EDITION 9
WeeklySEpTEmbEr 21, 2012
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
Don’t Get Lost in transLation: 3 ruLes for effective Hispanic & Latino outreacH
richard S. Levick, Esq.Originally Published on Fastcompany.com
3 ruLes for effective Hispanic & Latino outreacH
Don’t Get Lost in transLation:
With more than $1 trillion in annual spend-
ing power and projected growth of 48 per-
cent over the next three years, Hispanics
and Latinos do not represent a market seg-
ment; they are a market unto themselves.
As such, marketing and communications
outreach to this ever-expanding American
population isn’t a homogeneous, one-size-
fits-all proposition. Rather, it is a far more
targeted exercise that demands a true
understanding of the subtle nuances that
define myriad Hispanic and Latino commu-
nities in the U.S.
The Hispanic and Latino diaspora extends
across all geographies, generations, and
income demographics. There are Mexican,
Cuban, Dominican, and a host of other heri-
tages, all with distinct cultures, histories, and
even languages. There are first, second, third,
and fourth generation Americans, all of whom
demonstrate varying levels of assimilation.
Hispanics and Latinos live in urban, subur-
ban, and rural settings. Some measure their
incomes in tens of thousands of dollars a year.
Others make tens of millions.
Such diversity is the foremost challenges for
corporate marketers and communicators seek-
ing to tap into the Hispanic and Latino market.
Too often, companies fail to understand that
messages designed to reach the entire popula-
tion are too broad to tangibly resonate with
anyone in it. As with all advertising and public
relations endeavors, you have to know who
your audience is before you can paint fine
enough strokes to connect on a personal level.
In the Hispanic and Latino context, that means
knowing where your audience is from, where
it is going, and how it is likely to interact with
your unique corporate identity.
Weekly
1. it aLL starts witH GeoGrapHy.Jose Nino, President of the El Nino Group, Co-
Chairman of the Hispanic Alliance for Prosper-
ity Institute, and former President of the United
States Hispanic Chamber of Commerce, believes
that effective Hispanic and Latino outreach
begins with careful considerations about the
region in which companies are communicating.
“If you’re operating in the southwest, you’ll be
talking predominantly to people with Mexican
heritage,” says Mr. Nino. “In the southeast, the
population hails largely from Cuba and other
Caribbean nations. In New York City, you’ll find
a number of people of Puerto Rican and Do-
minican descent. There are, of course, excep-
tions in every city and state—but if you know
the basics of the Hispanic and Latino diaspora,
you already know a great deal about how best
to target your efforts.”
Mr. Nino says that’s because country of ori-
gin impacts everything from cultural consid-
erations to language. “A Spanish word that
means one thing in Mexico can mean some-
thing completely different to someone who
speaks an El Salvadorian dialect, and some-
thing else again to people whose families came
from Venezuela or another South American
country,” says Mr. Nino. “From the clothes
they wear to the foods they eat, there is just as
much diversity among these communities as
there is across the entire United States. That’s
why blanket marketing and communications
initiatives simply don’t work as well as they
could if companies really took the time to un-
derstand who they are talking to.”
Mr. Nino sees even more value in drilling down
beyond the region-by-region level. “If you have
the resources to look at these communities on a
neighborhood-by-neighborhood basis, you can
learn even more about wealth, assimilation,
and the other factors that influence buying
decisions. From there, you have all you need to
craft messages that really hit home.”
2. take tHe time to forGe LastinG reLationsHips.Raymond Arroyo, the Head of Alternative
Distribution at Aetna and a Member of the
Board of Directors at the United States Hispan-
ic Chamber of Commerce, sees patience as a
key factor that drives successful Hispanic and
Latino outreach. In working to close the health
insurance coverage gap among Hispanics and
Latinos, he has found that results don’t often
materialize overnight. “Hispanic and Latino
consumers want to take the time to learn
what you’re about before they buy,” says Mr.
Arroyo. “It’s a slower, more personal process
than what is traditionally used to market to
other audiences. These communities want to
know just as much about you as the products
and services you provide. That takes time –
and, as a result, too many companies abandon
efforts that might be working just because
goals aren’t reached as quickly as they might
have hoped.”
Tony Jimenez, President and CEO of MicroTech,
the fastest-growing Hispanic-owned business
in the United States, sees business-to-business
partnerships as an effective way to build the re-
lationships that Mr. Arroyo strives for. “We’ve
seen a lot of state and local governments put
an emphasis on working with companies that
contract work out to Hispanic and Latino-
owned firms,” says Mr. Jimenez. “The same is
true of the average Hispanic or Latino con-
sumer. When a company markets to us, it feels
good to know there’s a clear recognition of the
important role we play in American society.
But when a company is willing to work with us,
there’s an even more powerful message about
trust and investment in the Hispanic and La-
tino communities that goes a long way toward
crossing the cultural divides that may exist.”
3. Don’t forGet DiGitaL.According to recent reports, young Hispanic
and Latino Americans have spent $17.6 billion
on mobile devices and more than $500 million
on mobile applications thus far in 2012. That
fact alone tells us that any Hispanic and Latino
outreach strategy that deemphasizes the social
and digital media landscape (as many mistak-
enly do) isn’t built for an audience that is as
tech savvy as any we’ve seen.
Consider that the geo-targeting needs outlined
in point one are perfectly suited for a world in
which effective Search Engine Optimization
(SEO) and Marketing (SEM) can enable organi-
zations to tailor diverse messages to the re-
gions, states, cities, and neighborhoods where
they will have the greatest impact. At the same
time, consider that social media engagement
provides an ideal avenue for building the
personal relationships outlined in point two.
When companies utilize blogs, Facebook, Twit-
ter, and other platforms to talk not just about
their products and services, but the ways in
which those products and services empower
and enrich consumers’ lives, they nurture the
trust and familiarity so important to Hispanic
and Latino consumers.
speaking the Language
By understanding the diversity that defines
Hispanic and Latino communities, focusing
the time and effort that it takes to build lasting
brand relationships, and optimizing social
and digital media engagement, companies
can reach the fastest growing market in the
U.S. with the precision and specificity needed
to succeed.
In this context, speaking the language is about
a lot more than words. It’s about living a
culture and focusing on the details that are all-
too-often lost in translation.
Richard S. Levick, Esq., President and CEO of LEVICK,
represents countries and companies in the highest-stakes
global communications matters—from the Wall Street
crisis and the Gulf oil spill to Guantanamo Bay and the
Catholic Church.
L
richard S. Levick, Esq.Originally Published on Forbes.com
tHe u.s. Has a wto creDibiLity Gap
obama’s case aGainst cHina:
Weekly
But why should it play by the rules? We don’t,
at least not in this case.
A compromised WTO is only one consequence
of our non-compliance. Equally portentous, the
WTO could itself approve violations of U.S. in-
tellectual property as fair retaliation for unfair
trade practices. In 2010, for example, the U.S.
settled a dispute with Brazil over American
subsidies to cotton growers, one day before
Brazil was to begin sanctions—with WTO
authorization—totaling $830 million. The sanc-
tions included tariffs on such items as autos,
pharmaceuticals, medical equipment, electron-
ics, textiles, and wheat.
Brazil would also have been the first country to
infringe American intellectual property rights
with the WTO’s blessings. Brazilian farmers
would have no longer been charged fees for
seeds developed by American biotech compa-
nies. American pharmaceutical patents would
have been directly violated prior to expiration.
The prospective costs to U.S. businesses were
estimated at $239 million.
The United States blinked then—and it better
blink now in its dispute with Antigua, or risk
providing its global competitors with a pow-
erful excuse for why they too can ignore the
rules or simply stonewall when called to task
for doing so.
The Chinese have two good reasons to scoff
dismissively at the Obama administration’s
trade case, filed yesterday at the World Trade
Organization, which accuses them of unfairly
subsidizing auto and auto parts exports.
The case specifically targets $1 billion in subsi-
dies during 2009-2011, mainly of exports to de-
veloping countries where the automobiles are
assembled and purportedly compete with cars
manufactured stateside. The U.S. is also about
to take further legal action in an ongoing WTO
case against China that involves anti-dumping
duties levied last year against American car
exports to China. China has filed its own
counter-complaint with the WTO over anti-
dumping duties that Washington had levied on
$7 billion-plus in various Chinese goods.)
The first reason for the Chinese to balk is fairly
obvious. President Obama is announcing the ini-
tiative amid the heat of the election and he’s do-
ing so in battleground Ohio. It’s a fair guess the
Chinese will try to derail his initiatives by high-
lighting the blatantly ulterior motives at play.
The second reason is even more important be-
cause it potentially compromises any case the
U.S. might bring before the WTO. It involves
an ongoing dispute, dating back to the early
part of this century, between the government
of Antigua and Barbuda (“Antigua”) and the
government of the United States. At issue is the
total prohibition by the U.S. of cross-border
gambling services provided via the Internet.
Antigua has challenged that prohibition.
It seems a relatively narrow issue but there’s a
catch: the WTO ruled on the matter and came
heavily down on the side of Antigua, which is
the smallest WTO member to have ever op-
posed, much less prevailed against, the organi-
zation’s largest member in such a proceeding.
So far, however, the U.S. has simply not com-
plied with the ruling. We have neither lifted
the restrictions nor satisfied a damages penalty
that continues to mount annually. It is levied
each year the U.S. fails to pay up in full.
Typically, the United States takes a pretty
high-minded approach to compliance with
global regimens of all sorts, from WTO rulings
to anti-corruption initiatives. We have aggres-
sively sought a leadership role and more or less
achieved it. Caesar’s wife must now be beyond
reproach. The consequences of hypocrisy are
unacceptable, while only one instance of non-
compliance is needed to expose such hypocrisy.
Never mind a blatantly political instance like
the current Obama case over auto and supply
subsidies. Imagine you’re the People’s Bank
of China, which has taken a number of steps
since 2001 that discriminate against foreign
suppliers of electronic payment systems. On
September 1, a WTO Panel Report found in
favor of a case brought by the U.S. “This deci-
sion makes it clear that China should honor
its WTO commitments to play by the rules and
stop discriminating against American financial
services providers,” said U.S. Trade Represen-
tative Ron Kirk.
Weekly
The Antigua matter is especially intriguing
because it also raises a number of related ques-
tions about how global business is trending in
the Internet Age. In March 2003, Antigua took
its case to the WTO after several months trying
to engage the U.S. in meaningful negotiations.
A year later, the Dispute Panel Report found
that the restrictions against online gambling
violated the General Agreement on Trade in
Services (GATS) treaty. The ruling caused
quite a stir in the gaming industry as it pre-
saged a new era of unambiguously legalized
online gambling.
The American position was that our federal law
simply prohibits all betting and gambling ser-
vices provided by non-U.S. interests. So in 2005,
the WTO heard and ruled on an appeal, finding
that: (1) free trade in gambling was indeed one
of the commitments we made to GATS; (2) that
we had adopted “measures”—including the
1961 Interstate Wire Act prohibiting the use of
wire communication facilities to convey bets—
that interfere with that commitment; and that
(3) we could not rely on a “moral defense,” i.e.,
that gambling is immoral and the public needs
to be protected from it.
The WTO explained that any moral defense in
this case was obviated by, for one, the inter-
state online horse race betting that is today
altogether legal. The WTO gave the U.S. eleven
months to either allow Antigua to provide
online gambling or prohibit domestic online
horse betting. So much for morality!
For the U.S., the WTO decision requires a re-
haul of the Wire Act so that it is compatible
with our GATS commitment and, in a broader
sense, adjusted to the realities of the digital age
in a global economy. But the initial response
from the U.S. Trade Office was that it would
not ask Congress to weaken restrictions. Then
came the penalties. In 2007, the WTO awarded
Antigua $21 million in annual damages. The
tab has now accumulated to over $120 million.
Throughout, the Antiguans have seemed most
reasonable. This August, their government ap-
proached the WTO, seeking a compromise on
the damages issue even as it assembled a team
to come up with further solutions for consid-
eration by both the U.S. and WTO. Meanwhile,
the interminable American foot-dragging only
encourages others in the world to disregard
any pressure we might try to impose on how
they should “play by the rules.”
There are numerous lessons in this saga for
American lawmakers. First, they need to real-
ize what their constituents think. A 2006 Zogby
poll commissioned by Antigua found that over
70% of Americans do not want the government
to stop online betting.
Lawmakers and enforcers should also view
the Wire Act in context. In light of all the com-
plex legal issues that Internet commerce has
raised in the past two decades, isn’t it reason-
able that a 1961 law governing wire communi-
cations ought to be revisited under any cir-
cumstances? Bear in mind too the intent of the
Wire Act, which then-Attorney General Robert
Kennedy saw mainly as a weapon against
organized crime.
The good news is that the DOJ has already
showed some flexibility; notably, it reversed
its position last year by exempting lotteries
from Wire Act enforcement. Perhaps the tide
is slowly turning in favor of Antigua. Yet this
story is not just about gaming, nor is it just
about Antigua. It is also about our own legal
and competitive preparedness for the digital
age, and how that preparedness affects our
credibility in the global marketplace.
After all, it would be a shame to see American
companies lose millions in intellectual prop-
erty because of our insistence that a 1961 law
must govern technologies that were unimag-
ined when the law was written. Innovation
and leadership are inseparable. If our policies,
legal and otherwise, do not evolve in tandem
with marketplace realities, we will inevitably
fail our own standards at every level.
There are people throughout the world who
are just salivating to see that happen.
Richard S. Levick, Esq., President and CEO of LEVICK,
represents countries and companies in the highest-stakes
global communications matters—from the Wall Street
crisis and the Gulf oil spill to Guantanamo Bay and the
Catholic Church.
L
“ The WTO explained that any moral defense in this case was obviated by, for one, the interstate online horse race betting that is today altogether legal. The WTO gave the U.S. eleven months to either allow Antigua to provide online gambling or prohibit domestic online horse betting. So much for morality!”
buy me, seLL me, sue me
richard S. Levick, Esq.Originally Published on Forbes.com
At 7:16 a.m. EDT on April 2, Reuters report-
ed an unsolicited offer by Coty Inc. to pur-
chase cosmetics legend Avon Products. At
8:04 a.m., Avon formally rejected the offer—
a smart move, according to some observers,
in light of the purportedly low-ball offer.
The specific timing here is interesting and
important because of what happened im-
mediately afterward. At 10:18 a.m., the law
firm Harwood Feffer LLP announced it was
pondering a lawsuit against Avon’s board of
directors, based on concerns that Avon, by
rejecting the $10 billion, $23.50 per share offer
out of hand, failed to meet its fiduciary duties
to shareholders. At 12:18 p.m., the firm Brower
Piven announced it too was investigating Avon
for the same reason.
There’d been no time to come up for air. A
scant five hours after a proposed merger was
first publicly announced, and four hours after
it was rejected, not one but two potential
lawsuits were already in the works. Those who
understand the power of instantaneously viral
communications to incite litigation might won-
der what took them so long.
Weekly
So pervasive have such lawsuits become that
some observers have taken to calling litigation
a de facto “deal tax,” simply a cost of doing
business. Studies by Cornerstone Research
show that the incidence of lawsuits in deals
valued at more than $500 million jumped to
96% in 2011, up from just over 50% in 2007. In
other words, there’s now almost an absolute
certainty that, if you do the deal, you get sued.
Just as startling is the rise in the average num-
ber of lawsuits per deal, which more than dou-
bled to 6.1. Cornerstone found 11 transactions
in 2011 beset by at least 15 lawsuits apiece.
We’re talking about a phenomenon that
doesn’t only involve how bankers craft the
deals or lawyers dot the i’s. Nor are we just
necessarily talking about corporate fire sales
under generally distressed circumstances.
Even the best positioned deals involving the
healthiest companies must inevitably run a
contentious legal obstacle course. Google’s
announcement in August 2011 that it planned
to purchase Motorola Mobility resulted in
no fewer than 16 lawsuits even though the
$12.5 billion, $40 per share offer was widely
praised throughout the mobile communica-
tions industry as a good fit for all concerned.
As the legal press recently reported, Exxon-
Mobil is likewise a very good example of a
company that does “everything we can up
front to make sure the buyer knows exactly
what they are buying.” Yet the most com-
mendable of such efforts won’t plug all the
holes either. In February, for example, a Texas
court ruled against Exxon, awarding 21 plain-
tiffs’ law firms $8.8 million in fees for their
work on shareholder lawsuits related to the
2010 acquisition of XTO Energy Inc. It was a
good payday for the lawyers if not their clients
as shareholders won important new disclosure
guarantees but no money.
By contrast, Del Monte shareholders recently
got $89.4 million to settle a class action suit
prompted by conflict of interest allegations
against the company and Barclays Capital in
the sale of Del Monte to a group led by KKR.
But the Exxon scenario is really the norm, ac-
cording to the Cornerstone data, as outcomes
more often involve governance changes than
pecuniary awards. “Interestingly,” the study
comments, “…we have not encountered a case
in which shareholders rejected the deal after
the additional disclosures were provided.”
Not one case! Thereby hangs an instructive les-
son about the kind of communications that may
still effectively deter litigation, at least sharehold-
er suits. (Lawsuits between buyers and sellers,
with different sets of problems, are also on the
rise.) Lawyers like Stuart Grant of Grant & Eisen-
hofer, who represented the investors in the Del
Monte case, say that litigation ensures fairness to
the shareholders, especially in a market where,
absent antitrust concerns, the regulators don’t
scrutinize the deals all that closely.
Yet it also stands to reason that if, in lieu of
cash, disclosures imposed after cases are
brought suffice to placate claimants, why not
Weekly
Jack Bonner, President of A2W—Advocacy to Win, discusses the recent deluge of food labeling
lawsuits and outlines what companies in the crosshairs can do to protect their brands, reputa-
tions, and bottom lines. With adversaries making an aggressive case in the Court of Public Opin-
ion, both offensive and defensive strategies are needed to assuage consumer concern and con-
vince an increasingly wary public that they can believe what they read in the grocery store aisles.
crisis
LitiGationfinanciaL communications
corporate & reputationpubLic affairs
siGn up toDay
Jack bonneron DefeatinG fooD LabeLinG Lawsuits
assure those disclosures in the first instance
and cut out the expensive middle men, i.e., the
lawyers who file the now-inevitable lawsuits?
To explain why there’s been this uptick in litiga-
tion, we probably need look no further than the
Internet and the social media. How else explain
the precipitous rise in case volume compared
to past markets when M&A transactions pro-
liferated even more abundantly but activist
shareholders and high-volume class actions did
not? Human beings have not changed since the
1980s but their tools have.
In addition to the shareholders themselves, in-
fluencers with both interested and disinterest-
ed motives to challenge deals range from busi-
ness journalists to investment bankers looking
to build a reputation as consultants. They often
deploy a combination of old and new media.
The opening salvo might be a column in a
respected print publication or an appearance
on a cable business news network. The fire gets
lit and the stage is thus set for a social media
conflagration.
If the problem starts online, solutions can be
found there as well. Not just the substance of
the messages whizzing around the Internet, the
Cornerstone research powerfully underscores
the importance of timeliness as approximately
two-thirds of M&A-related lawsuits are filed
within two weeks of the announcement. What’s
demanded is as much transparency as possible
as fast as possible.
One envisions a situation, perhaps not un-
like the Exxon-XTO Energy case, in which the
grievances that lead to a lawsuit are fully aired
on a social media channel, perhaps an activist
site, that allows shareholders to vent any and
all such grievances. Recent signs point toward
a prudently self-interested participation by
public companies—Johnson & Johnson was a
pioneer here on the now-defunct Moxy Vote
—in such discussions on the very sites where
they’re happening. By going to the same sites
their potential adversaries go, they won’t elimi-
nate litigation but they will take a meaningful
step in that direction.
It’s called getting down into the trenches. From
a cost/benefit perspective, that sure beats show-
ing up at court.
Richard S. Levick, Esq., President and CEO of LEVICK,
represents countries and companies in the highest-stakes
global communications matters—from the Wall Street
crisis and the Gulf oil spill to Guantanamo Bay and the
Catholic Church.
L
“ …we have not encountered a case in which shareholders rejected the deal after the additional disclosures were provided.”