International Business - Challenges of Nationalism When Governments Reach Political Impasse

Operating a business in another country can be challenging indeed. That I can attest too after franchising my company abroad. Being an American company brings with it a bit of prestige and respect, but all of that can turn in a moment if our leadership ends up hitting a political impasse with any of these other countries you are doing business in. International diplomacy is a touchy issue, and all too often business people get caught in the middle. It's a travesty, and it seems that all the hard work that business people do as they conduct their international business transactions can be lost in a heartbeat by ego driven politics.

Then there are issues with trade disputes, territorial waters, human rights, and other nations which are allied with or against our trading partners. All of this makes it extremely complicated, and more difficult to manage and operate for the international business person. Let me give you an example of a rather challenging issue regarding the Japanese automakers in China.

There was yet another article in the fourth quarter of 2012 over how the territorial water conflicts between China and Japan had caused nationalistic pride in both nations. In China protestors attacked a number of Japanese automobile factories, and the number of new Japanese cars sold in China plummeting by half. This latest article appeared on November 10, 2012 in the Wall Street Journal titled; "Boycott Hits Japan Car Sales" by Rose Yu, Colum Murphy, and Yajun Zhang.

The attached graph showed car sales in China of Japanese cars slid from 250,000 in June and July to under 100,000 by October - indeed, a huge hit for the Japanese automakers by anyone's standards. What many people don't understand is this could easily happen to the United States as well. If the United States were to get in the way, or take a lead role in negotiating territorial waters off the coast of China with the Philippines, Vietnam, South Korea, Taiwan, or Japan it is quite possible that Chinese nationals would dismiss products made there by US companies.

This could hurt Wal-Mart, McDonald's, General Motors, Boeing, and a number of the companies on the Fortune 500 list. That in turn would hurt these US companies and their bottom line, therefore their stock price, which would also lead to consolidation, laid-off employees, and could easily crush their profitability for multiple quarters until things came back into view and the situation resolved itself.

The challenge of course for international business person is; you just never know. It isn't just these large companies that get it hurt, such issues can easily affect the growth and sales of smaller companies doing business and trading with these other nations. Please consider all this and think on it.

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