US tariffs against China more about politics than economics
In another controversial move, President Trump has decided to announce plans to impose tariffs on a number of Chinese products and at the same time introduce barriers to Chinese Foreign Direct Investment (FDI) entering the US. A battle around Intellectual Property Rights (IPR) protection and the potential use of cutting-edge technology for military purposes is at the core of this dispute.
This is not the first time the two countries fight over IPR protection. In 2007, the US filed a complaint against China in the dispute settlement mechanism with a positive outcome for the US in 2010. China had to implement a number of measures that would protect IPR. The question is, therefore, why did not US follow the same route again and announced plans to impose tariffs as a countermeasure to the lack of IPR protection? There are two driving factors behind this move.
First, it is consistent with the overall approach of President Trump’s administration. There is a clear lack of confidence to resolving these disputes through international bodies such as WTO as this usually takes a long time (the last dispute took close to three years) and a lot of resources. Imposing tariffs on a unilateral basis is considered to make an economic but mostly a political argument.
President Trump clearly stirs up the waters and forces other countries to respond quickly. It is not the first time that tariffs are being used, primarily in a political way, from the US administration. The recently announced plan to impose tariffs on steel and aluminum was a clear message to Canada with regards to renegotiating the North America Free Trade Agreement (NAFTA).
Second, this is a more complicated matter. The main argument is not around trade deficits or anything else but around national defense. China is now a global power and will soon demand to play an equal role on the world’s chessboard. Having weapons that build on cutting edge technology would be immensely important and US wishes to stop China from getting access to these technologies.
There will be winner and losers from this trade war if it develops further. Currently, the US has a $3.75bn trade deficit with China. Looking at the data more closely, almost 45% of that deficit comes from a single category of products - Computer and Electronic Products. This is a very clear case were technology created in the US is used in other locations with a very cheap cost basis to produce competitively priced products that are then exported back to the US. Imposing tariffs on these products will make them more expensive for US consumers with ambiguous results for the protection of IPR issue.
Looking at FDI, with data coming from FDIMarkets (a Financial Times subsidiary) there have been over 600 greenfield Chinese investments to the US in the period 2003 to 2018, generating over 90,000 jobs and with a capital expenditure of $45bn in total. The numbers are negligible when compared to the amount of trade. Most Chinese companies identified proximity to customers as their key motive and the vast majority are in the Sales, Marketing and Support functions of an organization. Imposing restrictions will have probably a very small effect on safeguarding technology leaks and IPR protection.
In conclusion, this is another political move from the US administration which has manifest itself through economic tools. Looking at the data it has a doubtful economic outcome but could possibly serve the political goals of Washington.
Marketing matters: from IBM to Kyndryl
Prior to joining Kyndryl as Chief Marketing Officer, Maria had a 25-year career at IBM, most recently as the tech giant’s CMO where she oversaw all marketing professionals and activities across North America, Canada and Latin America. She has held senior global marketing positions in a variety of disciplines and business units across IBM, most notably strategic initiatives in Smarter Cities and Watson Customer Engagement, as well as leading teams in services, business analytics, and mobile and industry solutions. She is known for her work with teams to leverage data, analytics and cloud technologies to build deeper engagements with customers and partners.
With a passion for marketing, business and people, and a recognized expert in data-driven marketing and brand engagement, Maria talks to Business Chief about her new role, her leadership style and what success means to her.
You've recently moved from IBM to Kyndryl, joining as CMO. Tell us about this exciting new role?
I’m Chief Marketing Officer for Kyndryl, the independent company that will be created following the separation from IBM of its Managed Infrastructure Services business, expected to occur by the end of 2021. My role is to plan, develop, and execute Kyndryl's marketing and advertising initiatives. This includes building a company culture and brand identity on which we base our marketing and advertising strategy.
We have an amazing opportunity ahead at Kyndryl to create a company brand that will stand apart in the market by leading with our people first. Once we are an independent company, each Kyndryl employee will advance the vital systems that power human progress. Our people are devoted, restless, empathetic, and anticipatory – key qualities needed as we build on existing customer relationships and cultivate new ones. Our people are at the heart of this business and I am deeply hopeful and excited for our future.
What experiences have helped prepare you for this new opportunity?
I’ve had a very rich and diverse career history at IBM that has lasted 25+ years. I started out in sales but landed explored opportunities at IBM in different roles, business units, geographies, and functions. Marketing and business are my passions and I landed on Marketing because it allowed me to utilize both my left and right brain, bringing together art and science. In college, I was no tonly a business major, but an art major. I love marketing because I can leverage my extensive knowledge of business, while also being able to think openly and creatively.
The opportunities I was given during my time at IBM and my natural curiosity have led me to the path I’m on now and there’s no better next career step than a once-in-a-lifetime-opportunity to help launch a company. The core of my role at Kyndryl is to create a culture centered on our people and growing up in my career at IBM has allowed me to see first-hand how to prioritize people and ensure they are at the heart of progress in everything Kyndryl will do.
How would you describe your leadership style?
I believe that people aren't your greatest assets, they are your only assets. My platform and background for leadership has always been grounded in authenticity to who I am and centered on diversity and inclusion. I immigrated to the US from Chile when I was 10 years old and so I know the power and beauty that comes from leaning into what makes you different from other people, and that's what I want every person in my marketing organization to feel – the value in bringing their most authentic self to work every day. The way our employees feel when they show up for themselves authentically is how they will also show up for our customers, and strong relationships drive growth.
I think this is especially true in light of a world forever changed by the pandemic. Living through such an unprecedented time has reinforced that we are all humans. We can't lead or care for one another without empathy and I think leaders everywhere have been reminded of this.
What’s the best leadership advice you’ve received?
When I was growing up as an immigrant in North Carolina, I often wanted to be just like everyone else. But my mother always told me: Be unique, be memorable – you have an authentic view and experience of the world that no one else will ever have, so don't try to be anyone else but you.
What does success look like to you?
I think the concept of success is multi-faceted. From a career perspective, being in a job where you're respected and appreciated, and where you can see how your contributions are providing value by motivating your teams to be better – that's success! From a personal perspective, there is no greater accomplishment than investing in the next generation. I love mentoring younger professionals – they are the future. I want my legacy as a leader to include providing value in work culture, but also in leaving a personal impact on the lives of professionals who will carry the workforce forward. Finding a position in life with a job and company that offers me a chance at all of that is what success looks like to me.
What advice would you give to your younger self just starting out in the industry?
I've always been a naturally curious person and it's easy for me to over-commit to projects that pique my interest. I've learned over years of practice how to manage that, so to my younger self I’d say… prioritize the things that are most important, and then become amazing at those things.