Multinational companies have benefitted from free trade, globalized media and the rising middle class in developing markets. Now populism, people’s fear of downward economic mobility, e-commerce and political tensions are turning the tables in favor of local brands. Business is caught in the crossfire of trade wars and hyper-sensitive social media is adding fuel to the outrage.
The importance of the home market has always been a debatable proposition. Is it a place for stock market listing and large investor presence or is it the font of values and spawning ground of top management? And can those values apply to markets that have a totally different set of societal aspirations?
In the past few months, we have seen this clash play out most prominently in the continuing tussle between China and the U.S. The leading Chinese technology company, Huawei, has been banned from the U.S., on the basis of breaking the ban on trade with Iran. Chinese AI companies are now excluded from the U.S. market as well, with alleged misuse of facial recognition technology.
Meanwhile, the National Basketball Association had to apologize for a tweet by Houston Rockets general manager Daryl Morey that expressed support for the protestors in Hong Kong. Then NBA commissioner Adam Silver backtracked in the wake of fierce criticism in home market, reassuring the public that he supported the right of players to speak their minds on issues. This summer Nike withdrew a new limited edition product from the Chinese market after the shoe’s designer (a Japanese designer) registered public sympathy for the strike in Hong Kong. This prompted outrage in the U.S., with The Washington Post accusing Nike of cowardice in the face of authoritarianism. A week later, the shoemaker also recalled a version of its Air Max 1 shoe decorated with the Betsy Ross-designed version of the American Flag after Colin Kaepernick, a Nike spokesperson, claimed that version of the flag was an offensive symbol because of its connection to an era of slavery.
Corporations need to balance the interests of their stakeholders, from consumers to employees to government. The first among equals should be the employee. Given the tight labor market, especially in technology, companies must respect the wishes of those who do not want to work with U.S. Customs and Border Protection. Marc Benioff, founder and CEO of Salesforce, has an important new book, Trailblazer, that makes the case for the Fifth Industrial Revolution, of technology in service of society. He acknowledges that he was pushed by his employees to get out of the contract with the U.S. government on border issues. The values of diversity, proper treatment of women, and participation in community should be universal and cross-border.
In the marketing world, national preferences must take priority over global matters. There will continue to be situations where powerful global organizations and icons take sides in national and regional controversies. But the tendency will be toward local spokespeople and influencers, meaning that global initiatives must be expressed in local terms, conscious of politics and historical sensitivities.
This will require more local management over centralized control of message, and more permission for local teams to respond quickly with action if there is an incident that inflames the local population. It means a greater overlap of public affairs and brand marketing. At Edelman we are now putting our crisis and public affairs teams members onto product PR teams, with the intent of preventing problems through relationships with public officials and thought leaders.
Local brands will attempt to play the nationalism card, using e-commerce and social media to emphasize local roots. The multinational will need to morph to multi-local to win in this new environment.
Richard Edelman is CEO.