A quote I often like to deploy comes from Jagdeesh Bhagwati, one of the leading policy ‘lights’ and advocates of free trade at the start of this period of globalization who said that American multinationals were the ‘B-52’s of globalization’. It was a fitting image for an economist who counselled the likes of the GATT and other world institutions to let free trade flourish, unrestricted by concerns over labour laws and whose main works were titled ‘Free Trade Today’ (2002) and ‘In Defense of Globalization’ (2004).
To his credit, Bhagwati’s view prefigured the domination of world commerce by US multinationals, that is until China’s own corporate giants rose. Today, the world’s largest companies are still mostly American, with a number of Chinese like Tencent, and a handful of Europeans.
However, a new trend is occurring, which will involve many of those ‘B-52’s’ turning for home, or even changing their spots.
I had often wondered whether the end of globalisation and the fracturing of the world economy into a multipolar order would produce a similar rupture in global corporate business models. That such a rupture didn’t happen is testament to the agility of these companies, the digitisation of economies and the power of international brands.
Since Donald Trump took power, multinationals have had to deal with a trade war, the supply chain disruptions of COVID and the resulting rise of both the digital economy and working from home in the West. As if that were not enough, the introduction of robotics and machine learning to production processes, national security concerns and then the Inflation Reduction Act have pushed and pulled American companies closer to ‘home’ (with some friend shoring), and even drawn a few Europeans with it.
If the American corporate empire is well, then the British corporate scene is withering (recall that the East India Company was perhaps the first company to become involved in geopolitics – with horrendous consequences for India, please see William Dalrymple’s The Anarchy) as the consequences of Brexit push large companies to delist from London and move to New York or the euro-zone (one of the notable movers is CRH which with a business in nearly every European country and American state is not unsuited to a US listing). HSBC
So to summarise, the international corporate response to a changing world has been to either change what is under the bonnet (supply chains, work and technology practices) or change ‘home’. Few of them have changed their ‘shop front’ or brand – which is the canary in the coal mine I have been looking out for.
In that respect, imagine my glee to hear that the giant venture fund Sequoia is to split itself in three – a US/European business, an Indian one and a Chinese firm called Redwood in the English re-translation from Chinese of Sequoia. While differences in local markets and investment styles may have contributed to this, the fact that American companies prefer Western capital than Chinese – and vice versa, will have been a factor, as will the growing scrutiny of service providers like investment firms and consultancies in China by the Chinese authorities. Sequoia is interesting as it has in the past shifted structure in response to a changing environment (nearly two years ago it effectively merged its individual pots of capital into a large pool).
The question now is whether Sequoia is the first of many brands to be hit by the geopolitical bug, and other brands splinter into regional varieties, or rather what industries specifically might be vulnerable.
If I were a management consultant, I am sure I could make a great deal of money consulting firms on the geo-political transformation of brands, should this become a trend. For the time being I think we can differentiate between brands at three levels.
First, those where the brand is integral to the product and its allure and quality transcend geopolitics (LVMH, Rolls Royce and potentially Apple
Thirdly are companies that involve transfers of data, money and services (capital flows rather than trade flows) and I think the interesting disruptive factor here will not so much be that brands will need to change, but that underlying modes of corporate governance and regulation will increasingly diverge between the large regions. Whereas the initial effect of the ‘B-52’s of globalization’ was to promote an Americanised approach to finance, accounting and regulation across many emerging markets, this may change, to the detriment of Western service companies.
Sequoia’s job is to spot new trends, let’s see if they are now going to lead one.
Source: Fox Business
Ex-England Under-21s star charged by FA for ‘racially abusing’ OWN team-mate
Starfish Space wins NASA contract to plan demonstration of orbital debris inspection
Kazakhstan’s Miners Write Letter to President, Makes Plea For Lower Energy Prices
400+ global travel leaders gather in Singapore for Web in Travel conference
Russia claims more than 335K have signed up for military service so far this year
I’m a Long-Distance Hiker With Ulcerative Colitis—Here’s How I Manage On and Off the Trail
The Benefits of Lactic Acid for Skin Go Beyond Exfoliation
This Back and Biceps Workout With Dumbbells Can Help Improve Your Posture
33 Tasty Pumpkin Recipes That Are Perfect for Fall
APL TechLoom Dream Review: A Comfy Shoe for Stylish Walkers and Casual Runners
First Ride: Verge TS Pro Electric Motorcycle
Linda Thompson Reveals Elvis Presley’s Touching Graceland Habit With His Beloved Grandmother ‘Dodger’
Council Post: What Small Business Owners Should Know About Bookkeeping
Juvenile arrested in Red Line harassment incident
Microsoft’s Surface Laptop Studio 2 Is Fancy, Expensive, and Very Hot
News24 hours ago
Liverpool bomber detonated homemade device in taxi outside women’s hospital after his asylum claim was rejected, police probe finds
Finance23 hours ago
Crypto Trading Platform GSR Receives In-Principal MPI License in Singapore
News14 hours ago
Rep. Matt Gaetz triggers vote to oust Kevin McCarthy from speaker’s office
Travel19 hours ago
QNB announces its Strategic Banking Partnership of Expo 2023 Doha Qatar™
Auto23 hours ago
Let Alfa Romeo 33 Stradale Designer Take You On Tour Of New Supercar
Sport23 hours ago
Fulham vs Chelsea LIVE: Blues look to build on Brighton win in Prem London derby
News23 hours ago
Revealed: The dogs that give humans the most expressive stares – so how does your pooch stack up?
Lifestyle13 hours ago
Tori Spelling’s “Oldest Babies” Are All Grown Up in Homecoming Photo