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Making Change: The Other Side of Globalization

Thursday, September 8, 2005 at 2:32 PM

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When we hear about globalization, often it's in connection with American companies moving overseas. Certainly, our region has seen significant job-loss related to globalization. But the phenomenon isn't as simple as that. As part of Making Change: Building the Region's Future, ideastream's Cindi Deutschman-Ruiz reports on the multi-faceted impact of globalization on Northeast Ohio.

Businessman Ashish Mehta is originally from India, but has lived in Northeast Ohio since 2003. That’s when he decided to base the U.S. operations of his company - Zodiac InfoTech - in Cleveland. Zodiac provides transcription services, medical record management, website design, and software development to doctors and medical centers. Because of Cleveland’s prominence in the healthcare industry, there’s a certain logic to Zodiac’s locating here. Still, Mehta says, the decision to come here surprised other Indian entrepreneurs - who cluster in places like New York, Houston, and San Diego.

Ashish Mehta: They say, ‘Oh, it’s the Midwest.’ But, there’s a lot of opportunity in our region. And I, you know, by now, I call myself an Ohioan.

Mehta has become something of a spokesperson for Cleveland-as-foreign-business-destination. He’s been quoted in the Indian media frequently, he says, extolling not only the business opportunities available here, but the range of supports foreign businesses can receive. Cleveland, Mehta says, gave him the warmest welcome of all the cities he was considering for his U.S. headquarters. And the help he received when he set up shop here - from explanations of the tax structure to the identification of potential clients - was critical, he says. In coming here, Mehta believes he’s leading a trend.

Ashish Mehta: I’m expecting more and more companies will end up establishing their businesses in the region, and contributing to the local economy.

According to Case Economics Professor Asim Erdilek, cities and states are competing vigorously to attract foreign business.

Asim Erdilek: Foreign companies are regarded as relatively speaking more attractive than domestic companies because wages paid by foreign companies are on the average 30% higher.

Indeed, efforts are afoot across the region to entice foreign companies to locate here. Since 2002, the business development group Bioenterprise has been working to attract biomedical companies to Northeast Ohio. So far, eight companies the non-profit has brought here got their start outside the U.S. Israel has been a particularly steady source of such companies, according to Baiju Shah, president of Bioenterprise. He says relationships are also being forged in Russia, Singapore, and Sweden. What these countries have in common, he says, are governments that have put a lot of money into health care research and technology development. Also:

Baiju Shah: Each of those countries is a relatively small market for technologies they can develop there. so those companies have to go to the U.S. to realize their full potential.

According to Case Economist Erdilek, the movement of foreign firms to the U.S. has become quite common. Contrary to popular opinion, he says, this form of globalization is far more prevalent than the off-shoring of American companies and jobs.

Asim Erdilek: The foreign business activity in the U.S. during the last decade, in terms either in the amount of investment, or the number of jobs created, has been increasing faster than the investments we make and the jobs we create overseas.

World Trade Center of Cleveland president Gary Johnson says those American companies that are going global - seizing investment opportunities, markets, resources, and partnerships abroad - are thriving. These tend to be larger businesses, he says, while companies that shy away from such efforts tend to be SME’s - Small and Medium-Sized Enterprises.

Gary Johnson: The Small and Medium Enterprise community of Northeast Ohio has focused much more on the threat side of globalization. however, we can point to the fact that our larger companies have in fact embraced globalization, and everyday are taking tremendous advantage of its opportunities.

But there may be good reason for a company to shy away from globalization, according to Erdilek. It’s expensive. And there’s no guarantee it will pay off.

Asim Erdilek: The effort to go international has high fixed costs. You basically have to have somebody be on site there. You have to have contacts. You have to travel. We’re talking about, not thousands, but possibly millions. And there are risks involved.

But all businesses - local and foreign - risk failure everyday, whether they go global or not. And in the 21st Century, experts say, not seeking international markets, investments, and partnerships could be the greatest risk of all.

Cindi Deutschman-Ruiz, 90.3.

Tags

Making Change, Regional Economy/Business - Analysis and Trends, Regional Economy/Business - News

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