WEF2022 – De-globalization, finding the right balance – Financial services


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We’ve heard a lot about de-globalization lately. According to some, more than thirty years of an increasingly transparent global economy would come to an end overnight due to protectionism, populism, the Covid19 pandemic and now, unfortunately, international conflicts. Personally, I was not convinced when I first heard this and after various conversations over the last three days here in Davos, I am even less so now.

Instead, what I see happening, and it’s already happening, is a rebalancing of global trade. It’s not just about moving the source of supply from one country to another. Consideration will need to be given to ESG factors, investments in automation, adding resilience through multiple supply deals and breaking away from the traditional position of cutting a few highly concentrated suppliers in exchange for volume. maximum. Ultimately, cost alone will no longer be the primary concern because, as many companies have recently found, if you can’t source it to sell, it doesn’t matter how cheap it is to make it. .

Rebalancing will involve strengthening ties with historical partners or creating them with new partners, both of which may not have been prioritized in a cost-dominated environment. It was very clear in a great session I participated in today, “Strategic Perspectives on Japan“.

Japan is a country that has a great role to play politically in the Pacific region and commercially on a global scale, particularly in the field of technology. As the United States and others seek to reduce their trade dependence on China, they are investing dollars and political capital to increase optionality by strengthening ties and investing with Japan. Complete commercial separation from China is unlikely, unnecessary, and likely unachievable, but spreading risk, even if it increases cost and complexity, is the way to go. Japan and others, many of whom play an important role here in Davos, such as India, Indonesia, Poland and Saudi Arabia, will be the beneficiaries of this approach and will have a vital role to play.

Globalization is not dead, in fact supply chains may even end up dispersing geographically in pursuit of resilience and stakeholder acceptance. Rebalancing is the right thing to do, the challenge for business leaders is to figure out how to do it, and to do it quickly with minimal disruption. It will not come for free.


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