A new world order has now begun emerging. Many political economists believed twenty years ago that strengthening the China-US business-to-business relationship would drive future business alignment. The rationale behind this thinking is that the export-driven Chinese economy driven by US IPR and US business operating from China will drive self-interest towards greater alignment and synergy between the two countries.

I had a partial disagreement with this US-China worldview. Chinese, like all other nation-states, are driven by self-interest. The 2008 global recession got exasperated by the rapid consumer demand drop in the US and Europe.
China was bound to re-align its business model to focus more on domestic growth from the existing export growth. It exactly did that. China has always believed in a China-led and China-centric world and was biding its time to establish itself as an economic power.
We are seeing the world order change again in which China is seen as a major economic and strategic threat to the democracies of the world. Global supply chains are undergoing significant changes in the face of competition from China and other countries. Some of the key changes include:
  1. Diversification: Companies are looking to diversify their sourcing by sourcing from multiple countries to reduce their dependence on any one country and mitigate the risks of disruptions in trade and tariffs. This can include sourcing from countries other than China, such as India, Vietnam, and Mexico.
  2. Near-shoring and Re-shoring: Companies are increasingly moving their production closer to the end consumer by relocating their factories to their home country or countries in the same region. This allows them to reduce shipping costs and respond more quickly to changes in consumer demand.
  3. Building resilience in the supply chain: Companies are working on building resilience in their supply chain by improving supplier management, risk assessment, and business continuity planning. This includes identifying key suppliers and critical components and working with those suppliers to ensure that they can meet demand during a disruption.
  4. Automation and digitalization: As companies look to increase efficiency and reduce costs, they are investing in automation and digitalization of their supply chain processes. This allows them to track their inventory better, reduce human error, and improve forecasting.
  5. Sustainability: Companies are becoming more focused on sustainability in their supply chain, looking for ways to reduce their environmental footprint and ensuring that their suppliers meet certain ethical and environmental standards.
  6. Collaborating with other companies: Companies are forming partnerships and collaborations with other companies and organizations to share resources, expertise, and technologies to improve their supply chain efficiency and effectiveness and reduce dependence on China.

Overall, global supply chains are becoming more complex, dynamic, and adaptive as companies navigate a rapidly changing global economy and competition from China and other countries.

I believe that this world order could change further in the future. The two most populous regions of the world, India and China, may bury the hatchet and start working together to strengthen business-to-business ties despite their political differences. Africa and parts of Asia that are resource rich will increasingly get aligned with the economies of India and China. They will increasingly become the major customers of commodities being produced by them. While North America and Europe will continue to be major global players, business-to-business global re-alignment and intra-Asia trade, especially between rivals India and China, will strengthen as we go along.


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