in this mess to begin with… WIKI provides a synopsis of the events that led up to the current “Great Recession”.  The late-2000s financial crisis (often called the Global Recession), is considered by many economists to be the worst financial crisis since the Great Depression of the 1930s. It resulted in the collapse of large financial institutions, the bailout of banks by national governments, and downturns in stock markets around the world. In many areas, the housing market had also suffered, resulting in numerous evictions, foreclosures and prolonged unemployment. It contributed to the failure of key businesses, declines in consumer wealth estimated in the trillions of U.S. dollars, and a significant decline in economic activity, leading to a severe global economic recession in 2008.  Link to complete article.