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Due Diligence on Potential Foreign Sales Agents

In many cases, a firm may lack the sales and distribution network and resources to fully realize the commercial poential of one or more of its products.  In such situation, the firm will look to third parties to provide marketing assistance including sales representatives in foreign markets where the firm is not yet ready to invest in developing its own sales and marketing infrastructure.  While sales representatives can be extremely important partners in foreign markets firms must be mindful of their potential liability for the actions of such representatives under the federal Foreign Corrupt Practics Act and this report details the due diligence procedures that should be followed before signing on with a new representative.


Graduation Business Education in China

A recent article in The Economist (“Teaching case studies in China”, January 22, 2011, p 78) highlighted several interesting trends in the rapidly expanding market for business education in China where there are reported to be more than 30,000 students enrolled in 184 “approved” MBA programs.  First of all, in spite of the large number of programs the quality of the offerings is debatable and The Economist noted that “fewer than half a dozen programmes are up to international standards” and that many Chinese students still prefer to go overseas to study due, in part, to the perception that degrees from the US, Hong Kong or Singapore carry more reputational value.  Second, most Chinese programs still focus on preparing students for careers in state-owned enterprises; however, the China Europe International Business School in Shanghai, often introduced as the best program in the country, has brought in foreign faculty members and has clearly decided to offer its students the coursework necessary for them to compete for jobs and career with multinational firms.  Third, finance and economics remain the most common major Chinese business students; however, the better programs have been expanding their offerings in “soft subjects” popular in the West such as human resources, marketing and leadership and foreign faculty members have been recruited to teach these subjects using Western innovations such as the “case study”.  It is anticipated that Chinese managers will appreciate the need to improve in these areas as their scope of responsibilities expand to include operations in foreign countries and oversight of local employees in those countries.  Finally, while the influences of the West are slowly but surely trickling into Chinese business education activities will remain tightly regulated and new business schools sponsored by universities in the West can expect to have to partner with a Chinese institution and accept a Chinese co-dean who reports to the government.


Another Cultural Dimension–Profits versus Social Responsibility?

National societies—countries—have been measured and categorized using a number of different dimensions.  Recently, the results of a survey published by Edelman Trust Barometer 2011 provided interesting insight into the attitudes of members of the “informed public” (broadly defined to include university graduates who were in the top quartile of wage earners in their particular age groups and countries) in 23 countries around the world regarding the tradeoff between profits and social responsibility confronting companies.  Respondents were asked whether they “strong agreed” or “somewhat agreed” with a famous statement made by Milton Friedman: “the social responsibility of business is to increase its profits”.  The Economist reported highlights of the results of the survey including the following:

  • Seven of the 23 countries had 60% or more of their respondents indicating some minimal level of agreement with the statement, thereby strong rejecting the popular push for corporate social responsibility (“CSR”).  These countries included, in order, the United Arab Emirates (84% approval of the statement), Japan, India, South Korea, Singapore and Sweden.
  • The US placed 9th among the 23 countries with 56% approval of the statement, coming in just behind Mexico and ahead of Poland.  The United Kingdom was in the bottom third of the group with 43% approval of the statement, an interest result given that companies in that country subject to its 2006 Companies Act are required by law to render reports on their CSR records.
  • Among the top 10 countries on the list were four members of the dynamic emerging markets group—India, Indonesia, Mexico and Poland; however, respondents from China and Brazil were among the most enthusiastic proponents of CSR ranking 19th and 20th, respectively.