World Economy 4.0: Protectionism Thwarts B2B Trade
Global trade is changing like never before. It seems like U.S. President Donald Trump and his administration regularly take steps to restrict world trade. The details of the design of a difficult Brexit are being hammered out with global trade implications. And Chinese President Xi Jinping has announced the transition to a globalized China, underlined by the country’s “One Belt, One Road” high-speed train line. This should connect China even more closely with Europe and strengthen trade.
B2B And B2C Businesses Benefit From Free Trade
In light of these developments, some are already talking about how we’ve reached the peak of globalization and world trade, indicating that globalization will inevitably decline. I disagree. The world has become increasingly globalized over the last 4,000 years. Modern technologies such as the internet, blockchain and digital commerce are connecting us more than ever.
Globalization and world trade cannot be reversed. Buyers purchase goods from many different countries thanks to advances in the latest technologies. If anything, globalization has become more personal, more interconnected and embedded in our daily lives. While some believe that an emerging global populism must be combated with isolation and de-globalization, there is another answer: The responsible use of cutting-edge technology. The world is becoming increasingly globalized because technology has created three things that the world has never known before: smarter local production, a new creator economy and digital platforms.
With today’s common production methods, robotics, additive manufacturing and 3-D printing, the variable costs of making a small batch of shoes are about the same as a large one. In other words, we can produce goods when and where we need them. A new generation of smaller manufacturers has emerged.
Technology Creates New Possibilities
New technologies enable developers and companies on platforms such as Kickstarter to design new products and quickly benefit from new financing models. While the first wave of technology led to mass industrialization and mass globalization, newer technologies enable the creation of more sustainable globalization through locally distributed production, the recycling of materials and strengthening a creative economy. The democratization of knowledge and commerce via the internet and other technologies makes it possible for entrepreneurs to create and produce their goods and sell them worldwide.
Digital platforms of all kinds have sprung up all over the world, effectively revolutionizing the global economy. The most successful examples include Airbnb, Netflix, Spotify and Uber. Their economic prospects are promising. They’ll continue to grow because of the sheer number of participants. Services offered through these platforms go beyond earlier ideas of gradual adoption. They are deeply rooted in the lives of many people today, and their value will be more than the sum of their individual parts.
Responsible Entrepreneurship For A Better Future
The theme that will shape the global economy and continue to help it progress in the years ahead is responsible leadership. However, this is not just a job for diplomats and politicians. Entrepreneurs must contribute as well.
Companies need to be committed to creating more open, accessible and sustainable supply chains and to discussing how we can make the future of the world economy better. They are responding to pressure from shareholders, customers, employees and governments to pursue “profit with purpose,” which means taking active measures to ensure sustainable and responsible sourcing. That could mean avoiding child slavery, conflict materials and doing business with partners/suppliers with reputations for money laundering, fraud, pollution and other crimes.
This requires a return to thinking about how we shape both politics and technology. We cannot focus only on narrow solutions, such as achieving cost reduction and profit maximization. Politicians and business leaders must focus on how we can work together to create true value for society as a whole.
This will not be easy. We must question, among other things, the existing corporate paradigm for designing supply chains. The good news is that many companies, especially in the B2B sector, have already embarked on this journey.