World Class Faculty & Research / October 6, 2006

Smith Hosts First Digital Economy Forum

On October 6, 2006, the Smith School hosted its first Digital Economy Forum in partnership with the Localization Industry Standards Association (LISA) of Switzerland. The event was the first major conference sponsored by the school's new Smith Center for International Business Education and Research (CIBER).

Bringing together business leaders from around the world, the Digital Economy Forum featured interactive global strategy workshops designed to give attendees immediately practical knowledge on relevant topics like crossing the language barrier, managing global Web sites, technology, off-shoring, and localization, and expanding your small and mid-sized businesses into the global marketplace. The key theme of the conference was globalization and localization, highlighting the need for companies to find a balance between their globalization and localization strategies for different country markets.

Prospects for American Business with China
Dr. Eric Clemons, professor of information strategy and economics at Wharton, delivered the mornings keynote address, Prospects for American Business with China: Views from Academia and the Field. Clemons shared four different stories from four very different companies entering the China market, as well as explained several different economic viewpoints on globalization.

Clemons described the old model of a global corporation, which offered the same product in every market, something similar to Burger Kings mantra: Have it my way. Today's transnational companies are more flexible in their product offerings but coordinate their efforts across markets and cultures, integrated by the power of information systems.

China, says Clemons, is an opportunity, a puzzle, and possibly a threat to American companies. The country's explosively rapid growth could lead to chaos, or to China becoming a major economic competitor for the U.S. The unequal distribution of wealth between urbanites and rural dwellers could also lead to social unrest, as those who are not benefiting (or not benefiting as quickly) from Chinas economic growth express their unhappiness in potentially dangerous ways.

Chinas rapid rate of growth could be a stabilizing factor or a destabilizing factor in its future, and at this point there is no way to know for sure which it will be. So what good is a question without an answer? Clemons encouraged his audience to develop plans that take into account the different answers to these perplexing questions. To illustrate the different ways companies are entering the China market, Clemons dissected the differing concerns of a high-tech vendor, an importer of luxury vehicles, a producer of filters for coal power plants, and a hotel company. One common worry was the theft or appropriation of intellectual property. The high-tech vendor chose not to take his product into China rather than see it stolen, but the filter-producer chose to go into partnership with a Chinese company, reducing his overall profit but safeguarding himself against technology theft.

Building Language Capabilities for a Truly Globalized Workforce
The luncheon keynote address was given by Dr. Richard Brecht, executive director of the University of Maryland's Center for Advanced Study of Language. Brecht, co-author of Language and National Security in the 21st Century, received his MA and PhD from Harvard in Slavic Languages and Literatures and is a professor of Russian at the University of Maryland. Brecht says he works to "change the language behavior in the federal government."

There are two general views on how language factors into the global economy, says Brecht: "it is impossible, or no issue at all." Billions of people are speaking Chinese, and the growing trend is that fewer people are speaking English. English may be the international language, says Brecht, but, "I guarantee in 100 years that Mandarin will be the number one language in the world."

Brecht categorizes what is going on now as "hyperglobalization" and finds issue with some of Thomas Friedman's arguments in his best-seller, The World is Flat, saying that most of the world isn't flat, it is less flat than ever. Industry hasn't confronted the language problem, and if you want to be globalized, Brecht claims, you need to be plural lingual: able to deal with people in many languages and cultures. Friedman, he says, doesn't put enough emphasis on the importance of language in his observations.

He says that the only real globalized workforce in America is the U.S. Military. With the Defense Language Transformation Roadmap initiative, the Department of Defense, Brecht says, was the first employer to focus on human capital and create a truly globalized workforce, requiring all levels of officers to have a second language; in turn offering monetary, posting, and advancement incentives. "Every leader must be linguistically competent," says Brecht applauding the military initiative. He urges business leaders to follow suit - leading by example when it comes to language learning by their workforce.

Brecht says that knowing the language of the place where you want to do business is the first step, but, "if you don't know the culture where you are marketing then you aren't going to succeed." You need to practice in the culture with the language - the "localization" component. You can't say that you know the Chinese culture if you don't know Mandarin and practice it in that culture, says Brecht. It's all about language and interaction - you will always be a voyeur, and get only half of the story, if you rely on interpreters.

In his concluding remarks, with the title globalization and localization will the twain ever meet, Vinod Jain, CIBER director, emphasized the need for companies to try and find a balance between their global and local strategies for different country markets. According to Jain, A global strategy helps companies benefit from economies of scale, efficiency, higher profitability, and a consistent brand image throughout the world, but isn't able to meet the specific needs of customers in individual countries. A localization strategy, on the other hand, makes a product linguistically and culturally appropriate for each country market, but isn't cost-effective. Its possible to achieve a balance between the two approaches," says Jain, "But it requires the application of advanced strategic thinking and modern technologies as discussed during the day in different sessions.

About the Smith CIBER
The Smith School CIBER was established on July 1, 2006 with the help of a four-year $1.42 million grant from the U.S. Department of Education. The Smith School CIBER is further supported by 100 percent matching funds from the school and will leverage the Smiths leading-edge global competencies to provide superior education, research and assistance on issues central to building U.S. international trade and global competitiveness. There are only 31 CIBER centers nationwide and they are each selected for their demonstrated global strengths and reputation.

About LISA
With more than 200 corporate and government members representing 32 countries, Localization Industry Standard Association (LISA) presents a clear and unbiased view of the challenges associated with globalization, the standards that apply to the resolution of those challenges, coupled with the worldwide resources available to focus on these issues.

Digital Economy Forum Web Site:

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About the University of Maryland's Robert H. Smith School of Business

The Robert H. Smith School of Business is an internationally recognized leader in management education and research. One of 12 colleges and schools at the University of Maryland, College Park, the Smith School offers undergraduate, full-time and flex MBA, executive MBA, online MBA, business master’s, PhD and executive education programs, as well as outreach services to the corporate community. The school offers its degree, custom and certification programs in learning locations in North America and Asia.

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