The International Entrepreneur: Environmental Impact of Globalization
Is expanding into overseas markets going to hurt the environment? This question was raised recently to me by a CEO/founder/entrepreneur. The answer is: it depends how you conduct your business.
Two years ago, my flight into Beijing bumped and lurched dramatically as we made our way through polluted skies. I was ready to panic and had barf bag in hand when I saw the calm demeanor of every Chinese person in my row. Evidently this must be normal. On Tianamen Square, pollution had grown so thick that the sky was gray on a clear day. You could actually see, smell, feel and taste the pollution.
For years, multi-national corporations have made headlines for employing child labor, skirting environmental laws in industrialized countries by offshoring high-polluting low-cost manufacturing, and selling off toxic process byproducts to anyone willing to dump in their own backyard. But is this path to destruction and responsibility avoidance just part of growing globally? – ABSOLUTELY NOT. In fact, global expansion by environmentally conscious entrepreneurs can improve the environment abroad.
Entrepreneurs bring innovation to all that they do – and environmental stewardship should be no exception, regardless of your country of origin or current country of citizenship. Here are a few things to keep in mind:
Offshoring is a Losing Proposition Long-Term. Industries that have little product differentiation and require the lowest possible cost structure to compete will always need to keep shifting manufacturing from one cheap labor/tax market to the next cheaper one. Ten years ago, much of our clothing in the West was made in China. Where was the last piece of clothing you bought actually made? I would guess instead of China, it came from Honduras, Viet Nam, Cambodia, Lesotho or some other country where labor is even cheaper. Building new factories, training new people, etc. – is that where you want to spend your company’s efforts? Instead, focus on creating real and lasting value.
Produce Products in the Markets Where You Want to Sell. The middle classes of China and India are enormous and growing rapidly. India’s middle class is actually larger than the entire population of the United States. Instead of offshoring to India or China, develop operations to serve those markets in-country. This eliminates shipping products across oceans and the pollution associated unnecessary shipping.
Incorporate Best Environmental Practices from Both Your Home and Host Countries. Think your country is the most advanced in all areas of environmental sustainability? Think again. No country has the definitive lead in all aspects of sustainability. Instead, learn from all markets where you compete in order to improve your company’s long-term sustainability worldwide.