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Socialism and Marketing: why the two won't mix
12/29/2011 8:47:24 AM
About twenty years ago, I hosted a Chinese engineer who was visiting the United States on a work swap program. He had been sent here to learn about auto manufacturing at GM plants and to take what he learned back to China where GM was establishing a manufacturing presence. It was the first time I had interacted with someone who had grown up in a socialist economy and the first time he had experienced capitalism at work. One of the things I remember about his month-long visit was his fascination with the amount of choices that Americans had. He flipped through channels on the TV just to count all of the cable channels. He went to the store just to marvel at the number of items that were for sale like he was walking through the Smithsonian. He ate every day at a Perkins restaurant, even though there were many other choices nearby. Perkins offered more food choices than he had ever seen in his life. I think he eventually ordered everything they had on the menu.

Over the past two decades since his visit, China has eased back on hard line socialism and moved closer to a free-market society. Their people are given more choices now than at any time during Communist rule. In fact, since 2010, GM China has sold more vehicles than its U.S. counterpart1. Who would have guessed two decades ago that there would be more new Chevrolets on the roads of Shanghai than there would be in Detroit. It is estimated that GM China will continue to increase production and is projected to sell over five million vehicles by 2015 – twice what is projected to sell in the U.S.

Back in the days when my Chinese visitor was staying with me, I heard someone say that China would slowly grow more capitalistic and the U.S. would grow more socialistic. I would not have believed it then, but look at where we are now. Our economy is having a hard time getting up off the mat, in large part because socialist ideals that have become attached to our society like barnacles clinging to the bow of a ship. Listen to what is happening at protests on both sides of the political spectrum. There are political rallies calling for the end of borrowing and spending more than we are taking into the U.S. Treasury. On the other side, there are demonstrations for big business to pay more taxes to pay for school loans and universal health care. It is the polarizing debate that has fueled wars and trade embargoes: Capitalism versus Socialism.

Where does marketing fit into all of this? When people are given a choice, marketing becomes the key to surviving and thriving in a capitalistic, free marketplace. It is the fuel that keeps your product in front of consumers and makes customers of them. Capitalism lets the market decide who the winners and losers should be. It drives competition, motivates companies to develop new and better products and services, and pushes customer service to make sure the client is happy with their purchases. Socialism takes choices away from the consumer and leaves it in the hands of a centralized, controlling group - typically the ruling party in government. If your business finds yourself on the outs with the centralized agency, you are out of business. As those choices are narrowed, business growth is hampered. Who would research and develop a new product or service if the government will limit its production or determine that it is unacceptable? When choice is limited or mandated by the government, it squelches the impact of marketing. As an example of this, U.S. sales of GM vehicles fell over 25% from 2008-20101. What happened at GM during this time? The federal government took over the struggling automaker, did away with several of their model offerings, and pushed the production of fuel-efficient cars which was not driven by market forces but by a political agenda. At the same time, GM China was increasing sales, which rose 214% from 2008-20101.

Communist China’s leadership did not become more capitalistic because they had a sudden altruistic moment and felt the need to empower their people – far from it. They are still a totalitarian regime that suppresses free speech, religious freedom and public assembly2. They turned to capitalism to survive. They saw the demise of the Soviet Union as it crumbled under a socialist economy that had left it bankrupt. China realized it had to change or face the same fate. What companies like GM saw in China was a massive market. There are 1.3 billion Chinese – four times the size of the U.S. population. They account for 18% of the world’s population. And this was a market that was hungry for something they had not had before: a choice. When there are free-market choices, marketing works to help your business excel.

If the U.S. continues to slide toward socialism, marketing will not work. So what do you do about it as we turn the page to 2012? First of all, become active in voting for pro-capitalist politicians and hold their feet to the fire. It has been too easy for our elected representatives to sell our future off in trillion dollar increments. Secondly, become aware of the creeping impact socialism is having on your own bottom line. You are seeing it from higher prices of consumable goods to hidden taxes in what you pay for daily. Thirdly, educate those around you. It baffles me when I talk to people who expect the government to do everything for them. Help people take pride in moving ahead in life by their own hard work. Realize there is a day of reckoning on the horizon and we must decide if we are going to move ahead or be taken over by the darkness.

________________________

1. General Motors http://en.wikipedia.org/wiki/General_Motors

2. Voice of the Martyrs, http://www.persecution.com

The World Bank, http://data.worldbank.org
Photo by ImageTwo
 

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