Globalism 2.0

• Western business people -- particularly American front-line decision-makers – are waiting for cooler heads to prevail and find common ground to do the sensible thing for global trade .

Globalism2.0 – Episode 23.

• You all know the story of the Frog in the Pot of Water. If the temperature rises slow and steady enough, he or she won’t recognize the danger until it’s too late.

• The US is raising Taiwan’s profile and prestige.

• State involvement and expanding trade alliances are going to have a bigger impact on your business and decision making, giving you new risks and timetables to manage.

What Happened in Globalism 2.0 this week:

• More complex compliance issues, barriers to sales, and constant proxy-rivalries are already starting to crop up – and they WILL disrupt your supply chains and make your business life more difficult.

Key Links:

A shipment of Uniqlo shirts was seized by US customs after officials suspected they were produced using forced labor in Xinjiang

• https://news.yahoo.com/shipment-uniqlo-shirts-seized-us-050158213.html

Xi says China ready to strengthen coordination with Iran, safeguard common interests

• http://www.xinhuanet.com/english/2021-05/25/c_139967298.htm

What is a Maquiladora?

• https://www.investopedia.com/terms/m/maquiladora.asp

• It’s time for some of us to start thinking about a Post-China world. If your career or sales or profits were propelled by China’s economic leaps since 2000 (and there are a lot of you) , then this could be a tough adjustment.

Ep. 19.  The Loosening Belt?  May 14, 2021.

The Biden Admin picks up a couple of key recruits this weeks as Australia and TSMC/Taiwan both sign on to Team America.  This follow on last week's string of good news -- from Europe's pulling away from the big China investment deal, and Japan moving closer to the US on defense.  While Biden has been slowly, dully, steadilly building up a coalition in plain sight, no one seems to ask the question -- What does the coalition consider a win?  What's the end game?   

As the world (and the economy that lives there) becomes more dualistic, any gain for one side is a loss for the other.  That may explain why China's week wasn't as great.  They've pretty much lost Australia as an ally and the EU as an investment partner.  The good news is that Covid diplomacy is working among developing markets.  The bad news is that the wolf warriors have done their jobs a little too well.  For the first time in a long time, China doesn't seem to have limitless choice of trading counterparty.  It has already scared away most of the main players (Japan, Canada, Australia, Vietnam, Malaysia -- all have had bruising encounters with China is the past year).    

And finally, HK is seeing a mass outflow of expats.  Sure, it may sound hysterical at first -- but the trend is bad and the reasons are worse.  AmCham polling says almost half of all expats would leave if they could -- mostly because of the new security laws put into place by Bj.  This shouldn't come as a surprise --recall our own informal polling here at Globalism2 showed, HK has totally lost its appeal as an expat or finance center.  

Your Business Environment Analysis has to react to growing STATIST influences.

• China and Russia prefer making strategy at senior party level, and having private and SOE players execute.

• Europe is someplace in the middle.

GM to invest $1 bln in Mexico to build electric vehicles

Move draws immediate criticism from United Auto Workers union

https://www.foxbusiness.com/features/gm-to-invest-1-bln-in-mexico-to-build-electric-vehicles

Foxconn Shrinks Plans for Wisconsin Plant  WSJ 

https://www.wsj.com/articles/foxconn-shrinks-plans-for-wisconsin-plant-11618959964

EU efforts to ratify China investment deal ‘suspended’ after sanctions

https://www.theguardian.com/world/2021/may/04/eu-suspends-ratification-of-china-investment-deal-after-sanctions

What Kazakhstan Can Teach About Medium-State Diplomacy How the self-styled “Asian Geneva” successfully navigated among Russia, China, and the West—at least for now

https://foreignpolicy.com/2021/05/04/what-kazakhstan-can-teach-about-medium-state-diplomacy/

World Factbook (CIA) – Kazakhstan 

https://www.cia.gov/the-world-factbook/countries/kazakhstan/

• Tesla has apologized and pledged to carry out "self-examination and self-correction", but Chinese state media has already branded the once-beloved EV maker "arrogant".   That is code for "uncooperative foreigner".  If a homegrown National Champion brand emerges (we're looking at you, Nio) - then Tesla may find the China market a lot less friendly in the future.  Look for more "spontaneous" boycotts, demonstrations, and lawsuits if the Party decides to harmonize Tesla right out of China. 

• The more the global economy improves, the worse policy gets - because there is no incentive to compromise.  US-China relations are K-Shaped -- business wants increased integration, but nationalist policies are getting more restrictive.  

While AmCham types still hope our trade kerfuffle with China will blow over,  pols and party members on both sides have reached agreement on one thing – it’s on.

China is reverting to Cultural Revolution rhetoric:  encouraging patriots to report online “wrong thinking”,  and urging Wolf Warrior diplomats to “study the history of the Party” to guide them in fighting back.

On the US side, Congress is getting more involved – which is never a good sign.

If you are a front-line manager, your window to implement a Plan B is being constrained by China’s successful spread of influence and soft power.  Today we’re looking at the battle for hearts and minds in the Caribbean.