Selling Globalization at Davos

The honchos at the World Economic Forum say they need to work harder to convince people everywhere that globalization is a good thing

by Andy Reinhardt

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Any conference that draws business and political leaders from all over the world is inherently a symbol of globalization. The World Economic Forum in Davos, Switzerland, which wraps up on Jan. 28, takes the concept to a new level. Four days of schmoozing and debate among leaders—often pitted against each other in the real world—gives credence to the forum's hopeful motto, "Committed to improving the state of the world."

Yet while the thousands of luminaries gathered in this alpine bubble share a common belief in the benefits of globalization, they are also aware that it enjoys far less support among ordinary citizens. Indeed, one of the primary topics of the conference has been concern over rising signs of anti-globalization—ranging from the potential failure of the Doha round of trade talks to concerns that countries may erect trade barriers to protect jobs and markets.

In this context, a remarkable panel of business leaders convened to discuss a new "manifesto" for globalization. The challenge: How to convince a wary public that the risks of globalization are outweighed by the economic benefits. "We have to get much more involved and engaged in the debate," said Jamie Dimon, chief executive officer (CEO) of JPMorgan Chase (JPM).

Legitimate Concerns

McKinsey & Co. worldwide managing director Ian E.L. Davis concedes that globalization advocates have been put on the defensive by everyone from labor leaders to populist politicians. "We have to stop using abstract concepts such as GDP growth and explain globalization instead in terms such as job creation, prices, and taxes," Davis said. Most people, he explained, don't realize that the same forces pulling jobs offshore also drive down prices for the goods they buy at the local superstore.

Business leaders also must acknowledge the arguments of globalization opponents and take concrete steps to address their legitimate concerns, Davis added. In the U.S., for instance, where health-care coverage is usually tied to a job, business leaders could support creation of insurance pools for unemployed and self-employed workers, or even a national health-care system. They could also support retraining programs for displaced workers.

Patrick Cescau, group CEO of consumer products giant Unilever (UL), agreed that concrete actions are more important than words. "We haven't been very good about demonstrating the benefits of globalization," he said. To the Anglo-Dutch company, which now gets nearly half its revenues from developing countries, globalization means customizing its products for different markets, putting staff on the ground all over the world, and investing deeply in local communities.

No Pain, No Gain

Unilever, for instance, is famous for selling products such as shampoo and laundry soap in tiny packets that cost people of limited means only pennies. "This is business, not philanthropy, and we make lots of money from it," Cescau said. At the same time, the company supports programs such as Project Shakti, which teaches poor women in rural India about nutrition and hygiene.

Renowned auto executive Carlos Ghosn, who runs both Renault and Nissan, conceded that one reason globalization isn't more appealing is that it demands more work and greater risk-taking from everybody—including people in emerging economies. "People there face much more stress than they used to," he said. For example, local providers who previously enjoyed a cozy local market may suddenly face increased competition—or even ruin—from a deep-pocketed multinational that moves into the market.

The notion that globalization has victims on all sides, and not just among highly paid Western employees who lose jobs to cheaper workers, could be eye-opening to many. Yet it is equally important to stress that globalization also has beneficiaries on all sides, argued James Schiro, chairman and CEO of Zurich Financial Services.

A Larger Market

Managing the impact of globalization on people's lives and their livelihoods falls under the broad umbrella of corporate social responsibility, suggested Unilever's Cescau. But it can't be an afterthought, "…something you do on Friday afternoon, after the real work of the week is done," he said. Rather, it has to be built into each corporation's fundamental strategy. "You can't have a healthy company without a healthy community."

Properly executed, globalization also creates huge opportunity. "Having a global market to serve is an incentive to innovate more," noted Columbia University professor and economist Joseph Stiglitz.

And the upsides of globalization for companies go far beyond getting a handle on wages. Carlos Ghosn said one of the greatest benefits is the learning that takes place when people from around the world work together.

He cited India's famous "frugal engineering" culture, born from years of having to make do with less. In today's car industry, knowing how to design a cheap car is an invaluable skill, and one Ghosn is incorporating into Renault.

In the end, concluded Zurich Financial's Schire, "we need to remove some of the uncertainty and risk, and by that, the anxiety about globalization." The gathered titans of industry know that's the message; now they have to make it work.

Reinhardt is Europe channel editor for BusinessWeek.com.