Rising Anti-American Sentiment Could Slam the Tech Sector

[Dave Farber <dave () farber net>]

------ Forwarded Message
From: Barry Ritholtz <ritholtz () optonline net>
Date: Tue, 18 Feb 2003 21:02:20 -0500
To: dave () farber net
Subject: Rising Anti-American Sentiment Could Slam the Tech Sector

Interesting perspective about a potential backlash . . . Just what the
tech sector needs right now -- even less customers!

-Barry

Rising Anti-American Sentiment Could Slam the Tech Sector
http://www.fortune.com/fortune/fastforward/0,15704,424088,00.html

As the technology industry becomes truly global, consumers angered by a
war with Iraq could turn their backs on U.S. products.
FORTUNE
Tuesday, February 18, 2003
By David Kirkpatrick


Every day we see new evidence of how technology is shrinking our globe.
When we say "globalization" we really mean "technologization."

Dramatic evidence of our linked global society came last Saturday with
the massive, coordinated worldwide demonstrations against a possible
war in Iraq. News reports called it the largest protest movement in
history, and that seemed likely. But how did it get so big so fast,
and, as many reports pointed out with wonder, before a war even
happened?

In a word, technology.

What made the protests in a reported 600 cities worldwide so potent was
not only their size‹up to six million in total‹but their coordination.
The Internet gives every potential protester information and, in many
cases, encouragement. And e-mail allows protesters and organizers to
communicate at no cost. I predict this is just the first in a new era
of global coordinated protest. The issues may change, but the connected
crowds will remain.

President Bush¹s apparent rush to war may have another implication in
this time of newly globalized technology‹the U.S. industry¹s already
shaky vitality could be at risk. Anti-Americanism, driven by resistance
to U.S. policies, is starting to affect sales of U.S. products around
the world. Both Coca-Cola and Procter & Gamble have seen sales in the
Middle East affected. A small upstart brand called Mecca-Cola is
gaining adherents in Europe and the Middle East. And a survey recently
conducted by Euro RSCG Worldwide found that large majorities of the
citizens of many countries‹including Argentina, Australia, Canada,
France, Mexico, Poland, Switzerland, and the United Kingdom‹felt the
"world is becoming too Americanized."

Could American technology sales be affected by these trends? Yes.
Neither consumers nor companies have to buy American products anymore
in order to have state-of-the-art technologies. An astonishing array of
companies have emerged around the world, providing alternatives to
American suppliers. Local manufacturer Legend sells more PCs in China
alone than Hewlett-Packard, long a regional presence, sells in all of
Southwest Asia. Chinese networking equipment supplier Huawei
Technologies had 2002 sales of $2.7 billion. Cisco recently sued Huawei
for its trade practices in the U.S. But the company¹s ambitions are
global. Here¹s a quote from its website: "Huawei has set up 32 branch
offices worldwideŠProducts are in application in 38 countries,
including Germany, Russia, Spain, Brazil, Thailand, Singapore and
Egypt." Expect that number to grow, regardless of Cisco¹s suit.

Of course we all know about global consumer technology powers like
Nokia, Samsung, and Sony, headquartered in Finland, Korea, and Japan
respectively. But did you know that one of Nokia¹s biggest chip
suppliers is an Italian-French company called ST Microelectronics? It
competes vigorously with American companies like Texas Instruments and
Motorola. And chips are rapidly becoming a priority in China as
well‹three cutting-edge chip plants there are in late stages of
preparation to build chips with circuits a mere 130 nanometers wide.
Then there¹s the Indian software phenomenon. Led by the three
giants‹Tata Consultancy Services, Infosys Technologies, and Wipro
Technologies, India is fast becoming a global center for business
software. Companies in many industries use these software and services
companies to write new code and operate their existing applications.
Expect that entirely new applications will begin to emerge from the
astonishingly creative Indian software sector. Meanwhile, German
software powerhouse SAP remains the dominant worldwide provider of
diversified software for large enterprises.

The point is that arrogance about American dominance and hegemony is
not justified, at least in the realm of technology. One of our great
heritages as a nation is that we have been seen as a just nation,
abiding by the rule of law. If we choose to behave otherwise, the
consequences, even in technology, could be serious. The day could come
when all those globally linked protesters decide to target IBM or Dell.
It might become politically unpalatable to buy from companies like
these, especially when there are local alternatives. The threats to
market share for U.S. tech companies are real enough as it is. A
political crisis could seriously hurt their businesses.



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