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four perspectives on international business
going global: challenges & opportunities

The Internet breaks down geographical barriers, and that spurs increased interest in doing business internationally. At this Netpreneur.org Coffee & DoughNets event held December 13, 2000, panelists brought four perspectives to entrepreneurs considering global expansion: the government’s policy view, the story from one entrepreneur who is doing it now, the investor considering funding a company and the veteran discussing the challenges of managing a global company.  

Statements made at Netpreneur events and recorded here reflect solely the views of the speakers and have not been reviewed or researched for accuracy or truthfulness. These statements in no way reflect the opinions or beliefs of the Morino Institute, Netpreneur.org or any of their affiliates, agents, officers or directors. The archive pages are provided "as is" and your use is at your own risk.

Copyright 2000 Morino Institute. All rights reserved. Edited for length and clarity.

 

fran witzel: welcome

Good morning. I'm Fran Witzel, Vice President of Morino Institute’s Netpreneur.org. Welcome to our very last Coffee & DoughNets meeting of 2000. On behalf of the Netpreneur.org team, thank you all for participating this year in the growing Netpreneur community. We wish you all a very, very happy holiday and a prosperous new year.

                In addition to giving special thanks to our speakers and moderator, we recognize today's volunteers. Deborah Gorham of Wilson Sonsini Goodrich & Rosati; Rutger deVink of mindSHIFT, Jeff Percey of Chamberlain Williams Tison & Associates, Linda Broenniman of The Piedmont Group and Martin Cadirola of Gauchotrade.com.

                Today we're discussing “Global Business: Challenges And Opportunities.” Introducing our speakers and moderating the Q&A session is James LeBlanc, President of  J. LeBlanc International, a firm that assists in the development of international strategic partnerships and alliances, business and competitive intelligence assessment and other services. Jim is a recognized expert on many international technology policy and business issues. He serves on the board of directors of the Northern Virginia Technology Council (NVTC) and chairs its International Committee. Please give a warm welcome to Jim LeBlanc.

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james leblanc: introduction

Good morning. We've got a tight agenda, so I'm just going to make a few introductory comments, but I'm going to ask a few questions first. How many in the room actually have a passport? [Nearly all of the audience members raise their hands.]

                All right. This is good. This is very good. Now, how many have actually used it for business travel over the last couple of years? [Again, nearly all of the audience members raise their hands.] That includes Canada, by the way. I know many people think that Canada is an American state, but it is a foreign country.

                As I understand it, this is the first Netpreneur.org  event focused on global issues. I think that’s terrific, and I hope it's not going to be the last. I look forward to working with Netpreneur.org and the NVTC International Committee, as well, on other international events that are coming up.

                Our nation's capital has got a lot going for it from an international point of view, as many of you already know. This really is an international center of business commerce and public policy. The Internet helps enable the international community, and yet many challenges still confront the country’s businesses, policymakers and entrepreneurs like you. They all have a fundamental impact on your bottom line. We don't have solutions to many of these challenges yet, but we're on our way, and, hopefully working with the community and yourselves, we can generate some of those solutions. These challenges also present opportunities, especially for companies that can participate in the development of technological solutions to many of the eCommerce problems we face. Regardless, global business, both online and off, can be critical to maximizing your revenues and success.

                Let's take a first look at some of the issues. One is the public policy dimension. There are a number of international institutions, organizations and governments that are, at this very moment, developing, negotiating and implementing public policy initiatives on eCommerce and other technological issues. They are going to have a fundamental impact on your bottom line. They'll either be threats or opportunities, so it's incumbent upon us to start thinking about this. No matter how small your business—and I know that many of you are from startups that are trying to find capital, recruit staff and get products out—these are things that you need to pay a little bit of attention to. Hopefully, with Netpreneur.org and NVTC as an advisory group, we can help guide you along those lines.

                From an entrepreneur’s perspective, how do you do business globally, both online and off? What are the standards, customs, rules and regulations? Do you localize your brand? Do you develop alliances? How do you market? How do you enter a foreign market as a young startup? What are the best business models for doing this?

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                From an investor’s point of view, where can you access capital for going global? US-based firms often want to be close enough to touch and feel their investments. What does this mean for a company that wants to globalize? Can you get capital for this? What about access to foreign capital once you get there? These are some of the issues that will be discussed this morning.

                Obviously, global business is a huge topic, so we're going to narrow it down for our first look. By the way, many of you probably already realize that your competition's not just sitting beside you. It's not just in Austin and Silicon Valley; it's in Tel Aviv, Stuttgart, Halifax and dozens of international sites where they are thinking that the next best thing is going to come from their area.

                To start us off, it's a great pleasure to introduce Ambassador Alan Larson. Ambassador Larson is Undersecretary of State for Economic Business and Agricultural Affairs. As Secretary Madeleine Albright's Senior Economic Advisor, his responsibilities include the entire range of international economic policy. Recently, his responsibilities were expanded to include serving as Acting Deputy of the National Economic Council for International Economic Affairs. He has also had a very distinguished career in various ambassadorial and senior diplomatic postings.

alan larson: the government lends a hand

Jim, thank you very much. Good morning, everyone. I'm very honored to be here. There is a real scope for an expanded partnership between the State Department and organizations like yours. It may not seem obvious at first, however, since there are some differences. For example, at the State Department, business casual dress means not wearing a white shirt with your navy blue suit, [Laughter] so there are some things that we'll have to work through.

                What I think is really important, first of all, is that we are convinced that the international marketplace will be a growing part of your life; or it needs to be, at least, for the reasons Jim just mentioned. Second, policy problems in foreign countries are an important impediment to the development of that business. We think we can work with you to help. And, third, we think that there are opportunities for us to work together on an ongoing basis in partnership on these problems as they emerge. I'd like to touch very briefly on those three themes.

                First of all, for the US in general, global growth is where it's happening. Over my career at the State Department, the share of our economy that is represented by international trade has more than doubled. This is an historic development. In your industry, the pace of expansion is even greater. The figures that I've been given suggest that global B2C eCommerce surpassed $61 billion last year, and B2B surpassed $184 billion. By 2003, B2C business is expected to more than double, and B2B is expected to increase by more than six-fold. Who knows if these numbers are right, but it's a sign of expectations for very, very rapid growth.

                Obviously, there are problems, and we're going to talk about some of them this morning, such as language and culture, regulations, weak intellectual property protection and country and currency risk. In addressing those problems, there is scope for a very important partnership between you, the government and, in particular, the State Department.

                One of the things we've been trying to do is help other countries think in the right terms and talk about the right principles in this area of the New Economy. In 1997, President Clinton put out a basic framework for global electronic commerce that focused on the importance of private sector leadership of regulatory systems, on avoiding unnecessary restrictions and regulations and on government taking a minimalist role in those cases where regulations are required. We've worked very hard to try to inculcate this basic approach in the minds of policymakers from other countries. We've been working with the European Union on this, and the Japanese have been very interested and are pursuing it as a high priority for the incoming administration. This whole area of the New Economy and electronic commerce was the cornerstone of the Asia Pacific Economic Council meeting that just took place, which includes 21 economies of the Pacific Rim countries.

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                We tried, as well, to go beyond general principles and get into a policy framework that will provide a good environment for you to do your work. For example, we have instituted a moratorium in the World Trade Organization (WTO) on the imposition of customs duties on electronic transmissions. We have an agreement that electronic commerce should be taxed only in a neutral and non-discriminatory way. We have negotiated, signed and ratified in the World Intellectual Property Organization (WIPO) a performances and phonograms treaty and a copyright treaty that basically updates intellectual property protections for the digital age. I was very, very pleased to have the chance to testify on behalf of the administration before the Senate in the hearing that paved the way for that treaty to be ratified.

                Obviously, there are some very important issues about privacy and consumer protection that we have been working on with other agencies of the government.

                One related area that's been very important to me at the State Department, because we have such a large role in issues like transportation and retailing, is to make sure that other countries understand that in a world where the pace of business is moving much, much faster, it's important that those sectors of the economy supporting the New Economy become more efficient as well. We've been hearing a lot from what you might consider old economy businesses, such as small parcel delivery and air transport companies, which see themselves very much a part of the New Economy. They deliver the goods that are ordered electronically, and they are seeing the need to update many parts of the economic structure of countries. For example, in the area of telecommunications, one of the most important cost factors for electronic commerce is the cost of being online. We are working very hard to get greater competition in the provisioning of telecom services so that those costs are driven down. In the marketing area, we're trying to eliminate merchandising restrictions that make it hard to sell one product to customers all over the world, and we're trying to deal with some of the customs problems that make it hard to move product quickly into countries. In the transportation sector, we've had great success in negotiating what we call “open skies aviation” agreements with more than 45 countries around the world, which basically means that our companies can respond without economic regulation to changes in the marketplace, allowing them to move products by air very quickly. We're also trying, both through the WTO and other arrangements, to eliminate restrictions in sectors like small parcel delivery.

        In the State Department and in the government more generally, we recognize that this is a very fast moving industry you're part of, and that it's important for governments to develop policies in consultation with and with the full participation of the private sector. We've worked hard to do that within our administration, and we've worked hard to get that model extended more generally. Here at home, just in the State Department, I have an advisory committee on international economic policy. Under that, we've established an active Global Information Economy Working Group, and it’s an open-ended working group. Any of you are more than welcome to participate. We have another committee, the Advisory Committee on International Communications and Information Policy (ACICP) that meets quarterly.

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