Vision - July/August 2008 - (Page 21)

Global opportunities demand ess By Gary Arlen www.ce.org lectronics companies, by the nature of their business, live in a risky world. Rapid product enhancements translate into short shelf life. Price-cutting is endemic in this industry. Fickle, faddish consumers add to the standard risks of doing business. These “normal” challenges appear routine in the context of global operations. From currency fluctuation to terrorism, from regulatory and political upheaval to expropriations and personnel hurdles, international expansion engenders an array of often-unfamiliar business challenges. “Emerging markets can offer an optimal combination of lower production and labor costs and close proximity to suppliers and customers,” explains Nabil Fawaz, global head of Agribusiness, Manufacturing and Services at the World Bank Group’s Multilateral Investment Guarantee Agency (MIGA). e extra focus on potential pitfalls. Dodge the Perils But the evolving geo-economic landscape is pocked with risks. Fawaz cites, for example, “political risks,” which include “incomplete or obscure laws on property ownership.” In worst-case scenarios, a government can “reduce or eliminate ownership … rights of the foreign investor.” Government actions to generate tax revenue, environmental laws or demonopolization may “have a crippling effect on an investors’ bottom line,” he adds. International Risk, the Hong Kong-based subsidiary of FTI Consulting Inc., lists further examples of global business risks, including product safety and health issues, brand protection and various intellectual property risks. “In the globalized economy, the pirating of intellectual property (IP) has become a major transnational problem, diluting brand equity and profitability of large and small multinationals, often presenting risks even greater than large-scale fraud,” according to International Risk. “In a world where the brand is a corporation’s crown jewel, brand piracy can threaten the very lifeblood of a business.” Rapidly changing financial exchange rates pose another challenge, as Paul Sabbah, president of Stamford International Inc. and chairman of CEA’s International Advisory Committee and its Accessories Division observes. He points to the shifting rates of the U.S. dollar against the Chinese Yuan and the Japanese Yen, which have ripple effects throughout the industry. “Risk has two edges to it,” Sabbah says. It can lead to great new opportunities, and it also can be shared with “financial institutions that are very sophisticated.” He acknowledges U.S. government-backed organizations such as the Export-Import Bank and the Overseas Private Investment Corp. as helpful resources for small and medium businesses. July/August 2008 21

Table of Contents Feed for the Digital Edition of Vision - July/August 2008

Vision - July/August 2008 Contents Shapiro's Spectrum In This Issue The Economist C4 Trends Visionary Embracing Disrupting Technology Vaulting Ahead with Your Brand International Risk Stop Boomerang Products CEA Newsline Tech Speak Tech Policy Going Global Eye on Business Market Insider Just the Stats

Vision - July/August 2008

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