Bush Starting to Hurt American Business Overseas

All international brands are being undermined by two big changes in consumer attitudes: sagging confidence in the future, coupled with a growing tendency to buy local, according to Roper. But American brands suffer from two further blows: disgust with the string of corporate scandals that began with Enron, and the backlash against the war in Iraq. The Roper survey, which was released to corporate clients July 1 and to NEWSWEEK last week, shows that American giants like Citibank, Yahoo and MTV now “dominate the bottom” of the list of global companies ranked on the basis of trust.

In Germany, a hotbed of protest against U.S. policy in Iraq, the number of consumers who said they regularly use Nike products fell from 49 percent in 2002 to 29 percent in 2003, and the number who said they regularly eat at McDonald’s fell from 43 to 34 percent. Once firm bastions of respect for American ideals like Hong Kong and Taiwan also showed a sharp turn against Nike, McDonald’s and other American brands.

The notion that American companies have reached the end of an era “is a ludicrous extension of a short-term situation,” says James Root, a managing director for Bain&Co. consultants in New York. If the United States were to get a new president, reverse controversial policies on the environment and find a new Michael Jordan, argues Chen, “who knows? In three years American brands could bounce back.” Still, the early-warning signs are now too strong to ignore. The first likely result: a further fall in the number of companies that are openly proud to be Americans abroad.