When a tsunami hit Japan in the summer of 2011, it also hit the global supply chain, sending aftershocks as far away as a General Motors plant in Louisiana that depended on parts from Japan. Nevertheless, the global supply chain proved fairly resilient. But this year’s pandemic has seen sustained pressure on a system that is already in flux. As Vijay Vaitheeswaran, US business editor at The Economist, sees it, “For a long time, cost was a driver of advantage,” he says. Now, he says, it’s time to “invest more in resilience.”
“The rise of companies like Amazon has pushed companies to change and accelerate their supply chains to bring a lot of things closer to home,” he adds. “I think we’re going to enter a prolonged period of ‘slobalization’ and it’s here to stay.”
Even with “slobalization,” a slowing or reversing of globalization, don’t expect business to go entirely local any time soon, even if brand positioning should. Multinational companies are heavily invested around the world, many in the expanding Chinese market. It does mean what seemed like a drive toward a more connected world may splinter into proprietary, almost nativist pieces, something Vaitheeswaran terms “the splinternet.”
Trade tensions between China and the US are a microcosm of this new balkanization spreading around the world.
“The genie’s out of the bottle,” he says in this month’s Signal Conversation. “I think we’re going to find an awful lot of technological, cyber warfare as well as restrictions by the US on transfer of technology that’s going to be a point of particular friction, including in 5G, which is a telecoms technology of the future.”
Dive into more trends coursing through global business in this fascinating conversation between Vaitheeswaran and John Battelle: