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BRAINSTORM

Rising anti-American sentiment could slam tech sector

By David Kirkpatrick
FORTUNE.COM


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(FORTUNE.COM) -- Every day we see new evidence of how technology is shrinking our globe. When we say "globalization" we really mean "technologization."

Dramatic evidence of our linked global society came last Saturday with the massive, coordinated worldwide demonstrations against a possible war in Iraq. News reports called it the largest protest movement in history, and that seemed likely. But how did it get so big so fast, and, as many reports pointed out with wonder, before a war even happened?

In a word, technology.

What made the protests in a reported 600 cities worldwide so potent was not only their size—up to six million in total—but their coordination. The Internet gives every potential protester information and, in many cases, encouragement. And e-mail allows protesters and organizers to communicate at no cost. I predict this is just the first in a new era of global coordinated protest. The issues may change, but the connected crowds will remain.

President Bush's apparent rush to war may have another implication in this time of newly globalized technology—the U.S. industry's already shaky vitality could be at risk. Anti-Americanism, driven by resistance to U.S. policies, is starting to affect sales of U.S. products around the world. Both Coca-Cola and Procter & Gamble have seen sales in the Middle East affected. A small upstart brand called Mecca-Cola is gaining adherents in Europe and the Middle East. And a survey recently conducted by Euro RSCG Worldwide found that large majorities of the citizens of many countries—including Argentina, Australia, Canada, France, Mexico, Poland, Switzerland, and the United Kingdom—felt the "world is becoming too Americanized."

Could American technology sales be affected by these trends? Yes. Neither consumers nor companies have to buy American products anymore in order to have state-of-the-art technologies. An astonishing array of companies have emerged around the world, providing alternatives to American suppliers. Local manufacturer Legend sells more PCs in China alone than Hewlett-Packard, long a regional presence, sells in all of Southwest Asia. Chinese networking equipment supplier Huawei Technologies had 2002 sales of $2.7 billion. Cisco recently sued Huawei for its trade practices in the U.S. But the company's ambitions are global. Here's a quote from its website: "Huawei has set up 32 branch offices worldwide...Products are in application in 38 countries, including Germany, Russia, Spain, Brazil, Thailand, Singapore and Egypt." Expect that number to grow, regardless of Cisco's suit.

Of course we all know about global consumer technology powers like Nokia, Samsung, and Sony, headquartered in Finland, Korea, and Japan respectively. But did you know that one of Nokia's biggest chip suppliers is an Italian-French company called ST Microelectronics? It competes vigorously with American companies like Texas Instruments and Motorola. And chips are rapidly becoming a priority in China as well—three cutting-edge chip plants there are in late stages of preparation to build chips with circuits a mere 130 nanometers wide. Then there's the Indian software phenomenon. Led by the three giants—Tata Consultancy Services, Infosys Technologies, and Wipro Technologies, India is fast becoming a global center for business software. Companies in many industries use these software and services companies to write new code and operate their existing applications. Expect that entirely new applications will begin to emerge from the astonishingly creative Indian software sector. Meanwhile, German software powerhouse SAP remains the dominant worldwide provider of diversified software for large enterprises.

The point is that arrogance about American dominance and hegemony is not justified, at least in the realm of technology. One of our great heritages as a nation is that we have been seen as a just nation, abiding by the rule of law. If we choose to behave otherwise, the consequences, even in technology, could be serious. The day could come when all those globally linked protesters decide to target IBM or Dell. It might become politically unpalatable to buy from companies like these, especially when there are local alternatives. The threats to market share for U.S. tech companies are real enough as it is. A political crisis could seriously hurt their businesses.


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