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DaimlerChrysler Chairman Jürgen Schrempp Defends Globalization as an Opportunity (July 2, 1999)

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3. Globalization does not mean lowering social standards but rather increasing worldwide prosperity.

It is often claimed that global competition leads to job cuts and social dumping. But the figures say the opposite. Since 1970, employment in the OECD countries increased by an average of 37 percent. In other words: the industrial countries have been able to create 110 million new jobs since 1970.

Globalization does not mean a withdrawal from Germany but rather investments in new markets that also secure jobs for us at home. At DaimlerChrysler, for every three new jobs created abroad, one new job is created in Germany.

[ . . . ]

At the same time, globalization does not mean irresponsible short-term investment decisions. We invest with a long-term strategy. That is why global corporations did not leave the crisis-laden regions of Eastern Europe, Southeast Asia, South America, or Africa, but instead persisted in opening plants and launching new products. In the crisis year of 1998, there were direct investments in foreign companies in developing and threshold countries to the tune of 155 billion US dollars – this was only barely (five percent) below the high level of the previous year. Anyone who knows how sharply domestic investments plummet in countries in crisis can appreciate the stabilizing influence that foreign companies exercise as reliable partners.

4. Worldwide capital markets are not the cause of crises; rather, they are catalysts for transparency, business efficiency, and democratic control.

Nowadays the amount of foreign currency exchanged around the world in a single day is equal to the total value of all world trade in four months. More and more people – including German citizens – are tying their savings and retirement accounts to the success of companies. Institutional investors, such as the California state workers’ retirement fund, have become dominant actors on capital markets. They currently administer roughly 8000 billion US dollars, which is more than one-fourth of the global GNP. Thus, for large companies, global competition and the competition for international capital will be even harsher in the future. And the pressure they face to achieve transparency, efficiency, and profitability will continue to increase.

In return, however, we also need additional stabilizing mechanisms on the finance markets. Better international early warning systems, the transparency of capital flows, risk-appropriate liability regulations, and the promotion of long-term investment horizons are prerequisites for responsible action on these markets.

5. The decisive resource in global market competition is not the limited reserve of raw materials but rather the unlimited reserve of knowledge.

[ . . . ]

Permanent innovation determines whether a company is viable for the future. At DaimlerChrysler, for instance, eighty percent of our profit comes from products that are less than five years old.

But innovation does not come for free. In order to preserve our technological edge in the future, DaimlerChrysler is investing 46 billion Euros over the next three years. Each and every day, 42 million Euros are invested in the future of the corporation and its employees.

The cost of innovation is rising. At the same time, we are witnessing the segmentation of the market into ever smaller niches, and the shortening of product cycles in which investments can be amortized.

The consequence is clear: investments only pay off when products are made and sold in greater numbers. And that means worldwide marketing and opening up new markets. When markets expand, companies have to expand. That is why mergers are an expression of functioning competition.

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