A: Let me first say that I haven’t lost my job because it has been outsourced overseas, and I feel bad for those who have. That said however, in the bigger picture, I think that free trade and globalization get a very bad rap. The fact is, globalization is good for the world, and it’s especially good for small business.
When talking about globalization, I am referring to ever-increasing free trade, the outsourcing of jobs overseas, the opening of new markets, fewer trade barriers, global economic integration -- the whole enchilada.
In a fragmented world, globalization creates bonds. In a world where too many people yearn for freedom, globalization offers hope. In a world where totalitarianism is all too present, globalization fosters democracy. And in a world where small businesses face ever-increasing competition, globalization creates new markets and new opportunities.
Free trade and globalization often get this bad rap because there is a belief that it allows huge multinational corporations to act without concern for human rights or democratic values. But the fact is that free trade helps small business far more than anyone else.
Here’s an example: I work with a company that manufactures a product which it sells to companies across the country. The product is manufactured in China and imported to the U.S. because it is far less expensive to have it made there. Yet by doing so, by riding the globalization wave, my colleagues have been able to create a viable business that employs many people and creates wealth for its owners. If they manufactured it here, they wouldn’t be able to compete.
So the first thing to note is that globalization creates jobs. Here’s another example: According to Howard Shatz, in his testimony before the House Committee on Small Business (September, 2003) between manufactures, wholesalers and other “trade facilitators” fully 94 % of all exporters in California alone are small and medium sized businesses.
That is an amazing statistic; more than 9 out of 10 exporters are small businesses. Why is that? By opening new markets with fewer barriers, free trade and globalization make it easier for American small business to manufacture and sell their goods overseas. The Internet alone has opened a whole new avenue of markets for those American small businesses that are smart enough to take advantage of it.
Much of this trade goes to our largest trading partner, Mexico, where a growing number of small businesses have cropped up to import these American goods. According a University of Miami study, “99 percent of Mexico’s private sector is composed [small businesses] that generate over 80 percent of employment in Mexico.” And that new, booming market awaits the small business savvy enough to tap it.
So the second benefit is that globalization creates new markets. Free trade and globalization not only foster small business growth at home, it also fosters business growth abroad, and that in turn, according to the study, “fuels . . . demand within Mexico for U.S.-made goods and services.” It’s a win-win symbiotic relationship.
These days, maybe the most positive offshoot of globalization, according to Dan Griswold in his paper, “Trading Tyranny for Freedom: How Open Markets Till the Soil for Democracy,” is that “economic integration promotes civil and political freedoms directly by opening a society to new technology, communications, and democratic ideas . . . By promoting faster growth, free trade promotes political freedom indirectly by creating an economically independent and politically aware middle class.”
Significantly, Griswold notes, “nations that have [opened] themselves to the global economy are significantly more likely to have expanded their citizens' political and civil freedoms.”
By creating jobs at home, by nurturing a middle class abroad, by fostering democratic ideals, by developing new markets, by tearing down boarders and barriers, globalization has a very positive impact on the world at large, and it is the American small business that is at the forefront of this revolution. American small businesses can continue to change the world for the better by riding the globalization/free trade wave and selling their goods to emerging markets overseas.
Today’s tip: I am now in the process of writing my latest book, The Small Business Bible. If you have a hint, tip, idea, or strategy that makes a difference in your business, I invite you to share it with me so that I may share it with others in the book. Please email your insights to sstrauss@MrAllBiz.com.