LEVICK Weekly - Sept 21 2012


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Don't Get Lost in Translation: 3 Rules for Effective Hispanic Outreach

Obama’s Case Against China: The U.S. Has a WTO Credibility Gap

Buy Me, Sell Me, Sue Me

Jack Bonner: On Defeating Food Labeling Lawsuits


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LEVICK Weekly - Sept 21 2012

  1. 1. EDITION 9Weekly September 21, 2012 Don’t Get Lost in Translation: 3 Rules for Effective Hispanic & Latino Outreach Obama’s Case Against China: The U.S. Has a WTO Credibility Gap Buy Me, Sell Me, Sue Me Jack Bonner: On Defeating Food Labeling Lawsuits
  2. 2. Don’t Get LostIn Translation:3 Rules For Effective Hispanic & Latino OutreachRichard S. Levick, Esq.Originally Published on Fastcompany.comWith more than $1 trillion in annual spend- demonstrate varying levels of assimilation.ing power and projected growth of 48 per- Hispanics and Latinos live in urban, subur-cent over the next three years, Hispanics ban, and rural settings. Some measure theirand Latinos do not represent a market seg- incomes in tens of thousands of dollars a year.ment; they are a market unto themselves. Others make tens of millions.As such, marketing and communications Such diversity is the foremost challenges foroutreach to this ever-expanding American corporate marketers and communicators seek-population isn’t a homogeneous, one-size- ing to tap into the Hispanic and Latino market.fits-all proposition. Rather, it is a far more Too often, companies fail to understand thattargeted exercise that demands a true messages designed to reach the entire popula-understanding of the subtle nuances that tion are too broad to tangibly resonate withdefine myriad Hispanic and Latino commu- anyone in it. As with all advertising and publicnities in the U.S. relations endeavors, you have to know whoThe Hispanic and Latino diaspora extends your audience is before you can paint fineacross all geographies, generations, and enough strokes to connect on a personal level.income demographics. There are Mexican, In the Hispanic and Latino context, that meansCuban, Dominican, and a host of other heri- knowing where your audience is from, wheretages, all with distinct cultures, histories, and it is going, and how it is likely to interact witheven languages. There are first, second, third, your unique corporate identity.and fourth generation Americans, all of whom
  3. 3. Weekly1. It all starts with initiatives simply don’t work as well as they Tony Jimenez, President and CEO of MicroTech, gions, states, cities, and neighborhoods wheregeography. could if companies really took the time to un- the fastest-growing Hispanic-owned business they will have the greatest impact. At the same derstand who they are talking to.” in the United States, sees business-to-business time, consider that social media engagementJose Nino, President of the El Nino Group, Co- partnerships as an effective way to build the re- provides an ideal avenue for building theChairman of the Hispanic Alliance for Prosper- Mr. Nino sees even more value in drilling down lationships that Mr. Arroyo strives for. “We’ve personal relationships outlined in point two.ity Institute, and former President of the United beyond the region-by-region level. “If you have seen a lot of state and local governments put When companies utilize blogs, Facebook, Twit-States Hispanic Chamber of Commerce, believes the resources to look at these communities on a an emphasis on working with companies that ter, and other platforms to talk not just aboutthat effective Hispanic and Latino outreach neighborhood-by-neighborhood basis, you can contract work out to Hispanic and Latino- their products and services, but the ways inbegins with careful considerations about the learn even more about wealth, assimilation, owned firms,” says Mr. Jimenez. “The same is which those products and services empowerregion in which companies are communicating. and the other factors that influence buying true of the average Hispanic or Latino con- and enrich consumers’ lives, they nurture the“If you’re operating in the southwest, you’ll be decisions. From there, you have all you need to sumer. When a company markets to us, it feels trust and familiarity so important to Hispanictalking predominantly to people with Mexican craft messages that really hit home.” good to know there’s a clear recognition of the and Latino consumers.heritage,” says Mr. Nino. “In the southeast, the important role we play in American society.population hails largely from Cuba and other 2. Take the time to forge But when a company is willing to work with us, Speaking the LanguageCaribbean nations. In New York City, you’ll find lasting relationships. there’s an even more powerful message about By understanding the diversity that definesa number of people of Puerto Rican and Do- Raymond Arroyo, the Head of Alternative trust and investment in the Hispanic and La- Hispanic and Latino communities, focusingminican descent. There are, of course, excep- Distribution at Aetna and a Member of the tino communities that goes a long way toward the time and effort that it takes to build lastingtions in every city and state—but if you know Board of Directors at the United States Hispan- crossing the cultural divides that may exist.” brand relationships, and optimizing socialthe basics of the Hispanic and Latino diaspora, ic Chamber of Commerce, sees patience as a and digital media engagement, companiesyou already know a great deal about how bestto target your efforts.” key factor that drives successful Hispanic and 3. Don’t forget digital. can reach the fastest growing market in the Latino outreach. In working to close the health U.S. with the precision and specificity needed According to recent reports, young HispanicMr. Nino says that’s because country of ori- insurance coverage gap among Hispanics and to succeed. and Latino Americans have spent $17.6 billiongin impacts everything from cultural consid- Latinos, he has found that results don’t often on mobile devices and more than $500 million In this context, speaking the language is abouterations to language. “A Spanish word that materialize overnight. “Hispanic and Latino on mobile applications thus far in 2012. That a lot more than words. It’s about living ameans one thing in Mexico can mean some- consumers want to take the time to learn fact alone tells us that any Hispanic and Latino culture and focusing on the details that are all-thing completely different to someone who what you’re about before they buy,” says Mr. outreach strategy that deemphasizes the social too-often lost in translation. Lspeaks an El Salvadorian dialect, and some- Arroyo. “It’s a slower, more personal process and digital media landscape (as many mistak- than what is traditionally used to market to Richard S. Levick, Esq., President and CEO of LEVICK,thing else again to people whose families came enly do) isn’t built for an audience that is as represents countries and companies in the highest-stakesfrom Venezuela or another South American other audiences. These communities want to tech savvy as any we’ve seen. global communications matters—from the Wall Streetcountry,” says Mr. Nino. “From the clothes know just as much about you as the products crisis and the Gulf oil spill to Guantanamo Bay and thethey wear to the foods they eat, there is just as and services you provide. That takes time – Consider that the geo-targeting needs outlined Catholic Church.much diversity among these communities as and, as a result, too many companies abandon in point one are perfectly suited for a world inthere is across the entire United States. That’s efforts that might be working just because which effective Search Engine Optimizationwhy blanket marketing and communications goals aren’t reached as quickly as they might (SEO) and Marketing (SEM) can enable organi- have hoped.” zations to tailor diverse messages to the re-
  4. 4. Obama’s Caseagainst Credibility GapThe U.S. Has a WTO China:Richard S. Levick, Esq.Originally Published on Forbes.com
  5. 5. WeeklyThe Chinese have two good reasons to scoff It seems a relatively narrow issue but there’s adismissively at the Obama administration’s catch: the WTO ruled on the matter and cametrade case, filed yesterday at the World Trade heavily down on the side of Antigua, which isOrganization, which accuses them of unfairly the smallest WTO member to have ever op-subsidizing auto and auto parts exports. posed, much less prevailed against, the organi- zation’s largest member in such a proceeding.The case specifically targets $1 billion in subsi-dies during 2009-2011, mainly of exports to de- So far, however, the U.S. has simply not com-veloping countries where the automobiles are plied with the ruling. We have neither liftedassembled and purportedly compete with cars the restrictions nor satisfied a damages penaltymanufactured stateside. The U.S. is also about that continues to mount annually. It is leviedto take further legal action in an ongoing WTO each year the U.S. fails to pay up in full.case against China that involves anti-dumping Typically, the United States takes a prettyduties levied last year against American car high-minded approach to compliance withexports to China. China has filed its own global regimens of all sorts, from WTO rulingscounter-complaint with the WTO over anti- to anti-corruption initiatives. We have aggres-dumping duties that Washington had levied on sively sought a leadership role and more or less$7 billion-plus in various Chinese goods.) achieved it. Caesar’s wife must now be beyondThe first reason for the Chinese to balk is fairly reproach. The consequences of hypocrisy areobvious. President Obama is announcing the ini- unacceptable, while only one instance of non- But why should it play by the rules? We don’t, Brazil would also have been the first country totiative amid the heat of the election and he’s do- compliance is needed to expose such hypocrisy. at least not in this case. infringe American intellectual property rightsing so in battleground Ohio. It’s a fair guess the with the WTO’s blessings. Brazilian farmers Never mind a blatantly political instance like A compromised WTO is only one consequenceChinese will try to derail his initiatives by high- would have no longer been charged fees for the current Obama case over auto and supply of our non-compliance. Equally portentous, thelighting the blatantly ulterior motives at play. seeds developed by American biotech compa- subsidies. Imagine you’re the People’s Bank WTO could itself approve violations of U.S. in- nies. American pharmaceutical patents wouldThe second reason is even more important be- of China, which has taken a number of steps tellectual property as fair retaliation for unfair have been directly violated prior to expiration.cause it potentially compromises any case the since 2001 that discriminate against foreign trade practices. In 2010, for example, the U.S. The prospective costs to U.S. businesses wereU.S. might bring before the WTO. It involves suppliers of electronic payment systems. On settled a dispute with Brazil over American estimated at $239 million.an ongoing dispute, dating back to the early September 1, a WTO Panel Report found in subsidies to cotton growers, one day beforepart of this century, between the government favor of a case brought by the U.S. “This deci- Brazil was to begin sanctions—with WTO The United States blinked then—and it betterof Antigua and Barbuda (“Antigua”) and the sion makes it clear that China should honor authorization—totaling $830 million. The sanc- blink now in its dispute with Antigua, or riskgovernment of the United States. At issue is the its WTO commitments to play by the rules and tions included tariffs on such items as autos, providing its global competitors with a pow-total prohibition by the U.S. of cross-border stop discriminating against American financial pharmaceuticals, medical equipment, electron- erful excuse for why they too can ignore thegambling services provided via the Internet. services providers,” said U.S. Trade Represen- ics, textiles, and wheat. rules or simply stonewall when called to taskAntigua has challenged that prohibition. tative Ron Kirk. for doing so.
  6. 6. Weekly“ Throughout, the Antiguans have seemed most age, and how that preparedness affects our reasonable. This August, their government ap- credibility in the global marketplace. The WTO explained that any moral defense in this case proached the WTO, seeking a compromise on After all, it would be a shame to see American was obviated by, for one, the interstate online horse the damages issue even as it assembled a team companies lose millions in intellectual prop- race betting that is today altogether legal. The WTO to come up with further solutions for consid- erty because of our insistence that a 1961 law eration by both the U.S. and WTO. Meanwhile, gave the U.S. eleven months to either allow Antigua to must govern technologies that were unimag- the interminable American foot-dragging only provide online gambling or prohibit domestic online encourages others in the world to disregard ined when the law was written. Innovation and leadership are inseparable. If our policies, horse betting. So much for morality!” any pressure we might try to impose on how legal and otherwise, do not evolve in tandem they should “play by the rules.” with marketplace realities, we will inevitably There are numerous lessons in this saga for fail our own standards at every level. American lawmakers. First, they need to real- There are people throughout the world whoThe Antigua matter is especially intriguing that interfere with that commitment; and that ize what their constituents think. A 2006 Zogby are just salivating to see that happen. Lbecause it also raises a number of related ques- (3) we could not rely on a “moral defense,” i.e., poll commissioned by Antigua found that over 70% of Americans do not want the government Richard S. Levick, Esq., President and CEO of LEVICK,tions about how global business is trending in that gambling is immoral and the public needs represents countries and companies in the highest-stakesthe Internet Age. In March 2003, Antigua took to be protected from it. to stop online betting. global communications matters—from the Wall Streetits case to the WTO after several months trying crisis and the Gulf oil spill to Guantanamo Bay and the The WTO explained that any moral defense in Lawmakers and enforcers should also viewto engage the U.S. in meaningful negotiations. Catholic Church. this case was obviated by, for one, the inter- the Wire Act in context. In light of all the com-A year later, the Dispute Panel Report found state online horse race betting that is today plex legal issues that Internet commerce hasthat the restrictions against online gambling altogether legal. The WTO gave the U.S. eleven raised in the past two decades, isn’t it reason-violated the General Agreement on Trade in months to either allow Antigua to provide able that a 1961 law governing wire communi-Services (GATS) treaty. The ruling caused online gambling or prohibit domestic online cations ought to be revisited under any cir-quite a stir in the gaming industry as it pre- horse betting. So much for morality! cumstances? Bear in mind too the intent of thesaged a new era of unambiguously legalized Wire Act, which then-Attorney General Robertonline gambling. For the U.S., the WTO decision requires a re- Kennedy saw mainly as a weapon against haul of the Wire Act so that it is compatibleThe American position was that our federal law organized crime. with our GATS commitment and, in a broadersimply prohibits all betting and gambling ser- sense, adjusted to the realities of the digital age The good news is that the DOJ has alreadyvices provided by non-U.S. interests. So in 2005, in a global economy. But the initial response showed some flexibility; notably, it reversedthe WTO heard and ruled on an appeal, finding from the U.S. Trade Office was that it would its position last year by exempting lotteriesthat: (1) free trade in gambling was indeed one not ask Congress to weaken restrictions. Then from Wire Act enforcement. Perhaps the tideof the commitments we made to GATS; (2) that came the penalties. In 2007, the WTO awarded is slowly turning in favor of Antigua. Yet thiswe had adopted “measures”—including the Antigua $21 million in annual damages. The story is not just about gaming, nor is it just1961 Interstate Wire Act prohibiting the use of tab has now accumulated to over $120 million. about Antigua. It is also about our own legalwire communication facilities to convey bets— and competitive preparedness for the digital
  7. 7. Buy Me, Sell Me, Sue Me Richard S. Levick, Esq. Originally Published on Forbes.comAt 7:16 a.m. EDT on April 2, Reuters report- to shareholders. At 12:18 p.m., the firm Browered an unsolicited offer by Coty Inc. to pur- Piven announced it too was investigating Avonchase cosmetics legend Avon Products. At for the same reason.8:04 a.m., Avon formally rejected the offer— There’d been no time to come up for air. Aa smart move, according to some observers, scant five hours after a proposed merger wasin light of the purportedly low-ball offer. first publicly announced, and four hours afterThe specific timing here is interesting and it was rejected, not one but two potentialimportant because of what happened im- lawsuits were already in the works. Those whomediately afterward. At 10:18 a.m., the law understand the power of instantaneously viralfirm Harwood Feffer LLP announced it was communications to incite litigation might won-pondering a lawsuit against Avon’s board of der what took them so long.directors, based on concerns that Avon, byrejecting the $10 billion, $23.50 per share offerout of hand, failed to meet its fiduciary duties
  8. 8. WeeklySo pervasive have such lawsuits become that holes either. In February, for example, a Texassome observers have taken to calling litigation court ruled against Exxon, awarding 21 plain-a de facto “deal tax,” simply a cost of doing tiffs’ law firms $8.8 million in fees for theirbusiness. Studies by Cornerstone Research work on shareholder lawsuits related to theshow that the incidence of lawsuits in deals 2010 acquisition of XTO Energy Inc. It was avalued at more than $500 million jumped to good payday for the lawyers if not their clients96% in 2011, up from just over 50% in 2007. In as shareholders won important new disclosureother words, there’s now almost an absolute guarantees but no money.certainty that, if you do the deal, you get sued. By contrast, Del Monte shareholders recentlyJust as startling is the rise in the average num- got $89.4 million to settle a class action suitber of lawsuits per deal, which more than dou- prompted by conflict of interest allegationsbled to 6.1. Cornerstone found 11 transactions against the company and Barclays Capital inin 2011 beset by at least 15 lawsuits apiece. the sale of Del Monte to a group led by KKR. But the Exxon scenario is really the norm, ac-We’re talking about a phenomenon that cording to the Cornerstone data, as outcomesdoesn’t only involve how bankers craft the more often involve governance changes thandeals or lawyers dot the i’s. Nor are we just pecuniary awards. “Interestingly,” the studynecessarily talking about corporate fire sales comments, “…we have not encountered a caseunder generally distressed circumstances. in which shareholders rejected the deal afterEven the best positioned deals involving the the additional disclosures were provided.”healthiest companies must inevitably run a Not one case! Thereby hangs an instructive les-contentious legal obstacle course. Google’s son about the kind of communications that mayannouncement in August 2011 that it planned still effectively deter litigation, at least sharehold-to purchase Motorola Mobility resulted in er suits. (Lawsuits between buyers and sellers,no fewer than 16 lawsuits even though the with different sets of problems, are also on the$12.5 billion, $40 per share offer was widely rise.) Lawyers like Stuart Grant of Grant & Eisen-praised throughout the mobile communica- hofer, who represented the investors in the Deltions industry as a good fit for all concerned. Monte case, say that litigation ensures fairness toAs the legal press recently reported, Exxon- the shareholders, especially in a market where,Mobil is likewise a very good example of a absent antitrust concerns, the regulators don’tcompany that does “everything we can up scrutinize the deals all that closely.front to make sure the buyer knows exactly Yet it also stands to reason that if, in lieu ofwhat they are buying.” Yet the most com- cash, disclosures imposed after cases aremendable of such efforts won’t plug all the brought suffice to placate claimants, why not
  9. 9. Weekly“ …we have not encountered a case in which shareholders rejected the deal after the additional disclosures were provided.”assure those disclosures in the first instance the importance of timeliness as approximately Jack Bonner On Defeating Food Labeling Lawsuitsand cut out the expensive middle men, i.e., the two-thirds of M&A-related lawsuits are filedlawyers who file the now-inevitable lawsuits? within two weeks of the announcement. What’s demanded is as much transparency as possibleTo explain why there’s been this uptick in litiga- as fast as possible.tion, we probably need look no further than theInternet and the social media. How else explain One envisions a situation, perhaps not un-the precipitous rise in case volume compared like the Exxon-XTO Energy case, in which theto past markets when M&A transactions pro- grievances that lead to a lawsuit are fully airedliferated even more abundantly but activist on a social media channel, perhaps an activistshareholders and high-volume class actions did site, that allows shareholders to vent any andnot? Human beings have not changed since the all such grievances. Recent signs point toward1980s but their tools have. a prudently self-interested participation by public companies—Johnson & Johnson was aIn addition to the shareholders themselves, in- pioneer here on the now-defunct Moxy Votefluencers with both interested and disinterest- —in such discussions on the very sites whereed motives to challenge deals range from busi- Jack Bonner, President of A2W—Advocacy to Win, discusses the recent deluge of food labeling they’re happening. By going to the same sitesness journalists to investment bankers looking lawsuits and outlines what companies in the crosshairs can do to protect their brands, reputa- their potential adversaries go, they won’t elimi-to build a reputation as consultants. They often tions, and bottom lines. With adversaries making an aggressive case in the Court of Public Opin- nate litigation but they will take a meaningfuldeploy a combination of old and new media. ion, both offensive and defensive strategies are needed to assuage consumer concern and con- step in that direction.The opening salvo might be a column in a vince an increasingly wary public that they can believe what they read in the grocery store aisles.respected print publication or an appearance It’s called getting down into the trenches. Fromon a cable business news network. The fire gets a cost/benefit perspective, that sure beats show-lit and the stage is thus set for a social media ing up at court. Lconflagration. Financial Communications Litigation Richard S. Levick, Esq., President and CEO of LEVICK, represents countries and companies in the highest-stakesIf the problem starts online, solutions can befound there as well. Not just the substance of global communications matters—from the Wall Street crisis and the Gulf oil spill to Guantanamo Bay and the Corporate & Reputationthe messages whizzing around the Internet, theCornerstone research powerfully underscores Catholic Church. Public Affairs Crisis Sign Up Today