GLOBALIZATION: ARE YOU A BENEFICIARY OR A VICTIM?

GLOBALIZATION: ARE YOU A BENEFICIARY OR A VICTIM?
By Ernie Delfin
Member, Newport Irvine Rotary Club
Asst. District Governor, 2005-2007

Thank you for such a nice introduction, David, Madame President Patty, PDG Ron Aide, my friend PP Paul, fellow Rotarians, honored guests, ladies and gentlemen… It is indeed an honor to be invited to speak before your large and dynamic club to share with you something that I hold passionately in my heart. Before I go on my GLOBALIZATION topic, let me just share you a part of my life about 30 years ago here in Southern California…. I was then a young man and I had a good job, being a CPA, as a controller of a big hospital in Los Angeles. As an controller I also enjoyed a lot of fringe benefits. One day I went to the Speech Therapist, Dr. Debra Jones and asked her: “Dr. Jones, as I have always wanted to improve my personal and professional life in this country, please advise me the BEST way to get rid of my accent? And the wise doctor said, ERNIE, THAT IS SO EASY, SIMPLY GO BACK HOME TO THE PHILIPPINES!”… But I never went back except many vacations every couple of years or so…. Now that you are laughing, let me do the task that is asked of me by David, your program chair.

Upon waking up this morning, I removed my pajamas made in Korea, brushed my teeth with a toothpaste made in Canada and a toothbrush made in China, took a shower and used a shampoo and conditioner made in China for a US company, put on undershirts made in Honduras, and put on this Rotary “barong” shirt made in the Philippines and also this Ecco leather shoes made in Italy. To keep us awake coming here, my wife and I had a cup of coffee from Colombia brewed in a coffee maker made in Taiwan.

Then, I picked up my Motorola cell phone made in Japan, and started my trip from Fountain Valley to this beautiful Ritz Carlton Hotel, in my Toyota Sienna van imported from Japan after I filled up my gas tank at the ARCO gas station (now, I could not tell you if that their crude oil came from Carson, California or from Iraq). These routine activities of daily living are repeated millions of times across America and all over the developed countries of the world. If ever you go to Wal Mart or some swap meets and even in South Coast Plaza or Fashion Island, you will certainly see where their merchandise or inventory are coming from. That is GLOBALIZATION, whether you like it or not!

This word “globalization” has been a buzzword in our society for a couple of decades now and many people have become its beneficiaries while others may have become its victims. Some people, like those who still think that globalization has “stolen” jobs from Americans as businesses have outsourced some jobs in Asia or in Latin America, hated the word. I believe that outsourcing does not really steal work from Americans; it forces companies to become more efficient to compete globally. GM is forced to improve to compete against Toyota and Honda. Companies like Wal-Mart and Microsoft loved globalization as they have taken advantage of its economic and financial implications. Their presence is now very evident in Asia, especially in China, where costs of doing business are much lower. As forward looking companies outsourced some of their operations in other continents, their market share in those continents is also increasing. If you read Wal Mart’s operations in China, in the near future, a significant percentage of their profits will come from sales in Asia, especially from China, still a sleeping giant as it has over a billion consumer base that is just beginning to love the taste of McDonalds and KFC, the sounds of Western music and movies from Hollywood. We teach them free enterprise and we increase our market.

I can go on and on to debate that globalization is also good for America as the chartering of more Rotary Clubs in other countries is good for Rotary International, especially in non-democratic countries like Afghanistan and China, where freedom of assembly is still not openly practiced. With the wonders of internet, the minds of educated people can no longer be controlled by any government or by any dictator. The wings of democracy, free enterprise and capitalism are spreading like the “Speed of Thought”, to borrow Bill Gates’ book title. We even have E-Clubs now and the free use skype.com or yahoo messenger has enabled Rotarians to talk to other Rotarians across the world. Yes, we Rotarians as sophisticated businesspeople or plain consumers can become beneficiaries of globalization brought faster by the information society we are in now. To believe that we are victims of a globalized economy is not only preposterous but quite myopic. We can embrace and enjoy the fruits of globalization but in so doing we in the first world countries like the United States must also spread the benefits to others, not just for PROFITS by exploiting those countries and peoples who are giving us cheap labor through business practices that are obviously immoral or illegal by our own American standards in our own land. I am referring to various blatant practices of some multinational companies (MLCs) in child labor exploitation, working long hours, in unsafe and hazardous work places and also causing havoc into the environment due to improper disposition of toxic wastes onto the ground and into the air. Many of these sins of omissions of some multi-national companies are fully documented but oftentimes the third world countries hosting these MLCs are too powerless to enforce their environmental laws, if any.

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As businesspeople and leaders in our communities, we can enhance the quality of life by embracing globalization where economic or market forces dictate the movement of goods and services from the supply side to the demand side while we must also practice the Four Way Test, especially the 2nd and 4th ones that it must be FAIR & BENEFICIAL to all concerned. Let me just give you a few real examples that some of you may not be aware of:

In the health care industry, especially in California, there is no hospital or nursing home that has no Filipino nurses. Most hospitals in many major cities also have Filipino doctors. In the Philippines today, there are probably 20,000 RN graduates every year but it can only employ probably 20% thereof… So most RN graduates go to foreign lands esp. the USA Canada and England where English is spoken, as English is the medium of instructions in college in the Philippines. In the Philippines, an RN is paid in l5,000 to 20,000 pesos equivalent to $300.00 to $400 dollars a month! An average licensed RN in California can easily make l0 times as much in a month, even without working over time or in two jobs…. Now, that Filipina nurse can send $1,000 a month to her family which is 3 times as much as she was making in the Philippines… That is 50,000 pesos that enable the RN’s siblings or children to go to college, without which latter will never have a chance be educated beyond high school. I dare say that this exportation or importation of a professional nurse, the RN wins, her family wins, the Philippines exporting the RN wins and the US hospital wins, our government and economy win, the consumers or patients win. And for my company that is now starting to recruit Filipino nurses and teachers into the USA, I also win. And, after a year or two when these immigrants have saved enough money, they can also buy their first condo or a house from me. Now, you will understand why I like the effects of globalization in many respects!

Let me give you another example: Your Rotary Club has a budget of say $20.00 for your rotary vest, like this, times 50 units totaling to $10,000… The Philippines probably can do it for $10.00 FOB Manila, then your Rotary Club saves $5,000 and thereby adding more money for your community projects. Lo and behold, you also increased the production and sales revenues of the authorized Rotary factory in the Philippines for $5,000 or roughly quarter a million pesos! That amount would have probably employed a few people for about two weeks. As businesspeople, you can easily see the domino effect of your simple decision to avail of globalized outsourcing for the best price for the same quality product.

Lastly, with the volatility of the dollar against other currencies, it also pays to know and understand what is happening between the US$ and the currencies in Asia, or the Euros in Europe. The USA due to many domestic or foreign factors, balance of payments, deficit spending, war in Iraq, etc, the US dollar is losing its real strength against other foreign currencies. When the dollar fluctuates (weakens) our exporters and importers are affected and we consumers and investors are also affected. Everyone knows that the price of crude oil from OPEC affects us all in the gas pumps. In Asia right now, where cost of money is probably twice as expensive than the USA, an investment in Asia or in the Philippines, where you can easily early l8 to 36% a year relatively safe should be looked into. Money never harbors any nationalistic tendencies nor practices any altruistic behaviors. Unlike water, however, money tends to seek higher plateaus where it can have higher yield in investments suitable to the investor. Consider investing or converting your weakening dollars into other currencies to force your money to work harder like a 24/7 slaves to increase your retirement nest egg. So while you are sleeping in the USA, your money is making you more money in Hong Kong, Tokyo or Manila.

As you go to bed tonight, Asia is just starting to work. That is one main reason that many companies in the USA are now outsourcing their call centers or back office work, like medical transcription, legal research, customers service in India or in the Philippines. Yes, that is real globalization and the world has indeed become a small village after all. It is an exciting playground and if you are not playing the global field yet, you probably are missing something interesting in your life, like missing the excitement of a Rotary International Convention.

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(This is a transcript of a speech delivered by the author before the Monarch Beach
Sunrise Rotary Club on January 30, 2007)

Email writer at: ernie.delfin@gmail.com or edelfin@progressivefunders.com