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The Reshaping of Globalization

In the past few weeks, New York State Governor Andrew Cuomo has become something of a fixture on TV news. Every day around 11 a.m. to noon eastern time, the governor addresses the nation giving a snapshot of how New York State, New York City, and the country at large are faring in this unprecedented global pandemic. 

Toward the end of his remarks on April 1, he turned his attention to the post-COVID-19 world. “How do governments work together?” he asked rhetorically in combating imminent planet-wide threats. “You can’t just figure it out on the fly? Later, about future medical preparedness, he opined, “Why are we shopping in China for basic medical supplies?” 

Whether the governor realized it or not, his questions strike at the heart of an emerging international debate – is globalism dead? And consequently, has the coronavirus been its deathblow?

While the future is unknown, there are strong indications that a binary answer to the question is insufficient. Globalism is not dead. At worst, it’s on pause. And once the COVID crisis abates globalism – defined as “the operation or planning of economic and foreign policy on a global basis” – will resume, albeit with some valuable lessons learned.

For small and medium-sized US businesses (fewer than 500 employees), which make up 99.7 percent of all US businesses, there are several post-COVID takeaways:

Globalization’s Cure for the Common COVID

Supply chains can no longer be so Chinese centric – If it had not been clear before the pandemic, this point should be obvious now. Since China joined the World Trade Organization (WTO) on December 11, 2001, it has become known as the “world’s factory.” While cheap foreign labor and enormous factories have meant mass production at affordable prices, hyper reliance on a single country for manufacturing can be dangerous. In the current moment, this danger is most acutely felt when it comes to medical supplies and pharmaceuticals. But a host of additional products (or their constituent parts) come from China as well. That China was hit first with the COVID-19 virus was terrible luck. But several shocks can befall any nation (earthquakes, floods, pollution, political unrest, etc.), leaving it vulnerable to supply chain disruption.

Consider Southeast Asia and other Emerging Economies – For US small and medium-sized businesses (SMBs), Southeast Asia may be a right place to diversify their global production portfolios. In fact, the Asian Development Bank estimates the region’s economies overall (before the height of the coronavirus pandemic) would grow 5.5 percent in 2020. Countries like Bangladesh, Myanmar, Cambodia, and Vietnam, among others, were all forecast to grow their economies 6.7 to 8 percent. To be sure, these countries will take a hit too. But the more companies are diversifying their supply chains, the better.

Think “Local Abroad” – Beyond Southeast Asia, there’s a growing upwelling of local abroad interest. That means reinvestment in Mexico and Latin American countries, as well as Canada. One of the key advantages of bringing business back to North America rests with more diverse and more affordable transit options over shorter distances. We need to invest in cargo ships, airplanes, trains, and trucks, along with the potential for greater ease of labor force relocation for the new jobs created. This is most advantageous in the nation’s border towns like Laredo, Texas, and Nuevo Laredo, Mexico where a US citizen works in Texas, lives in Mexico, and aspires for homeownership in the US. Imagine factory towns employing thousands of workers under millions of square feet of plant operations – all within a few hours’ drive from the business’s primary customer base?

Invest in Automation and Teleconferencing Technology – Whether doing business in far-flung Southeast Asia or closer to home, overhead costs are an ever-present part of doing business. If the coronavirus has taught us anything, it’s that working from home is possible – and profitable – thanks to our digitally connected world. From teachers to business executives, words like Zoom, GoToMeeting, Skype for Business, Webex, BlueJeans Network, and Zoho Meeting have become commonplace. In the post COVID globalized world, companies doing business overseas may seek to reduce their physical footprint and instead rely on more teleconferencing services. Combined with investment in factory automation, businesses that plan right could come out of this crisis more agile than ever before.

“This is not the end…”

As SMBs and the rest of the world face uncertain times, we have all, collectively, looked to the past for inspiration to help chart the course forward. World War II and post World War II analogies are everywhere.

They are references not missed by Governor Cuomo. In his “rallying the troops” April 1 closing remarks, he quoted Winston Churchill, the British Prime Minister from 1940-1945 and again from 1951-1955. “It is no use saying, ‘We are doing our best.’ You have got to succeed in doing what is necessary.”

For small and medium-sized businesses and the entire world, we must recall the tragic shortcomings of a more fragmented world. We once lived in a world where authoritarianism and isolationism ran rampant. Building walls between nations or erecting trade barriers do little except to prevent the smooth flow of goods, people, and ideas. Rather than curtailing globalism, its reach should be broadened, covering an ever-widening expanse of the human family.

While the final verdict on globalization remains to be seen, what can best be said of its current state can also be summarized in another Churchill classic: 

“Now, this is not the end. It is not even the beginning of the end. But it is, perhaps, the end of the beginning.” 

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