Asian business is reforming. Its emerging multinationals will change the way we all live ... BUSINESS power follows economic power. In the 1920s British firms owned 40% of the global stock of foreign direct investment. By 1967 America was top dog, with a 50% share. Behind those figures lie cultural revolutions. The British spread the telegraph and trains in Latin America. American firms sold a vision of the good life, honed by Hollywood and advertising. Kellogg’s changed what the rich world ate for breakfast, and Kodak how it remembered holidays. The next corporate revolution, as we describe in our special report this week, is happening in Asia. This too will change how the world lives. ... rules that have governed Asian capitalism for the past two decades are changing. Asian firms are having to become brainier, more nimble and more global. ... The immediate motivation is underperformance: growth has slowed, and Asian shares have lagged American ones by 40% in the past three years. Three deeper trends are also at work. First, labour costs are rising, not least in China, and East Asia’s workforce is ageing. Second, Asia’s middle class is becoming more demanding. They are no longer satisfied with fake Louis Vuitton handbags; they want clean air, safe food and more leisure, and are madly in love with the internet. Third, competition has intensified from Western multinationals, which have invested $2 trillion in Asia. They also now use the same cheapish labour, and they generally have much more sophisticated supply chains, brands and R&D.
- Also: The Economist - Business in Asia: How to keep roaring < 5min
- Also: The Economist - Megatrends: Q & Asia < 5min
- Also: The Economist - Governance: Avoiding the dinosaur trap < 5min
- Also: The Economist - China Mobile: Get up and dance < 5min
- Also: The Economist - Hutchison Whampoa: Now for the fat-cow years < 5min
- Also: The Economist - Globalisation: The fear factor < 5min
- Also: The Economist - Convergence: One world < 5min
More than any other single innovation, the shipping container—there are millions out there, all just like the ones stacked on the Hong Kong Express but for a coat of paint and a serial number—epitomizes the enormity, sophistication, and importance of our modern transportation system. Invisible to most people, they’re fundamental to how practically everything in our consumer-driven lives works. ... Think of the shipping container as the Internet of things. Just as your email is disassembled into discrete bundles of data the minute you hit send, then re-assembled in your recipient’s inbox later, the uniform, ubiquitous boxes are designed to be interchangeable, their contents irrelevant. ... The exact placement of each box is a critical part of the equation: Ships make many stops, and a box scheduled to be unloaded late in the journey can’t be placed above one slated for offloading early. Imagine a block of 14,000 interlocked Lego bricks—now imagine trying to pull one out from the middle. ... The container’s efficiency has proven to be an irresistible economic force. Last year the world’s container ports moved 560 million 20-foot containers—nearly 1.5 billion tons of cargo altogether. Though commodities like petroleum, steel ore, and coal still move in specially designed bulk cargo ships, more than 90 percent of the rest—everything from clothes to cars to computers—now travels inside shipping containers. “Reefer” containers, insulated and equipped with cooling units, carry refrigerated cargo and are plugged into power sources on ships or at dockside. Because the containers are all identical, any ship can move them. ... The Port of Los Angeles, America’s busiest container port, handled 476,000 TEUs in 1981. Thirty years later, 7.9 million 20-foot containers—almost all of them containing goods on their way from factories in Asia—moved through the port, a 16-fold increase. Hamburg’s four container terminals loaded and unloaded 8.9 million TEUs in 2012. On the long list of global container ports, Hamburg and Los Angeles are middleweights: Shanghai, the world’s largest container port, moves 31 million TEUs each year.
Conventional wisdom says that globalization has stalled. But although the global goods trade has flattened and cross-border capital flows have declined sharply since 2008, globalization is not heading into reverse. Rather, it is entering a new phase defined by soaring flows of data and information. ... Remarkably, digital flows—which were practically nonexistent just 15 years ago—now exert a larger impact on GDP growth than the centuries-old trade in goods ... although this shift makes it possible for companies to reach international markets with less capital-intensive business models, it poses new risks and policy challenges as well. ... The world is more connected than ever, but the nature of its connections has changed in a fundamental way. The amount of cross-border bandwidth that is used has grown 45 times larger since 2005. It is projected to increase by an additional nine times over the next five years as flows of information, searches, communication, video, transactions, and intracompany traffic continue to surge. In addition to transmitting valuable streams of information and ideas in their own right, data flows enable the movement of goods, services, finance, and people. Virtually every type of cross-border transaction now has a digital component.
It’s tempting to imagine a future in which Ghosn’s itinerary is considered a valuable artifact: a window into what globalization was really like in 2017, when it was spreading further than ever and, at the same time, getting slammed by waves of populist discontent. ... If the politics of the past year have left any sort of mark on him, it’s imperceptible as he strides onto the stage for the Q&A. These are his people—students of business, not politics—and most of the questions they lob his way are as familiar as old friends: What drives you to take over struggling companies, and how do you always seem to turn them around? How were you able to become the first foreigner to run a major Japanese company? What’s your secret for winning the trust and loyalty of employees throughout so many diverse cultures? ... “I keep my eyes on the scorecard,” Ghosn tells them. Production, profit, growth—the bottom line. Diversions constantly arise, but he’s learned to manage the distractions, which he says assume different forms in different parts of the world.