• Reverse globalization: A solution to an economic time bomb

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    AS we’ve seen before, hundreds of organizations—leaders in their industries, both in their respective parent countries and abroad—become successful by conquering new markets and setting up new production bases elsewhere. That’s what globalization is all about—multinationals maximizing profitability by selling more products and reducing costs at the same time elsewhere other than their country of origin.

    The strategy is to understand the basic issue—consumers and resources (labor, capital, natural resources, etc.) are limited in one’s home country, like giant Nestle, based in Switzerland but is well accepted and respected for its products used by all types of consumers around the globe.

    There’s no other way but to do country-hopping, away from the geographical boundaries of one’s parent-country. For new ideas and opportunities organizations must be external-looking. That’s how the mantra “think global, act local” became over-used. You have to define the best possible strategy in one’s parent country, do it abroad and bring the profit back home.

    This has been tested thousands of times by progressive countries as far back as the 15th century European “Age of Discovery” when a group of Portuguese explorers discovered the Atlantic archipelagos and Africa, followed by the Spanish discovery of the Americas.

    In the Philippines, globalization started in 1521 when Portuguese Ferdinand Magellan sailed to the Far East to spread Christianity and obtain exotic spices for the Spanish crown.

    Back to the future, many business organizations must establish their physical presence in as many countries as possible where they are accepted both politically and economically. They have to invest elsewhere, bring in their technology, and share their expertise in the process of manufacturing their products and selling them to consumers in the host countries.

    It takes years to realize the gains of globalization. Sometimes, you import “fire fighters” when things go wrong in the local operations of a host country. Often, the appointed firefighters who are excellent managers from their country of origin become useless, most of the time due to their lack of understanding of the real problem.

    These firefighters are in hurry to meet a time-imposed instruction by the head office that they try to implement a solution before they even fully understand the problem. They often rely on few local advisers or no adviser at all even if they’re not acquainted with the culture. Instead, they resort to do the easy task—reduce, cut, remove, and fire people.

    If they don’t succeed, the multinationals would simply pack and go, giving lots of excuses, including the oft-repeated government restrictions, unreasonable trade unions, poor peace and order situation, and enormous taxes, among other flimsy reasons many of which are already in place long before they set foot on local soil.

    These excuses, also known as misplaced prejudices, become unrealistic when foreign businessmen and their political cohorts initiate moves to eliminate restrictions to land ownership. The truth becomes apparent when you look at the amount of their investments in China, which has the most prohibitive rules on land ownership.

    Given these issues, let’s explore two questions. One: Can multinationals de-globalize operations or pull out its business from one country to another if it’s not allowed to own land? Two: Is there such a thing as reverse globalization where a host country attracts foreign investment, human resources, and many others?

    For question No. 1, the obvious answer is yes. You’re free to go the sooner you’ve settled your obligations to the workers, debtors, and government. Good riddance! However, for the second question, the answer may be new but innovatively simple.

    For instance, how is it possible for Japan, the third largest economy in the world to do reverse globalization as one possible solution to its current problems—aging society, low birth rate, shrinking population, lack of English-speaking business professionals?

    What is reverse globalization? Instead of Japan spending its resources outside of the country, why not encourage foreign investment and relax its cultural aversion to immigration by allowing professionals to stay in Japan for a limited period of, say, 10 to 15 years? Think about it.

    I’m studying the whole idea when I first read Chris Matthews’ article in Fortune magazine that we need to forget the problem of Greece. Instead, focus on Japan as the world’s real economic time bomb that could also affect us.

    Rey Elbo is a business consultant specializing in human resources and total quality management as a fused interest. Send feedback to elbonomics@gmail.com or follow him on Facebook, LinkedIn, or Twitter for his random thoughts.

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    2 Comments

    1. Mr. Elbo- Very good article on business globalization. Whether it is forward or reverse globalization, I have seen companies I’ve worked with both in the Philippines and here in the U.S. use these practices to serve markets and take advantage of lower manufacturing cost. I’ve been part of teams overseeing products and services that “migrates” to Mexico, Malaysia, Philippines and China and sometimes back to Missouri where it used to be done. It is easier to do nowadays due to the IT/IS, supply chain services and clearer quality standards. These factors facilitate better transfer of information between the home office and the oversees location. Thank you.

      • Thanks Luis! …for the feedback. I’m studying the idea of reverse globalization for certain countries like Japan that is suffering from aging society, low birth rate, and lack of English speakers, among other issues.