International Business – Entrepreneurial Trends [Volvo In China As A Case In Point]

The business and investment trend is accelerating toward globalization in all aspects of vendor diversification, supplier diversification, contractor diversification and consumer markets diversification, as well as in currency and and general asset diversification geographically. If your investments are centered upon companies headquartered in a particluar geographical territory or country, that might be just fine. But analyze the fundamentals of those companies individually, and you ultimately find that you have actually been increasing internationally, and your portfolio companies have been conduits to achieve this. Although I do not offer tax, investment, financial, legal, accounting or other advice, I strongly suggest that you example your portfolio companies and find out where they are investing — because where they choose to invest, is ultimately where you have invested.

If your portfolio of investee companies is comprised of insular (i.e., non-globally-oriented, highly localized with established manufacturing of markets in one particular country, you are invested in what could become a stagnant pool within a surprisingly brief period of time.

It sounds humorous, but it is true, just the same — “Invest, if you wish, in companies which are situated or traded locally, but be certain that a good percentage of those companies are working on global strategies for part or all of their processes. Don’t be a fiscal xenophobe, and don’t be small-minded in terms of the geographical locus of your assets and investments, or in your own entrepreneurial or established company.” Supporting the industries of your nation, like giving generously to charity, is an admirable thing to do; however, if you have eventually have no assets of any value left  to offer for either patriotic support or charity, you’ll just become embittered and add to the ranks of the impoverished. Your loss will not be anyone else’s deliverance.

Think globally, and be certain that your personal business strategy and your personal portfolio investment strategy incorporate the accelerating trend toward multinationalism, and shopping the world markets.
Growing businesses, as well as established companies in an expansionary mode (or those who believe, foolishly, that they are mature, and may rest on their existing systems and past achievements, must accept the reality of sourcing their vendors, labor and consumers internationally. As this becomes the trend among many “real” companies as well as “virtual companies” the expanded global free market must be understood, and engaged in order to accelerate growth and to remain competitive. Failing this, or failing to seriously incorporate the “global factor” in the strategic planning aspects of your entrepreneurial or mature enterprise, may render you subject to extinction. -DC

International Business – Entrepreneurial Trends [Volvo In China As A Case In Point]

Plainly speaking to entrepreneurs, internationalists, trend-watchers, and leaders of small to mid-sized businesses in search of new markets, China is being tacitly acknowledged as a place to 1) manufacture relatively inexpensively), and 2) to sell into a burgeoning consumer market that is fueled on earnings and wealth rather than on credit. Other Asian nations are being regarded with a similar covetousness and avarice.

A word of advice to younger companies — think about the benefits of e-commerce, and investigate the possibilities of going global. These will become two competitive necessities.

The result of this perception, and the trends which support it (see Volvo article, below) is that we are entering into an age where manufacturing companies which once did their administration in their countries of domicile, occasionally outsourced some of the manufacturing or assembly, and did their marketing principally with re-imported finished products wihin their own home economies (with a percentage for export), are fast becoming mere admistrative “shell” entities.

These shell entities are legally domiciled and headquartered in their home countries, but they are both manufacturing and marketing out-of-country and offshore. It is simply a prudent shorter-term economic choice.

By way of simple example, take an American consumer goods manufacturer which has its products produced in plants throughout China, and sells predominantly to Asia and in parts of Eastern Europe and Latin America, with only limited sales in the USA. The ultimate result spells increased profit for the company, but also contributes to the decline in US employment, consumerism, and career opportunities. Most of the real economic value is added out-of-country, and most of the profit is generated (and increasing kept or expended) actually goes out-of-country. What remains behind is merely an American “shell company” which just maintains its roots (and perhaps its books of account) here. This same phenomenon is happening in virtually every currently-regarded “industrialized nation”.

Expect this result to accelerate:

1. True employment losses in the US and other currently-regarded industrialized nations;

2. An export of great minds, innovation, initiative and career paths out of the United States and other currently-regarded industrialized nations;

3. Export of employment, disposable personal income, investment and accumulated wealth outside of the US and the other currently-regarded industrialized nations;

In summary:

Expect every company which reaches a certain “critical mass” of revenues per year to become multinationalized. This means that every business in any of the currently regarded industrialized nations (no matter where domiciled, and barring government-imposed trade restrictions) will eventually reach a size (or as Malcolm Gladwell would say, a “Tipping Point”) where it will Internationalize. Every entrepreneurial small- to mid-sized business, from start-up to growing company, should start preparing itself preemptively for the world of outsourcing, import, export and internationalism.

Personally, as the Chairman of TNNWC Group, LLC, I am seeing increasing interest and inquiries coming to our International Connections Service (ICS) Division by the month. Additionally, these companies are increasingly young at the times of inquiry. What may start as virtual export or import experiment on the part of an entrepreneurial entrise may ultimately turn into a significant logistical reality.

Whether it is perceived as patriotic or not, companies will become more aligned with those nations where their suppliers, manufacturers, and production facilities are actually located, and where their greatest customer markets are located, than where they are domiciled.

All prospective investors in such enterprises will want to know is “Where can I buy stock or a participatory interest?”… “What exchange are the shares or units traded in?”… and “What currency should I purchase those shares, units or interests with?”

Following is an article extracted from a recent SmartBrief Newsletter published by ELFA (Equipment Leasing and Financing Association):

  • Volvo Construction Equipment sharpens focus on China
    Volvo Construction Equipment President and CEO Pat Olney said the company will continue its ambitious growth strategy for China and elsewhere in Asia. “We will support this approach with products dedicated to this market, using local Chinese knowledge and leveraging an expanded Asian manufacturing and distribution footprint,” Olney said during his first news conference as chief. (5/18)

One thing is certain. Internationalism cannot be ignored any longer by any business strategist, leader or investor at any level. It’s a fact of life.


Douglas Castle,

This article has been published in varied versions in the The National Networker (TNNWC) Weekly Newsletter, The Global Futurist, The Internationalist Page, GICBC and several other blogs by this same author.
“While Rome Burned” – Images By Douglas Castle

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3 Responses to International Business – Entrepreneurial Trends [Volvo In China As A Case In Point]

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