Does U.S. foreign policy hurt U.S. brands?

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The reputation of the U.S. around the world has taken a beating as a result of foreign policy decisions, particularly the preemptive war in Iraq. But has that had an effect on U.S. brands?

It depends on whom you ask.

Public relations firm Edelman found in its "Trust Barometer" study, released in January, that "opinion leaders" in Europe and Canada are significantly less likely to trust individual U.S.-based global corporations. The study also found that more than 40% of opinion leaders in Canada, Europe and Brazil are "less likely" to purchase U.S. products because of the Bush administration's policies.

Additionally, Global Market Insite, a Seattle-based market researcher, recently conducted a poll that found that 20% of European and Canadian consumers avoid purchasing American brands because they disapprove of U.S. foreign policy.

Some branding experts, however, say that U.S. brands, particularly those in the b-to-b arena, are largely immune to opinion about American foreign policy. Others, though, assert that it can have a long-term detrimental effect on American companies.

"The short answer is that it certainly hasn't helped," said Hayes Roth, VP-worldwide marketing and business development at branding consultancy Landor Associates. "Has there been catastrophic or irreparable damage? No, I don't think so."

Roth pointed to boycotts of companies such as McDonald's Corp. "Most of the times with these product boycotts, they tend to be noisy but short-lived," he said.

At the same time, he said that Landor had access to research that indicated that the U.S. itself has declined in terms of brand standing over the past few years. But he said he didn't think such a downturn would have a long-term effect on American companies.

"It's a short-term public relations problem more than a branding problem," he said.

Roth added that b-to-b brands had little to worry about, a fact backed up by the Edelman "Trust Barometer" study, which found that opinions of technology companies in particular are not affected by their country of origin.

"IBM is not suffering," he said. "I think it's more of a consumer issue. In the business-to-business world, there is less emotion in making a purchasing decision. ... I don't believe when you're buying massive quantities of oil that you're thinking about whether this is an American brand of oil or not."

Jasmine Montgomery, a client service and strategy director at FutureBrand, agreed that b-to-b companies would be less affected by anti-American sentiment. "I think that b-to-b companies and technology providers will have less of an issue," she said.

But she is much more pessimistic about the future of American brands overall. Anti-American sentiment is genuine and strong, she said, and has grown with the re-election of President Bush who, prior to his second term, was seen by many overseas as not representing the views of the majority of Americans. "Now that distinction has blurred," she said.

With the global economic landscape changing with the rise of China, India and other countries expected to continue in the foreseeable future, Montgomery makes the argument the U.S. needs all the friends it can get. "One can't underestimate what America stands to lose in terms of economic power if they find it difficult to trade overseas," she said.

Montgomery said there are signs that American hegemony is faltering. "The fact that Airbus has overtaken Boeing happened in part because, frankly, some people would rather deal with a French company than an American company," she said.

Roth noted the U.S. has been through periods where its foreign policy was unpopular-the Vietnam War, for instance-but that positive sentiment for Americans always bounces back. "When the tsunami hits, who do they call?" he asked. 

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