Monthly Archives: February 2010

Breaking Waves

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  • The mind boggles.  Club Med has invested in a ski resort in China.  Way up in the northeast, in Heilongjiang Province, Club Med has bought into a financially-strapped ski resort.  This may be an intriguing clash of cultures.
  • President Obama’s approval of loan guarantees for two nuclear reactors in Georgia has split the unions.  Construction unions love it, but the approval is drawing fire from the United Steelworkers because some 20% of the package will buy critical components from steelmakers in China or South Korea.  The union is trying to create doubts about the safety of Chinese steel, but we are not talking about consumer goods here.  China has been successfully manufacturing reactors, while our own industry has been moribund for thirty years.  Why should we expect to be competitive on something with which we have little experience?
  • We had the pasta war, several chicken wars, even the turkey ball war.  But the toilet paper war is just beginning.  Unions in Australia are challenging imports of cheap toilet paper from China and Indonesia, saying the product is being dumped (I’m not going to touch that pun).  Having had personal experience with cheap toilet paper in both Indonesia and China, this dispute is self-limiting.  Australian consumers are only going to buy it once.
  • Brazil now exports more to China than it does to the United States, a reflection, of course, of the recession.  The problem is that China buys a vastly different group of products than Brazil sells to U.S. customers.  Brazil’s trade with the United States is mainly in industrial goods, but China is mostly buying commodities such as soybeans and iron ore.  This destroys the value-added business of Brazilian product companies and sends Brazil back to the days of simply being a commodity supplier.  This will presumably end when the U.S. economy moves into recovery.  In the meantime, not everybody is dancing in Brazilian streets.  For more, see the article in Asia Times.
  • The recession also hurts the Cuban cigar trade.  Sales were down by 8% in 2009, reflecting reduced international travel (which, of course, cuts sales at duty-free airport shops) and Spain’s economic downturn.  Spain has historically been Cuba’s largest cigar market, but … up in smoke.
  • A suit brought by Totes-Isotoner alleging gender discrimination in customs classifications was tossed out by a Federal appeals court this week.  The company argued that having different duty rates for men’s and women’s clothing (a time-honored practice around the world) discriminated against whichever gender got the higher rate on a particular item of clothing.  I would guess this is about gloves.  The court in New York disagreed.  Totes-Isotoner says they will appeal to the Supreme Court.  (note: these classifications are set, at the 4-digit level, by international agreement – not by any one country.)
  • Shipping lines complain loudly about all the empty containers they have to move westbound across the Pacific.  So what do they do about it?  They raise their westbound rates. What a novel idea – raise prices to attract business.  Gotta think about that.

What a Reception!

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Let’s go back to how Hollywood portrays embassies.  Remember those diplomatic receptions I mentioned in the previous two posts?  See them here and here.

An embassy reception can be wonderful – if you are not working.  The food is usually good and the drink well picked and enjoyable.  Conversation is sometimes stimulating – and sometimes not.  If you work at the embassy that is giving the reception, however, you are working and working hard.  Knowing who has been invited, you have picked your targets to establish new contacts, make points that couldn’t be made in another setting, or pumping for information.  Many of the guests are doing the same to you, just as you would at someone else’s reception.  It takes concentration, a strong memory, and a willingness to forgo.  At receptions at my own embassies, I drank nothing alcoholic until late in the evening when all my targets had departed.  Dinners are different; you have to drink the wine.

Once you have run out of your chosen targets, you still don’t relax.  You are on the lookout for any guest who is alone or seems out of sorts.  After all, the purpose of a diplomatic reception is to project your country’s image, so you don’t want anyone unhappy.  Among old-school diplomats, too, we did not leave an embassy function until after our ambassador had departed and the last guests were out the door.  I had one ambassador who delighted in announcing to 200 guests that they should party as long as they wished, and then she would disappear up the stairs and go to bed – leaving her officers to entertain for a few more hours.

4th of July at Embassy Budapest (Embassy photo by Attila Németh)

Food offered by an embassy is generally superb, but there are exceptions.  In bad budget years, you eat little at your own receptions until you know there is enough for your guests to enjoy.  One ambassador insisted on serving vegetarian lasagna at every event, sometimes relieved by hotdogs or sliders if it was July 4.  That brings up the subject of holidays.  Most embassies are closed on local holidays as well as on their own holidays.  That sounds generous, but some of those “holidays” are hardly restful.  I never looked forward to Independence Day.  At any American embassy, July 4 occasions the biggest longest party of the year – and embassy officers spend much of the day wearing coat and tie, talking to the targets described above.  Receptions were not my favorite part of embassy life though, I’ll admit, there are some who thrive on it.  I knew one officer in Singapore who managed to go to receptions or dinners almost every night.  Neither he nor his wife cooked.

I am often asked about diplomatic passports, the famed “black” passports.  Vastly overrated, though occasionally they get you into a faster immigration line at an airport.  In many countries, however, a diplomatic passport is required to have a visa before you can enter – even if you don’t need one on a tourist passport.  And guess what happens to the passport-carrying American diplomat when terrorists seize your aircraft?  I carried a normal passport whenever possible.

Now, a subject near and dear to American hearts: are diplomats really exempt from obeying local laws?  No.  They are not exempt, but they may not always be subject to the same penalties.  Diplomats can be declared persona non grata and deported, but you are not likely to do that for a few unpaid parking tickets.  In U.S. embassies you are told that, if you break local law, the embassy is not going to bail you out of trouble.  In fact, unpaid parking tickets were billed to the embassy by local authorities and collected directly from you by your own admin people.  Not all nations’ embassies are quite so cooperative.

Lastly, are embassies safe?  There is a memorial plaque in the main lobby of the State Department to U.S. diplomats who have died in service overseas.  The plaque carries 239 names, ranging from a diplomat lost at sea in 1780 to an officer murdered in Ethiopia last year.  ‘Nuff said.

I am always ready to respond to questions about embassy life and living in other countries.  Send in your questions!

“They are quite different, you know!”

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In A Small Town In Germany, one of John le Carré’s characters walks into the British embassy in Bonn, but is confused as to whether his meeting is with the commercial section or the economics section.  The embassy receptionist responds: “Oh, they are quite different, you know!“  But a businessperson, new to embassies, may not know.

Amembassy Bratislava

As mentioned in yesterday’s post, an embassy can be an enormous managerial challenge.  The typical embassy, American or otherwise, is organized into a number of functional sections, and these may be subdivided in larger embassies.  The sections with which a company is most likely to work include the commercial and agricultural sections, and the defense attaché’s office.  These are the sections most concerned with helping companies get deals done.  The DAO’s office (names vary in embassies), obviously, is concerned with military sales and can provide invaluable insight and contacts with foreign defense ministries.  An agricultural section, equally clearly, focuses on agricultural sales and issues, and most food and beverage exports.  The commercial section is the catch-all, dealing with close to 90% of U.S. exports.  When in doubt, start with the commercial section and they will put you in touch with others as needed.

Other sections often are needed, especially when a U.S. company is going after big procurement contracts.  Sikorsky spent years trying to sell Black Hawk helicopters to the Austrian military.  The military wanted them, but it took the DAO’s office talking to the defense ministry, the commercial section convincing the finance and economics ministries, and personal lobbying by the ambassador to get the job done – all working hand-in-glove with Sikorsky’s own efforts.

A company running into a trade policy issue may see a different cast of characters.  Say you need to get a country to modify a product standard to get your products on the market, or you feel you have been hurt by some outrageous local regulation, you will likely need to work with the commercial or agricultural section (depending on your product), the economics section and possibly the political section.  Trade policy is generally split up between the first three, but that varies tremendously depending on the expertise of the individuals in those positions.  Again, commercial is a good place to start.

Embassies have many other sections, many of which you will never see.  There is an administrative section dedicated to the running of the embassy and its logistics.  A communications section, a public information or public diplomacy section and many more.  Even intelligence sections.  One section that may prove critical to you is the consular section.  These are the people to contact when you lose your passport or, heaven forbid, you land in a foreign jail.  (They can’t spring you, but they can give you good advice and make sure you get a decent lawyer.)

But their major fascination for you may be the consular officers who approve or disapprove visa applications.  You may want your new foreign partner to come to your plant in Ohio for training, but if they can’t get a visa, it isn’t going to happen.  It is always good to let the consular section know who you are inviting and provide them with cogent, written details of why that person needs to travel to the United States.  Consular officers, by law, have to deny applications from people they consider potential illegal immigrants, so you want to make sure they know this isn’t the case.  Provide copies of the same materials to your foreign contact so that they have them with them when they go to the consular section for an interview.  Files can get lost when you are handling hundreds of applications a day in some places.

What can you expect when you visit with a commercial or agricultural section?  Good professional help and advice.  These sections are dedicated to helping American export sales.  If you are a newcomer to the market, they will give as thorough a briefing on doing business there as you could want.  There’s a good chance they have already done market research that bears on your product, which is available free of charge.  If they haven’t you can commission research (for a fee, usually).  They do a whole lot else and both the Commerce and Agriculture Departments use them to offer dozens of services to help sell U.S. products (check out www.export.gov).  These services can provide you contacts with potential business partners, checking on their bona fides, helping you get ready for a trade show, and much more.  If you are having a business problem, talk it over with these sections.  They will either have a solution or will have some good ideas of how to get started.

I wrote yesterday about Foreign Service Nationals (FSNs).  Don’t make the mistake that many companies do – insisting that they must speak to or meet an American officer.  It is often the local FSN, who may specialize in your industry, that knows what he or she is talking about.  An American officer may have developed that knowledge during an assignment, or you might find that the officer has been in country all of two weeks.  If the Americans tell you to talk to an FSN, be grateful they recognize their limitations and do it.  The FSNs who worked for me in five different embassies continually surprised me with what and who they knew.

You won’t find commercial or agricultural sections in every embassy or consulate.  The U.S. Commercial Service staffs the commercial sections, and they only have enough budget to provide sections in most U.S. embassies, but not all.  Agricultural sections, staffed by the Foreign Agricultural Service, are found in fewer places.  If there is no ag section, ask for the commercial section.  In the truly small embassies, commercial functions will be handled by a State Department officer who tries to address commercial, agricultural, economic and many other issues at once – kind of a one-armed paperhanger.  Be kind and adjust your expectations.  You’ll likely be pleasantly surprised.

Tomorrow, we’ll get to a few nagging questions, like what does a black passport get you, what are diplomatic receptions really like, and are diplomats really exempt from host country law?