Globalism 2.0

• A constructive, pragmatic trade relationship that benefits both sides is clearly a good idea – but is it realistic? PRC propaganda is taking on the role of permanent disruptor, while the Western side seems to be juggling a variety of positions

• US & Euro managers and negotiators have to face facts: the US China trade conflict will be with us for a while, and those tariffs are probably going to be around at least until the end of the year.  

• Have the Beijing Warrior Wolves handed Biden the golden key to world leadership… and to Cultural Icon status.?

• If you are American or an MNC Brand – you have to reevaluate your notion of “market forces”. Market forces used to be your friend. Not necessarily true anymore. 

Decoupling your supply chain from China  may not be voluntary - and it may not be initiated by the US side.   The China+1 strategy seems manageable right now, but front-line managers and negotiators need a plan for a “hard decouple”.  Both marketers and manufacturers should prepare for permanent shifts in their supply chains and distribution networks – not just short term disruptions.  The same thing that is happening in the Chinese lux market will soon be playing out in other emerging middle class markets throughout the world.   As consumption patterns diverge, Western brands will not only lose customers – but their economies of scale that drove prices to the floor will lose their power. 

You just heard news that may have a huge impact on your business.  Should you ignore it, take a cautious wait & see approach, or make the most of this opportunity?  In the new world of Globalism 2.0, you need a plan for dealing with "high impact / low probability" events -- because those are the ones that can really ruin your day. 

In this episode we introduce some basic business analysis tools that will help front-line decision makers organize their planning.  But the real challenge is knowing when to take action, and when to wait for  more information.   

The US and its coalition of western liberal capitalist democracies "won" Globalism 1.0.  By 2008, communism was in ashes, large swathes of former "emerging economies" had become devoted consumer markets, and orderly international trade was the rule - not the exception.  

Since then, however, the West seems to have lost the trail while China and select emerging markets are powering ahead.

What happened?  Nationalism in the US and China, and Covid 19 created a perfect storm of disruption and dislocation.   Analyzing the impact of Globalism 2.0 requires us to examine the drivers on a micro level and determine which forces were dominant - and where they are pushing us.  Is the new economy being shaped by

• Ideology

US-China decoupling is likely is some way, shape, or form.  There are 3 tracks towards full decoupling:

1.  Supply Chain of Materials and Manufacturing (already begun)

2.  Supply Chain of Markets, People, and Services (underway)

3.  Standards, Specifications, and Compliance alignment   (not yet)

Globalism 2.o    So it leads to this...  Growing middle classes in emerged markets, technology, and new economic competition are just some of the forces realigning global trade into distinct spheres of influence.  The manufacturing supply chain will stay intact for a while (planes & ports;  mines & factories), but markets and the service supply chain (people) will localize and coalesce into exclusive economic spheres.    

The line between government and corporate is blurring out of existence.  Whether it's Communist Party officials setting global technical standards or the US Federal Gov building a refining industry, the new reality is that there you'll be spending MORE time with compliance, regulations, and bureaucracy in the near future -- not less.  And for those of you setting up new supply chains as you decouple, it may be a lot of work.  Plan accordingly.