Sunday, February 22, 2004

Firms rally to image of U.S.

They seek to blunt effect of foreign critics

By Carl Weiser
Enquirer Washington bureau

WASHINGTON - Foreigners shouting anti-Bush slogans are one problem; foreigners refusing to buy American products - that's real trouble.

Worried that anti-Americanism will hurt U.S. companies' brand image and sales, a group of business leaders has banded together to figure out how to reverse the trend.

"There is a definite cooling toward American culture," said Keith Reinhard, chairman of advertising company DDB Worldwide and the founder and chairman of Business for Diplomatic Action. "It's widespread, and it's at the point where it's affecting the ability of U.S. brands - or shortly will affect the ability of U.S. brands - to compete effectively and expand freely."

American companies such as Nike and Citibank have found their stores or offices attacked. Terrorists bombed a Marriott hotel in Indonesia and planted a bomb outside IBM's Bologna, Italy, office. Anti-globalization protesters have launched boycotts and campaigns against global icons like Burger King, Coca-Cola, Gap, McDonald's, Microsoft, and Pepsi.

U.S. companies are trusted less because of mistrust of the government - a "trust discount," according Edelman Public Relations, which conducts an annual survey on brand images. Nearly two-thirds of French and Germans claimed they were less likely to buy U.S. products because of their dislike for American foreign policies.

In the Arab world alone, anti-Americanism costs American companies an estimated $9.4 billion a year in lost sales, according to a Washington research group.

If American multinational companies have to hire extra security, if they can't recruit locals because they're afraid, if they're the target of boycotts - those are extra costs to business, Reinhard said.

The federal government, through what it calls "public diplomacy," spends about $1 billion a year trying to improve America's image. But report after report has declared those efforts a failure.

Incorporated in January

That's why this new group will be strictly business, Reinhard said. The group of executives from the advertising, entertainment and communications industry, as well as academics, has been meeting informally for about two years, but it formally incorporated in January.

It doesn't have an annual budget, Reinhard said. Most of its money has come from his family foundation.

Its first public venture is a panel Monday at Yale University on how companies can ensure their brands aren't ruined because of rising anti-Americanism. The group plans to take findings from its symposium and present them to leaders of major multinationals at a private April conference in New York City.

"A company needs to have a foreign policy just like a country does," said Jeffrey Garten, dean of the Yale School of Management, who will moderate the panel.

American businesses, which export about $1 trillion in goods and services, may not yet recognize the danger their brands and sales are in, Garten said. But if they wait much longer, it will be too late, he said.

Some disagree on harm

The idea that anti-Americanism is hurting American brands is far from universal. Overseas markets provide 40 percent of sales for American multinationals, and that number is going up, said Howard Silverblatt, market equity analyst at Standard & Poor's.

American products, from Tide detergent to Coca-Cola to Microsoft, continue to dominate the marketplace. Some studies show many consumers separate their dislike for the American government from their preferences in computers, movies, and jeans.

"They're wearing their Levis to go to anti-American demonstrations," said Lucy Davison of London-based Research International Group.

Cincinnati-based Procter & Gamble, maker of Crest, Tide, and Pampers, has seen no slip in its brands' images or in sales, spokesman Terry Loftus said. That's important because more than half the company's sales come from outside the United States.

"We're pretty much viewed as local brands," he said. "They see these as their mom's brands, not an American brand. They're made locally. Our organization is largely staffed with locals. We are, in many respects, local companies."

P&G, for example, had to deal with controversy in 2002 across the Arab world because of the name - Ariel - it uses for Tide in some parts of the world.

The name actually comes from German and English literature and is associated with fresh air scents. But the rumor was that Israeli Prime Minister Ariel Sharon actually owned the detergent, a man that many Arabs blame for the problems in Palestine.

P&G officials went on a PR blitz to hammer home Ariel's ownership - and that the detergent was being made in Egypt by Egyptians.

Sales slipped for a time because of a boycott, but rebounded.

Most in denial, expert says

Yale's Garten said most American companies publicly deny any worry and insist they are loved -- knowing full well the opposite is true.

John Quelch, an expert in international marketing at Harvard Business School, said about 13 percent of consumers consider themselves anti-globalists who will avoid brands they consider "global," many of which are American.

"Of course, you could say that 13 percent isn't big enough to matter. But we think this may be a mistake," Quelch said.

"While a global brand can't pretend to be totally local - that would be most unauthentic - it should be sensitive to good local citizenship."

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