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JULY 9, 2007
Edited by Deborah Stead Talk Show "Rupert is a sort of 18th century guy: The world is still forming, and he's going to do what he can to hack out a place in the wilderness." — Richard Parsons, chairman of Time Warner, on Rupert Murdoch's desire to own Dow Jones, as reported by The New York Times LITIGATION NATION Made In China. Sued Here America's product liability attorneys have begun rolling out the lawsuits as stories about unsafe and counterfeit imports from China continue to make headlines. The defendants: U.S. companies that distribute the products to American consumers. The cases might prove to be the vanguard in a march of litigation, with plenty of deep-pocketed American companies targeted. On June 26 such a lawsuit prompted regulators to demand a recall of nearly a half-million Chinese-made tires. Foreign Tire Sales, a Union (N.J.) distributor of tires made by Hangzhou Zhongce Rubber, was named in a wrongful death case filed in a New Jersey federal court after one of its made-in-China tires allegedly caused an accident that killed two people. In turn, Foreign Tire Sales has sued its Chinese supplier. Both companies say they're not at fault. Lawyers have also gone after U.S. companies such as Del Monte, which sold pet treats made with tainted Chinese ingredients. Del Monte, which issued a voluntary recall, hasn't yet responded to the suit. "We're just as interested in getting answers as some of the other folks," says John McDonough III, head of litigation at the New York office of Cozen O'Connor, which is representing the company. Meanwhile, the Washington (D.C.) firm of Cohen, Milstein, Hausfeld & Toll is weighing litigation against Western distributors of Chinese-made counterfeit glycerin that found its way into cold medicine, killing hundreds of children in Panama and elsewhere. "Do people along the chain have responsibility for knowing where key ingredients are coming from? The answer you're going to find in an era of globalization is 'Yes," says Cohen Milstein's Michael Hausfeld. Despite a wave of business-friendly legal reforms in recent years, companies can be held liable in most states in the U.S. even if they unwittingly sell a dangerous product. "All you have to show is that the product was defective," says William Ruskin, a defense litigator with Epstein, Becker & Green in New York. "It's no defense to say, 'We didn't know.'" Under product-liability law, one company often can be held 100% liable for all damages awarded to all consumers, regardless of its market share or the amount of tainted product it might have sold. Don't expect plaintiffs' lawyers to make their way to China. They aren't likely to bother with small, far-flung producers that can't afford to pay big judgments. -Lorraine Woellert By Lorraine Woellert   HIRING LINES Americans Need Not Apply The video looks as if it were shot at a sleepy corporate seminar. But the dialogue is riveting: a group of lawyers telling potential clients how to pretend to look hard for American employees while hiring cheaper foreign workers instead under the H-1B visa program. Trying to fill jobs with Americans is a requirement for employers seeking to turn foreign workers into long-term hires. But here's Lawrence Lebowitz, marketing director for the Pittsburgh law firm Cohen & Grigsby, at its annual Immigration Law Update Seminar in May: "Our goal is clearly not to find a qualified and interested U.S. worker," he says in the five-minute video clip posted on YouTube (GOOG ) on June 16 by the Programmers Guild, an advocacy group for U.S. tech workers. The trick, according to Cohen & Grigsby attorneys, is just to go through the motions of hiring Americans. The video, which the law firm originally posted on its own Web site (and has since removed), has sparked a strong reaction in Congress, which is sharply divided over a controversial immigration reform bill. On June 21, Senator Chuck Grassley (R-Iowa) and Representative Lamar Smith (R-Tex.) fired off a letter to the law firm demanding an explanation. The two also called on Labor Secretary Elaine Chao to monitor more closely com- pliance with the rules. Cohen & Grigsby directed requests for comment to their public relations firm, which did not return calls. By Moira Herbst CAR TALK Here Comes The Chinese Motorcade As if Toyota's (TM ) overtaking General Motors (GM ) as the world's biggest carmaker weren't enough distraction, Detroit is now bracing for an invasion of Chinese cars. Brilliance China Automotive (CBA ) plans to roll out at least one vehicle in the U.S. next year, with the help of Scottsdale (Ariz.) distributor China Motor, which is expected to showcase its plans in Detroit in July. China Motor is set to launch a $20,000 vehicle, which it has been certifying for U.S. safety and emission requirements. Brilliance is already testing the waters in Europe with a $30,000 sedan and says it will introduce at least two more models there next year. Other Chinese carmakers are also eyeing the U.S. market. Geely Automotive began testing a $10,000 subcompact in Puerto Rico last year, with the idea of selling it stateside in 2009. And in early June, Hebei Zhongxing Automobile said it hopes to export three vehicles to the U.S. in 2008. It also plans to build a plant in Mexico. There's no certainty that all these deals will gel. But already, about 100 U.S. dealers want to carry Brilliance vehicles, according to China Motor chief David Shelburg. Says Sheldon Sandler, founder of Bel Air Partners, a financial adviser to dealerships: "They don't want to have to say later that they missed out on the next Toyota." By David Kiley and Geri Smith BLOGSPOTTING Mobile Mania Mobilephoneblog.org Having trouble staying on top of the goings-on in the mobile world—the most sought-after phones, games, and ringtones? Check out this blog by Phil Yerkes and John Calian, the duo behind gaming software distributor Movaya. Games are the blog's bread and butter. But there's more. Among recent entries: the latest manifestations of iPhone mania, and a write-up of a study showing that cell-phone users are hanging on to their models for about a year and a half, a month longer than they were last fall. The blog also looks at a report that measures the size of the mobile-phone accessories market (a huge $32 billion). And there's an item on the rise of a new consumer category: "Gamer Moms." By Michael Loeb RETAIL DETAIL Mirror, Mirror, Talk To Me The magic mirror can't tell you if those jeans make you look fat. But it can dispense style tips, locate other sizes and colors, and summon sales assistants. Created for stores by thebigspace, a London and Milan design outfit, it's a regular mirror made interactive through technology—radio frequency identification (RFID), audio and video software, an ultrasonic touch screen, and a wireless messaging system. A customer approaching the mirror with RFID-tagged garments activates customized ads and messages. A tailored suit might prompt James Bond-like images of martini glasses and go-go dancers. Or words and images can float on the glass to inquire about fit, suggest coordinating items, and take requests for other merchandise. (Messages are beamed to salespeople's handheld devices.) "It's about getting you into the spirit of what you're holding or wearing," says thebigspace co-founder Dick Lockard, who says six major retailers in the U.S., Europe, Latin America, and Asia will install magicmirrors beginning in August. Lockard says the system, which costs $20,000 to $30,000 per store, boosts sales and cuts down on theft. (The mirror can "read" how many garments are brought into the dressing room.) Debenhams, a British department-store chain, saw sales rise 5% at the two stores where it staged a four-month trial of a prototype. Says Marshall Kay, a retail strategist at consulting firm Kurt Salmon Associates: "It's a fantastic way to bring products to life within the store." By Elizabeth Woyke MEALTIME A Safeway With Tablecloths Once upon a time, supermarkets sold food that people carted home to make into meals. Then, as the lives of Americans became more harried, grocery stores began offering fully prepared dishes to go. Now Safeway (SWY ) is testing a lunch and dinner option that's the ultimate in no-fuss, no-muss: The $40.1 billion chain has launched a freestanding restaurant of its own. Citrine New World Bistro opened on a commercial strip in Redwood City, Calif., in June. The menu runs the gamut from grilled Asian pork loin to Jamaican grilled shrimp (both $13.99) to margherita pizza ($8.99), and there's a full wine list to boot. In terms of offerings and prices, Citrine fits into the same category as chains like Panera Bread (PNRA ) and Applebee's (APPB ). Safeway says its restaurant is a natural evolution from the take-out food counters at its 1,755 stores. The Pleasanton (Calif.) company won't discuss expansion plans, but it has been advertising for help for other sites. Darren Tristano of restaurant consultant Technomic spies a trend in which more grocers will expand outside their store aisles. Indeed, Safeway isn't the first to branch out into restaurants, which are generally a higher-margin business: Crispers, a Lakeland (Fla.) salad-and-sandwich chain, is majority-owned by Publix Super Markets. Such moves may help grocers hold their own against their low-price nemesis, Wal-Mart Stores (WMT ), which is now the country's top supermarket. By Michael Arndt PRINT MEDIA Big Papers On Campus Even as most print publications struggle for readers and ad revenues, college newspapers are thriving. Advertisers, from wireless carriers to car insurers, spent $30 million last year on ads in campus papers, according to estimates by Alloy Media & Marketing, which places 75% of the national ads that run in them. "The strength of college newspapers surpasses any other print vehicle," says Alloy Vice-President Samantha Skey. Alloy figures that advertising in college newspapers increased 15% in the fiscal year ended March, 2007, vs. the previous year. (Sales for newspapers in general were down 2.8% in the 2006 calendar year.) America's 16 million college students are $200 billion-a-year consumers. They're also a captive audience: The 1,800 student papers boast 3.4 million readers, whereas People draws only 2.6 million college-age readers, according to Alloy. It's no surprise then that student papers have caught the eye of at least one media group. In February, Gannett (GCI ) acquired its second college paper, the Central Florida Future, which serves the University of Central Florida. "The papers already had attractive business models," says Gannett spokesperson Tara Connell. She cites an additional benefit: "We get to train people to work for our company." By Tyler Hill PR WATCH Shoppers Without A Cause Consumers are flooded these days by corporate marketing campaigns linking brands to social issues—everything from (Product) Red, a multicompany effort benefiting African AIDS victims, to Avon Products' (AVP ) breast cancer crusade. Indeed, the public now expects just about every company to be allied with a cause, according to Carol Cone, whose brand-strategy firm recently conducted a survey on cause-related marketing. And that, says Cone, has led to a case of consumer cause fatigue. Of the 1,066 adults polled online by Boston-based Cone in March and May, 36% said they bought a product in the previous 12 months after learning of its maker's commitment to social issues, down from 43% in 2004. Only 14% said they intentionally paid more for a product that supports a cause, down from 28%. And just 30% said they told a family member or friend about a product or company committed to a social issue, compared with 43% three years ago. That's an especially telling number, says Cone, because "word of mouth is the crucial currency in today's society, especially with young people." By Conrad Wilson E-COMMERCE A Missed Oportunidad Latinos are one of the fastest-growing markets online, advancing by 15% from April, 2005, to April, 2006. By now, 55% of Hispanic adults cruise the Internet. But while surveys show most of these 16.3 million users prefer to be served in Spanish, a study has found that the U.S. Web sites of most companies are overwhelmingly English-only. Common Sense Advisory, a Lowell (Mass.) consultancy, looked at the sites of 102 leading online retailers, including such giants as Office Depot (ODP ) (which offers Spanish content) and Target (TGT ) (which doesn't). It found that only 18 offer any Spanish text, with support in Spanish especially hard to come by. Of the 18, fewer than half responded in Spanish to customer inquiries sent by Common Sense. And while 27 of the 102 sites suggested ringing the retailer's call center for help in Spanish, only a third of those actually provided such assistance. Companies would be wise to use Spanish at least some of the time on their U.S. Web sites, says Lee Vann, founder of Captura, a Hispanic online marketing agency. "People automatically think they have to translate their whole site," he says, but offering navigation guides and FAQs in Spanish is a fine start—if users are told which links lead to English-only content. By Kerry Miller BLOOMBERG Ballot Worries? Not Likely New York Michael Bloomberg's June 19 declaration of independence from the GOP has led to speculation about a possible Presidential run—and plenty of punditry about how tough it is for an unaffiliated candidate to get on the ballot in all 50 states. The truth is, that's not likely to be a problem for Bloomberg. Yes, the patchwork of state rules tripped up independent candidate Ralph Nader in 2004, when he qualified for the ballot in just 35 states plus the District of Columbia. But when you have a few billion in the bank, a crack team of political operatives, and a history of being exceptionally well-organized, it's a different story. And the mayor, who has been brushing aside any suggestion that he'll enter the 2008 race, has already had aides research ballot requirements. A White House wannabe must collect a total of more than 630,000 signatures across the country, with rules varying by state. Luckily for Bloomberg, candidates are permitted to pay people to collect signatures for them. By Richard S. Dunham
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