The reports from southern Thailand were unsettling: Muslims, angry about the U.S.-led assault on Iraq, were dumping bottles of Coke and Pepsi into the streets and proclaiming boycotts of American products.
Nestle SA, fearful that its brands could be targeted, dispatched a team to meet with Islamic leaders in the area. Not that Nestle is American -- its headquarters is in Switzerland -- but that was precisely the message the team wanted to convey, along with some soothing words about local ownership and employment in Nestle's Thai operation. "There are relatively few people who know where [Nestle] is based and what nationality it is," a company spokesman explained.
For the world's corporate behemoths, fast action is often necessary these days to avoid being caught in the political crossfire over the war. With passions inflamed, and customers holding widely disparate opinions, multinationals are downplaying disagreeable associations in the markets they serve while emphasizing the depth of their local roots. And small wonder: The news is full of images -- French wine poured down toilets in New Jersey, McDonald's restaurants vandalized in Saudi Arabia -- that conjure up the multinationals' worst nightmares of economic globalization going into reverse.
"We're in a very difficult time geopolitically," said James Gregory, chief executive of CoreBrand, a global marketing consultancy. "People are backing off the idea that the world is one big, happy place for sales."
Yet as the Nestle episode suggests, the multinationals have one big factor working in their favor: In today's globalized world, confusion reigns over corporations' national identities. Finding corporate targets suitable for spleen-venting can be difficult. In many cases, the operations of multinationals are so far-flung and intertwined with myriad national interests that it is almost impossible for people despising the policies of one country to take action against that country's firms without inflicting collateral damage.
Evian, for example, may be a quintessentially French brand, but its mineral water is distributed in the United States by Coca-Cola Co. Other products listed on American Web sites as boycott targets include Parkay margarine and Reddi-wip, because they are made in Canada, which has declined to send troops to Iraq. Trouble is, both brands are owned by ConAgra Foods Inc. of Omaha.
So much of Canadian manufacturing is controlled by American interests that Anne Kingston, a columnistfor the Toronto-based National Post, wrote last week: "The unavoidable and dispiriting takeaway . . . is that Canada is unboycottable."
For all the vituperation the war has stirred, economic attacks appear to be having minimal impact, whether they are aimed by foreigners at U.S. corporate giants or by Americans at firms headquartered in France, Germany and other members of the "coalition of the unwilling." Organizations such as American Chamber of Commerce chapters in France and Germany say their members are reporting almost no decline in business that they can attribute to hostility over the war, and the same goes for organizations of foreign companies operating in the United States.
Exceptions can be found. The U.S. subsidiary of Pinguely-Haulotte Group, a French maker of construction equipment, said new orders plummeted 90 percent in the past month. "People have told us point blank they are not going to buy French products," said Alastair Robertson, the sales manager of the Glen Burnie, Md.-based company. In response, the firm now describes itself to American customers as "European" rather than "French," and each of its 53 sales representatives in the United States carries a letter from the venture's top executives stating that they "do not necessarily agree" with the views of their government on Iraq.
A German bicycle maker, Riese and Mueller GmbH, declared recently that it will not renew $300,000 worth of orders from U.S. suppliers. And from Lawrenceville, Ga., comes the tale of CompAtlanta Inc., a purveyor of used computing and printing equipment, which announced on its Web site that it was refusing to sell to customers from countries opposed to the U.S. war effort. Sid Mitchell, president of CompAtlanta, said the firm would probably lose $300 to $400 a month in sales over the eBay auction site, where it normally does about $8,000 to $10,000 in monthly business, but he hopes to break even because of the publicity his initiative has received from Canadian media organizations.
"I've gotten e-mails from people saying, 'We'll be looking to buy from you,' " Mitchell said. "Of course, it remains to be seen whether they will or not. "
The greatest dangers face companies that deal directly with consumers, especially those with high-visibility brands. That is a particular problem for U.S. multinationals serving the consumer market, because the appeal of their products is based on the desire of their customers "to have the American experience," said Shih-Fen Chen, a professor of international marketing at Brandeis University. "This is something quite unique for American products. You purchase products from China not because the product has a positive image, but because the product is cheap. Coca-Cola, Nike, Levi's -- these are popular in the international market because of the cultural meaning the products represent."
So even though companies such as Intel Corp. are not likely to be hurt, because foreign customers genuinely need their goods, the consumer-oriented giants will suffer, Chen predicted, if America's image switches from a freedom-loving, fun and innovative country to that of a bullying hegemon. "They have been selling American culture for so long, and they may pay the price for their previous strategy," he said.
In foreign markets, McDonald's Corp. has long sought to shield itself from such problems by tailoring its menus to local tastes and highlighting its importance to local economies -- for example, by stressing in France that most of its store owners are French and that it is one of the largest purchasers of French agricultural goods. Lately it has been stepping up those efforts. In Indonesia, the fast-food chain handed out hundreds of leaflets stating that "McDonald's Indonesia has grown in the hands of Indonesian sons and daughters." In Argentina, after war protesters called for boycotts, McDonald's ran a national newspaper ad showing a Big Mac with "Made in Argentina" stamped on it.
Amid today's venomous atmosphere, even companies that have only tenuously troublesome national links are going to great lengths to ensure they don't get tarred with the wrong brush. Vie de France cafes in the United States have posted 6-by-4-foot banners in their front windows emblazoned with American flags and the words: "We support our American troops around the world."
As it happens, the chain has no relationship to France except for its recipes; it is owned by Yamazaki Baking Co. of Tokyo, but the company wanted to take no chances.
It should come as no surprise that the impact of boycotts has been modest, because the links between the United States and countries like France and Germany are based less on exports and imports -- that is, the shipment of goods made in one country across the Atlantic -- than on transatlantic investment by multinationals in factories and other facilities. The sales by U.S.-based affiliates of European companies "represent the primary means by which European firms deliver goods and services to U.S. consumers," said a recently released report by the Center for Transatlantic Relations at Johns Hopkins University. Such sales, at $1.4 trillion in 2000, are "over four times larger than the value of U.S. imports from Europe."
Thus, some of the multinationals responsible for those huge investments take a relaxed view about being hit by boycotts. Munich-based Siemens AG, for example, employs over 70,000 Americans, mostly at facilities that sell "B2B" -- business to business -- "and our customers know these are of American origin," said Eberhard Posner, the company's chief spokesman.
For many big companies, being dropped by individual customers is a less worrisome consideration than other potential problems stemming from war-related animosities, in particular the likelihood that decisions by government policymakers will be affected.
In meetings last week between representatives of European business associations and U.S. administration and congressional officials, attendees voiced considerable anxiety about the lack of progress in World Trade Organization talks aimed at lowering global trade barriers. "The additional concern is whether the poison from the political relationship might spill into" the negotiations, said Rhian Chilcott, a Washington-based official of the Confederation of British Industry.
German executives are especially uneasy, said Gary Litman, an official at the U.S. Chamber of Commerce who met with a group of them recently and is helping to organize a "summit" of German and American chief executives scheduled for May 20 in Washington.
"No one has detected any serious impact on business," Litman said. "But the more important concern they express is that in areas where business depends on good government cooperation, tensions could really impede further integration of the U.S. and European markets."
A taste of what may be in store has surfaced in the form of congressional pressure on U.S. government agencies to sever contracts with French-owned companies. In the latest example, Rep. Scott McInnis (R-Colo.) announced Wednesday that he is urging the Department of Veterans Affairs to stop buying headstones from a marble quarry in Georgia owned by Imerys, a Paris-based industrial conglomerate, arguing that it would be "an insult" for families of U.S. servicemen and women fighting in Iraq "to mourn their loss under a headstone supplied by a company with French allegiance."
Jean-Francois Boittin, the minister-counselor for economic and commercial affairs at the French embassy, said: "What I really hope is that nobody will have a huge business selling headstones." But he noted wryly that one of the companies McInnis proposed as an alternative headstone supplier is a mine located in his Colorado district. And in yet another illustration of globalization's tentacles, that mine is Swiss-owned.