Now, being a Yankee isn't dandy

As US image slips abroad, American firms may find foreign deals tougher to close.

After 14 years of regular travel to Brazil, Andrew Odell was thunderstruck by what he found there on a trip last month. "I have never run into such a consensus view on US politics," says the contract negotiator and partner at Bryan Cave, a New York law firm. "People condemn the US [for its Middle East policy], and are frightened by the US."

In subtle and not-so-subtle ways, America's troubled world standing is beginning to color its business relationships abroad. So far, the practical impact seems minimal. Many executives, including Mr. Odell, see their foreign counterparts distinguishing politics from business - especially when a cheap dollar makes American goods and services attractive overseas.

On the other hand, perceptions count. In what many view as an era of bold political unilateralism by the United States, negotiators working cross-border deals for US firms in Latin America, Europe, and Asia now find themselves facing a precipitous shift in their homeland's image abroad. And they're struggling with whether and how to adjust to it.

"I would say it creates a backlash for everybody in an interdependent world," says Bruce Patton, deputy director of the Harvard Negotiation Project in Cambridge, Mass. "If you're a really big kid and you don't lean over backward not to be coercive, people think you're a bully.... If you get what you want just because you can, they hate you for it."

That's what appears to be happening with America's image abroad. For example, only 15 percent of Indonesians felt somewhat favorable or very favorable toward the US, down from 61 percent a year earlier. The Roper survey of 30,000 people in 30 countries also found declines in non-Muslim countries: Russia, down 25 percentage points; France, down 20 points; Italy, down 10.

"Overseas, they perceive Americans as being aggressive and uncompromising," says Sheida Hodge, managing director of the cross-cultural division for Berlitz International in Princeton, N.J. Ms. Hodge spent the last half of 2003 on the road. "Everywhere I went I heard the same thing: 'Americans want to have their way.' The Japanese tell you; the Chinese tell you; the French tell you."

Does anger cut profits?

How that political concern translates to the bottom line is debatable. For the first time since RoperASW began tracking it in 1998, America's declining reputation was beginning to affect the appeal of US brands, its survey found.

Today, in what should be a rich environment for an inflow of foreign money, surprisingly few overseas firms have bought or merged with American firms.

Some observers say overseas companies are simply pessimistic about whether the US can sustain its recovery, with crude-oil prices at historic highs, and don't see the US as a place to invest serious money. Others attribute it to a less hospitable US stance toward foreign business since 9/11.

But a Harvard Business School study released early this year suggested only minimal effects from overseas anger at the US. In 12 countries, only 12 percent of consumers preferred a local brand to a global (often US) brand. One reason the backlash is minimal, experts suggest, is that many US multinationals, such as Eastman Kodak, have worked hard to establish a local identity in the countries where they operate.

The question is whether consumer antipathy will grow - and how American business should react.

Instead of a softer stance, one emerging school of negotiating calls for tougher tactics. According to this view, the US is losing business because its win-win approach fails overseas.

"So often, especially where culture is used as a barrier, the excuse is that 'Well, it's our culture, so you have to give us something. It's our culture, so in order for you to do business here, you're going to have to compromise,' " says Jim Camp, a negotiating coach in Vero Beach, Fla., and author of the contrarian new book "Start with No."

Mr. Camp, who has worked with nearly 200 public- and private-sector clients, cites a major American supplier to the photographic-instruments industry. The firm ships large, expensive machines abroad to firms that rely on them to operate. That ought to provide some leverage, Camp says, but it doesn't.

"That American supplier has not had one year of profitability in the past nine years," he says. "They've had a win-win mind-set, and they've compromised away their margins of profit." The company, he says, has stayed in business by firing employees and outsourcing jobs.

Camp calls this a widespread syndrome. "It's shocking to me the number of people who won't even ask what the other side requires," he says. "Instead, they'll compromise before they even find out. They'll cut their price trying to get someone to like them."

Residual goodwill

But other dealmakers aren't panicked. Experts say that it's still about individual relationships built on mutual respect and trust. And anecdotes suggest that America may still have some goodwill to draw upon.

Odell points to an Arab businessman he knows - a prospective client - who recently sent him an e-mail with a glowing account of his family's trip to the US, including Disney World.

US negotiators in Europe report stability, too. As Italy wrestled in recent weeks with its collective feelings about America 60 years after D-Day, John Keffer was on the ground in Florence, working a business deal. An American lawyer for the firm King & Spalding, Mr. Keffer was representing an Italian subsidiary of General Electric in the sale of one of its divisions to another American firm. Most of the players there were Italian. And politics cropped up in conversations with the US team, he says. But debate never impeded progress.

"People can separate what they feel about the current administration's politics from their desire to do a deal," says Keffer.

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