Manolete Gonzalez is a professor of business at Oregon State University, where he specializes in international business. He is a native of the Philippines and holds degrees from Northwestern University and the University of Southern California. He continues to own businesses in the Philippines. He seemed to be an ideal subject to talk about globalization for this edition of InBusiness.

InBusiness: Before I turned on the recorder, we talking about the book “A History of the World in Six Glasses,” and one of the points it makes is that, really, we’ve always had a global economy. Ever since we’ve had countries, there’s been trading between them. What is it that has made globalization such a hot topic now, when in point of fact, maybe the world hasn’t always been flat, but it’s always been interrelated economically?

Manolete Gonzalez: I grew up in the Philippines. My world was always a world of products coming from different countries. In fact, our refrigerators were called Frigidaires because those were the first refrigerators we used. Our toothpastes were called Colgates because those were the first toothpastes we used. My first car was a Toyota, that was in the 60s. In my world, it’s always been a global world. The country sold sugar, logs and hemp, and in exchange, we got consumer items. We were self-sufficient in some of our basic food items, but we didn’t have the other stuff n toothpaste and the other stuff that we call necessities right now. So that was my world. My feeling is that we are now more aware of globalization in this country, and I have to make that distinction because I think the concern that we have now is more of an American-centric issue. If you look at it from the 1950s to the 1960s, most of the big stuff we bought was probably made in the United States n cars, appliance and so on. The ones that were imported from Japan and China were trinkets and souvenir items. But over the years, the stuff made in Japan, moved to Taiwan and then China, and it also grew, and now we have basically a lot of the stuff that we consume is made overseas. I think that’s where the concern came, when the big-ticket items started coming from other places and then you see the basic industries here beginning to have to deal with competition coming from these other places. The 50s and 60s were times of rebuilding for the Japanese economy, the Chinese economy, and so these guys caught up in the 70s and 80s.

InBusiness: There’s a case to be made for globalization as well, although we sometimes tend to think about it in negative ways n we hear, for example, about plants in Corvallis, say, that have outsourced many of their job overseas. You hear news reports of industries taking their jobs to Mexico or other spots where they can cut their labor costs. We hear a lot of bad stuff about globalization in the news, but there is a case to be made for globalization as well, right?

Gonzalez: Well, first of all, you can’t stop it. Secondly, we have to understand different economic conditions in different places. There are dislocation costs here, obviously, because it’s cheaper to produce some things in (other) countries. Part of the objections to or concerns about globalization are the ethical issues of whether we are taking advantage of somebody willing to work for cheap labor. But that’s all relative. Where I come from, (for) a call-center worker, starting pay will probably be about $500 to $600 a month, which is a pittance, compared to what we have. And in that country, that person will still be a young twentysomething individual living with his parents. But with that $500 or $600, he would have arrived. He actually gets paid more than what a secretary would get paid. I was just telling my students this yesterday, he or she would … earn enough that she would feel comfortable going to Starbucks for coffee in the morning for their lattes. In the Philippines, if you can go to Starbucks, it’s the place to be. You go dress up and go to Starbucks. That’s how at least some of us describe how you’ve arrived. A cell phone and a Starbucks coffee. Somebody else coined that, I didn’t. But that’s for $500 and $600 a month. And so it’s a different world.

InBusiness: And it helps those companies, which may be based in the United States, to manage to keep a competitive edge in a global economy. That’s how they try to keep their costs down.

Gonzalez: Well, you always have to deal with margins and competitive ability. These guys are competing in a world market. If their costs are rising, they have to take a look at their margins, how are they going to survive, how do they compete? The other value of outsourcing is that it allows them to have somebody else worry about some part of their value chain, so they can concentrate on what they do well. Nike was built on that whole notion: Let somebody else do the manufacturing, we will deal with the design and marketing. I think since its inception, it’s probably just owned one factory. … And the only reason they owned that factory was so they could understand manufacturing. But then they have no production capacity whatsover, but they do manage their subcontractors pretty well.

InBusiness: Now what about a company like some of the agricultural companies in the mid-valley, a grass-seed company, perhaps, or a farm that’s competing against agricultural products that are being grown someplace else where wages are much cheaper and regulations might be much looser. What are the implications of living and working in a global economy for an agricultural company?

Gonzalez: That’s a tough one. I think there are some businesses where we probably have a natural advantage. I think grass seed, for one, there’s a pretty large market for that overseas, golf courses and whatnot. There are some areas where, say, the Chinese have excelled. In the world where I come from, they have wiped out some farmers, period. … There is some stuff that we grow here (in the mid-valley) where we probably have a competitive advantage, mainly because we have a natural growing climate and we have the technology. And that’s where we’re going to have to keep ahead, other than the natural conditions. We have been in the seed business, we have been in the vineyard business, for quite a long time. You can’t just rest on your laurels, you just keep doing it better.

InBusiness: For people in the mid-valley who are thinking of taking their business global, what are the things they need to keep in mind?

Gonzalez: I have a student whose family has a business in Medford. They make equipment that’s used in vertical construction work. They compete with very large entities. … I have friends who are in the construction business in the Philippines as well and so I said, “Give me some of your material and I’ll give it to them and I’ll see what they do.”

(The friends) said, “There’s a lot of work being done in China.”

And (the student’s family’s) … first response was, “We don’t want to go to China. … They might steal our stuff.” And so, there’s that fear, and there’s that uncertainty. For some of them, it’s an unknown entity. What we hear are the bad things. So I think one of the first things is you just have to be aware of some of your own internal fears as you go overseas. There are some serious issues about copyright protection, about imitation and all of that stuff in China, but I’ll tell you, I think what we don’t understand about China is that it’s probably being run by Taiwanese, Hong Kong and Korean entities. Those are the guys who moved to China and then subcontracted out to U.S. firms. My other point is that it takes a while to understand how the business is set up in particular countries. So one of the rules that one has to understand is, how does it work? If you’ve not been overseas, then it takes a while or you need somebody to sort of hold your hand for a couple of years and get through. Because it can be complex n relationships are different, contracts are handled differently n hell, even finding an address can be different. Yeah, it can be daunting, but I think we have to get over our fears. That’s probably the big issue for me. I don’t have to deal with that because I’m always overseas.

InBusiness: You’ve been there. You’re past the point where you worry about the fears that are ungrounded. You understand what the business climate is overseas.

Gonzalez: I don’t mean to offend you, but we have to get beyond what the popular press tells us. Because if you just read the popular press, you go, oh, tainted food, or this or that. There’s truth to it, but it’s not (the whole story).

InBusiness: To what extent do you think that plays into the hands of people who are rallying against globalization?

Gonzalez: Oh, a lot. A lot. Part of my other life is in dealing with reforming government institutions, and so we’re aware of what cause-oriented groups do. They’re very good at picking up on little tidbits of news and making that a cause celebre.

InBusiness: Are you finding in the classroom with the students that you’re teaching, although they’ve self-selected to some extent because they’re taking an international-business class, are students more interested in the world outside our borders than they might have been a generation or two ago?

Gonzalez: Yes, they are. There is an interest. You can judge it from those who go overseas as part of our exchange programs and those who take international business courses and those who take international majors. There is an interest. I have to caution them, however, that if their interest is more in terms of being assigned overseas, a lot of the companies are actively reducing those (positions). Those spots are expensive. But that’s part of their dream, to work overseas. So I tell them, join the Peace Corps. Join the Peace Corps, get the experience, and then use that as leverage to find something interesting to do.

InBusiness: Because that Peace Corps year is going to look good on a resume for a company that’s looking for someone who’s got some experience overseas.

Gonzalez: It’s an immersion. Or join the Foreign Service. One can get good experience overseas. Besides the U.S. Government pays well. In other words, there are other ways to obtain an international experience than joining a multinational.

InBusiness: Is there an example that you use in your teaching of a company anywhere that’s done an exceptional job of taking its brand and its business globally?

Gonzalez: Not one particular company. Procter and Gamble, for example, they’ve been in our place for, what, 50 years? They have factories there. They’re fairly well-established. They’re so established that their employee roster is a good training ground for anybody wanting to go into the consumer business. You know how established you are when you are at that stage.

InBusiness: When people are raiding your employee roster.

Gonzalez: CitiCorp has been there. I was a CitiCorp officer for a while. They’ve been there for a while. Their fortunes have not been as good lately, but they were on top of the heap at one point. Those were good brands. They’re still good brands overseas. But I tell my students that these guys have been at it for a long time and what I’m more interested in describing to them is that it took these guys a long time to build their presence to where it is. When you talk about Wal-Mart, when you talk about the Nikes, you can talk about the Procter and Gambles and so on, you see them in 2007, but you forget that these guys have been at it for a while, some for 40, 50 years.

InBusiness: So that’s one of the traits you see in successful businesses overseas.

Gonzalez: Persistence. Persistence. Persistence. You make a mistake, OK, then figure it out and do something else. In the case we’re using, Wal-Mart failed in their first couple of years, they had such big problems in Mexico, and what did they do? Well, they turned, figured out their business model, did something different, and I think they continue to try there. But in some places, they have tried (and it didn’t work), and so they sold, got out. But that’s what business is. Either you don’t find a partner or you don’t find the right mix, you’ve got the wrong assets or something. So (failing overseas is not always) just being ignorant (of a foreign market), sometimes you don’t have the right wherewithal. Then you go back in.

InBusiness: You have the wisdom to figure out, got to get out, we’ll take another look at it, maybe we’ll take another run at it.

Gonzalez: Yes.

InBusiness: How did you get here? How did you get to Oregon?

Gonzalez: I got my master’s degree at Northwestern in the early 70s and I was in a hurry to get back to the Philippines because martial law had been declared.

InBusiness: So you were raised in the Philippines.

Gonzalez: Yes.

InBusiness: How did you come over to Northwestern?

Gonzalez: I just wanted to take my MBA in a university with a banking institute, because I wanted to go into banking, and they accepted me. And then I went into banking when I got back into the Philippines and I just decided, there was martial law and this was the place and I had to be there. I wasn’t about to run away from that thing. And after I became general manager of Chemical Bank’s leasing company, I moved around and moved up, I said, well, “OK, that’s it, what am I going to do next?” I took my doctorate, went to L.A., USC, and after I got my doctorate, the chairman of the management department here at Oregon State called me up in a conference and we had a chat and he sold me Oregon. I think he sold me Oregon first and then Oregon State. And I came over and I went home and I told my wife, “You know, I think I found the city I really want to work in.” That was in 1985. The U.S. government, the occupation administration, we were under the United States for 50 years. In the early 1900s, they built a city about 5,000 feet above sea level, because it was too hot in the lowlands during the summer. So they built a retreat, pine trees and so on, and I’ve always longed to work in that city. When I found Corvallis, I went back home and I told my wife, “It’s a similar place. We’re staying there.”

InBusiness: What did she say when you told her that?

Gonzalez: “We’re in L.A. When are we going to move?” But it took us two years to deal with that issue. She loves it here. She hasn’t left. If I tried to sell my house and move back to the Philippines, she wouldn’t have it. I converted her.

InBusiness: You still have business in the Philippines, right?

Gonzalez: We have family business. We are in the real-estate business there. I make no bones about it, I may work to afford being a simple professor, because we have a family business. I have a comfortable life because we have a family business. I’m also trying to put up an Internet-game business, so I have a couple of programmers working for me there. I’m doing my outsourcing thing.