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Remarks at Asia-Pacific Cooperation (APEC) Small- and Medium Enterprises (SME) Summit, Yokohama, Japan

Thursday, November 11, 2010

Commerce Secretary Gary Locke
Remarks at Asia-Pacific Cooperation (APEC) Small- and Medium Enterprises (SME) Summit, Yokohama, Japan 

Thank you for the kind introduction.  And I want to thank the Japan Chamber of Commerce and Industry for hosting this event.

It’s great to be here this morning with so many of the entrepreneurs and small business owners who are such powerful forces for your local economies. 

My dad was a small business owner – he ran a small supermarket in Seattle, Washington.  He spent seven days a week in that store.  And I spent a lot of those days by his side.

I know the time, the effort, and dedication it takes to run and grow a business.

So you all have my admiration and deep appreciation for what you do for your families, workers, communities and countries.

This week at APEC, President Obama and other APEC Leaders are trying to chart a new path for strong and lasting economic growth – one that moves beyond the recent cycles of boom and bust.

Small- and medium enterprises will be absolutely central to this effort.  Consider the fact that 90 percent of businesses and 60 percent of this region's employment opportunities are driven by entrepreneurs. 

And SMEs are also frequently the driving force behind innovation -- and the commercialization of new products and services that are the lifeblood of our global economy.

Because you are the engines of innovation and growth, the job of the policymakers at APEC is to straighten and smoothen out the road ahead of you. 

Today, I'd like to talk a bit about how APEC is helping to build a more conducive environment for small and medium enterprises.  But I’d like to spend most of my time talking about how the SME community can take some initiative to help themselves.

The most important thing that APEC is doing right now is trying to fix some of the structural problems that have created too much imbalance and too much volatility in the global economy.

We can no longer assume that the path to global prosperity is simply paved with exports to the United States, Europe, and other developed countries.

The United States will do its part to facilitate global adjustments by increasing private savings and exports, as well as taking steps to bring down our fiscal deficits to a sustainable level. 

But as America does its job, countries that are overly reliant on exports for their own growth will benefit by undertaking concrete policies, such as regulatory reform, infrastructure improvement, and investment in human capital like education that will help boost their domestic demand.

APEC is also working to knock down many of the barriers that inhibit SMEs from fully participating in the global economy.

Various APEC initiatives are developing policies to promote:

  • Entrepreneurship;
  • Ethically sound business environments; and
  • Expanded access to credit.

The U.S. Commerce Department is also working through APEC to ease regulatory barriers and spur the development of a variety of emerging industries.

We’re working to spur more research and more credit for clean energy technologies.

We’re working to develop goals and target dates to achieve regulatory harmonization for medical innovations.

And as we work to spur these innovations, we are also working to strengthen the intellectual property protection that enables them to be created them in the first place.

As more APEC countries move up the economic value chain, they will have to continue building a system of laws and a regulatory infrastructure that rewards and protects those who take risks to develop new innovations.

If innovators fear that their inventions or ideas will be stolen, then one of two things will happen – they’ll either stop inventing, or they’ll decide to create their inventions elsewhere.

One of the most pernicious aspects of IP theft is that it damages the trust that companies and countries depend on to collaborate across borders. 

The world desperately needs breakthrough technological innovations to solve challenges ranging from climate change to poverty to infectious disease, and the bottom line is that IP theft makes it tougher for us to tackle them.

That's why this issue will continue to be a priority for the President and his administration, the Commerce Department and I hope increasingly, the entire APEC community.

I'm confident that the steps APEC is taking, along with our respective governments, to fix the structural problems in our economies will pay enormous dividends for our businesses, and most importantly for the citizens of our nations.

But ultimately, governments and multilateral bodies like APEC can only be catalysts for economic growth and innovation. 

You – the entrepreneurs and the small- and medium-sized companies – are the ones that have to actually do it.  And I believe that there are a few steps small and medium enterprises can take to create a more favorable environment for you to do business.

The first thing is to get involved in communicating to your politicians and your stakeholders what you do, how you contribute to your community and what policies you need to succeed.

I know that when you’re busy meeting payroll, and competing in an absolutely unforgiving environment, that can seem like a luxury you don't have time for.

But I believe our current economic challenges actually make it even more important for small and medium enterprises to be involved in shaping policy and public opinion.

Let’s face it – in a lot of quarters – “the business community” and its leaders are not held in the highest esteem.

Millions of people around the world are still suffering from the aftermath of a financial crisis that resulted in large part from a toxic combination of greed, incompetence and shortsightedness from some of our business leaders.

And this came just a few years after accounting scandals at companies like Enron and a dotcom bust shook the global economy.

People in my country – and in countries throughout the APEC region – have lost their homes, their jobs, their retirement savings and their future because of all this.  They are mad.  And they have a right to be.

It isn’t fair that upstanding, responsible members of the business community are unfairly painted with this broad brush of mistrust from policymakers and the public.  But that is the reality in 2010. 

And if this continues, it will be increasingly difficult for business leaders to convince people that policies that are good for the business community are in fact good for everyone.

If business leaders aren’t seen as responsible forces for progress, then increasingly they won’t be at the table where decisions are made.  They will be on the menu.

It doesn't have to be that way.  Your companies are doing great things every single day that make people's lives immeasurably better.  Get out there and tell your story.  Show how you’re making a difference.  And help make the connection for people that when your businesses succeed you:

  • Provide good jobs so employees can provide for their families;
  • You support community infrastructure through paying taxes and fees;
  • You purchase goods and services from local suppliers and service providers, thus reinforcing local economic growth; and 
  • When you compete intensely, and fairly, with all comers – then that competition sets off a virtuous cycle of innovation. 

So telling your story and getting engaged is important.  But it’s not enough.  Taking real action to improve the communities where you operate is just as, if not more important.

I'm talking about corporate social responsibility. One of the things I find interesting is that this concept can mean so many different things to different people.

Some hear CSR and they imagine businesses writing checks to charities.  Others think of companies making production processes more environmentally friendly or helping mentor school children.  It's all of those things.

But I think CSR can best be described in much broader terms. 

To me, corporate social responsibility means changing the definition of what it means to be a successful business.

It means being more sustainable in everything you do, from how you use resources like water, land and energy to how you treat your employees to how you nourish the local communities where you are doing business.

This isn't just the right thing to do.  It's the smart thing to do.

To take just one example, look what happens when companies partner with communities to contribute to local educational and health care programs or to help build up local infrastructure. 

Every school you help build, every child you keep healthy is increasing the odds that people will grow to reach their full potential. 

And when you've got an educated, healthy populace, you've got a population that is going to build and create things, start new businesses and create a more robust local economy that will help everybody thrive, all in addition to purchasing your products and services.

That’s the right thing and the smart thing being the same thing.

Or look at what happens when you support scholarships or research at a local university.  Yes, you’re expanding opportunity for young people, which is great on its own.  But you may also be helping seed the next great innovation.

Over the years, basic not for profit R&D at universities and government research labs have helped spur innovations ranging from the Internet, to GPS to even memory foam mattresses. 

The basic research happens in the lab, and then it gets handed off to an entrepreneur who turns that idea or that invention into a commercially successful business or product.  It is a virtuous cycle that has been repeated time and again.   

When you support these endeavors, that's the right thing and the smart thing being the same thing  

I know that some people say that corporate social responsibility is actually diverting companies from their only true purpose, which is creating value for their owners and shareholders. 

They say that the goods and services companies provide to their customers is in and of itself a social good.  And that’s often true.

But I think this line of argument misses the bigger picture.  

There is nothing incompatible with being a fierce competitor and being a good corporate citizen. 

And when you are perceived to be a net positive in the community or country where you operate, you’re going to find a lot more receptive audience when you start advocating for policies that can help grow your business.

So I think it's clear that each of us -- policymakers and the SME  community – have important complementary roles to play in creating an environment friendly to business and job creation.

The key focus of my time at the U.S. Commerce Department has been and will continue to be advocating for and creating policies that help entrepreneurs succeed and that encourage innovation.

Because I know that when all of you find success, our countries succeed, our families succeeds, and our middle class succeeds.  But guys like me need leaders like you to help tell that story.

And to demonstrate through both words and deeds that our small and medium businesses are cornerstones of our communities that can help us build the more just and prosperous world we are all working towards.

Thank you.