Americans are used to resentment of their global dominance. Since the war on Iraq, however, this hostility has begun to hit them where it hurts: in corporate balance sheets. David Usborne reports on the backlash being felt in the boardrooms everywhere from McDonald's and Nike to Microsoft and Coca-Cola
17 July 2003, Independent News UK
It has not taken long for Americans to realise that the triumphal appearance by President George Bush aboard an aircraft-carrier after the toppling of Saddam Hussein was somewhat premature. Barely a day goes by now without news of another soldier falling to the bullets of hidden snipers. Little attention has been paid, however, to another consequence of the campaign in Iraq. Call it corporate collateral damage. And the victim is Brand America.
True, boycotts of American products were popping up around the globe even before the war started. Coca-Cola, McDonald's and Budweiser were among the most visible and frequently targeted companies. There were even some small-scale terrorist attacks, including a bomb-blast at an Istanbul McDonald's on 15 April. But most of these actions have either had limited local impact or have started to peter out.
The much bigger worry inside boardrooms, from New York to Atlanta and Chicago, has been this: will the unpopularity abroad of George Bush's America - whether we are talking his attack on Iraq or his inaction on global warming - impact on the fundamental appeal of their brands in global markets? And if so, how badly?
Even having to ask the question has been hard. For decades, going back to the Second World War, when British women were clamouring for nylons, Made-in- America has sold, in part, because of what the country has represented - above all, prosperity and capitalist freedom. A pair of Nike trainers could signify dollar- wealth to an Asian slum-dweller. A black-market pair of Levi 501s symbolised protest in Eastern Europe before the fall of the Berlin Wall.
"People in China and Taiwan, and even Europe, go to McDonald's not because they love the food, but because they want to have the American experience," notes Shih-Fen Chen, a professor of international marketing at Brandeis University, in Massachusetts.
But what if American products have started to stand for something else? Such as bullying imperialism or intolerance of the rest of the world's problems? Would it be time to suggest to the makers of Marlboro that they tone down their American heritage when selling their cigarettes abroad? Would that spell the end of those big- sky advertisements with open roads and square-jawed guys in cowboy hats?
This is indeed what corporate America has been asking itself, and now it may have the first inkling of an answer. According to a report just completed by the New York consulting firm RoperASW, the value of America's favourite brands abroad is showing unmistakable signs of slippage. For now, at least, it is just possible that selling a product inextricably linked with Uncle Sam and the Stars and Stripes may be more of a liability than a boon.
The report, originally prepared for the corporate clients of RoperASW but acquired this week by Newsweek magazine, is based on hour-long interviews with 30,000 consumers in 30 major economies around the world. The responses were processed to assess a measure of "brand-power" for the best-known multinationals, both American and non-American.
Of the top 10 global US-based firms, only one saw an increase in its brand-power compared with a year earlier. All of the others were either unchanged, which is bad enough, or in negative territory. This is the fifth year that the same survey has been carried out. And 2003 is the first time that American companies have seen their brand-power starting to sink. By contrast, the survey shows gains for the best-known non-US brands.
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It is not just food and clothing companies that should be concerned. Even Microsoft has not escaped the change of mood. According to the survey, its brand- power index declined 18 per cent around the world in just a year. Only McDonald's did worse, dropping 21 per cent. Other losers include Nike, MTV, Disney and the Discovery Channel. Non-US brands that have grown in appeal range from BMW to Philips, Sony and Volkswagen.
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Others experts have also been sounding the alarm. Professor John Quelch, dean of the Harvard Business School, voiced his own concerns in a recent interview with the school's Working Knowledge periodical. "Never before have global concerns about American foreign policy so threatened to change consumer behaviour," he said. "We are not speaking here of the frivolous grandstanding associated with temporary boycotts by a student minority. We are witnessing the emergence of a consumer lifestyle with broad international appeal that is grounded in a rejection of American capitalism, American foreign policy and Brand America."
And it is not just American companies that should worry. The same fate could await the large multinationals of the only other country in the world that is most closely associated with America today and its foreign policy. That country, of course, is Britain. "In the past, companies were unabashed about using their American brands - it was the gold standard," comments Eric Schwalm of Bain & Company, the global-business consultants in New York. But he goes on: "Building your base off a US or British brand may no longer be the best way to go."
The Bush administration considers itself to be business- friendly. Yet, it may have inadvertently soured the atmosphere around the globe for the very icons of American capitalism. These icons, from Coke to Nike to Levi's, may have only two choices. To underplay their American origins as far as possible. Or to wait for the President, or his policies, to change. "Who knows?" says Professor Shih-Fen Chen. "In three years, American brands could bounce back."
