Multinational Corporations Aren’t About To Give Up on Global Business | The Red Pen | GZERO Media

What impact do increasing geopolitical tensions have on big, multinational corporations?

​An op-ed in the Financial Times argues that the era of borderless enterprise may be past, thanks to rising geopolitical tensions between the US and China. In "Geopolitics spells the demise of the global chief executive," Elisabeth Braw writes that the nationalities of companies and their chief executives now matter again and their ability to pursue a truly global business strategy will be limited. But has the situation actually changed? Ian Bremmer and Eurasia Group analyst Charles Dunst take out the Red Pen to explain that nationalities have always mattered, and many of these risks aren't new.

Today we are talking about the impact that increasing geopolitical tensions could have on big, multinational corporations. In a recent op-ed for the Financial Times, Elisabeth Braw of the American Enterprise Institute, AEI, argues that we could be entering a distinctly new chapter in global business, one in which where a company comes from matters much more. In other words, a move away from borderless companies and toward nationalism.

She cites CEOs like Ramon Laguarta of Pepsi and Satya Nadella of Microsoft, both foreign-born executives leading American companies, as a positive trend of globalization that may come to an end in the current political reality.

It’s an extremely interesting and provocative piece. You should definitely read it.

We are not convinced. Let’s get out the Red Pen.

First, Braw writes that “the era of borderless enterprise may be past” and argues that “suddenly companies’, and executives’, nationalities matter again.”

So question, when did nationalities stop mattering? Governments have long supported their national champions. In the wake of the 2008-09 financial crisis, the German government spent 1.5 billion euros to bail out their auto industry. BMW, for one, might have had non-German higher ups, but when the rubber met the road, it mattered the most was that BMW was a German company. The era of the globalization never meant an end to national pride or responsibility when things got tough.

Secondly, the number of foreign CEOs of Global Fortune 500 companies has remained pretty constant since the 2008 financial crisis. I’d also point out that as of 2019, the last date we could find good numbers for, 45% of the companies on that list were founded by immigrants or the children of immigrants. No real change.

Next, Braw suggests that Western corporate titans may now conclude that the companies they run “should be loyal not just to their shareholders but to the company’s home country if it provides democracy, rule of law and a safe business environment.”

I’m not ready to bet on that. Western companies have long done business in nondemocratic countries, and some major US businesses haven’t blinked twice in recent years even on issues like Uighur forced labor. In fact, China overtook the United States last year as the top recipient of new foreign direct investment. Goldman Sachs just announced an expansion of its staff there by 2024. Amazon, Apple, Nike, Gap…the list goes on. Still doing business and expecting growth in China.

Finally, Braw writes that “executives may consider themselves citizens of nowhere, but a business can be harmed because of where it is based.”

That’s true. But is that risk new? There were boycotts of German companies in the 1930s, of course, and the same in South Africa during Apartheid in the 1960s.

Yes, Apple and Google are enthusiastic citizens of nowhere. But not so much for Microsoft and Amazon, which are increasingly US national champions.

In conclusion, do rising tensions between, say, the United States and China mean that a new era of business with borders is on the horizon? A Standard Chartered report, just from a couple of months ago, back in March found that of multinational corporations based in the United States, the United Kingdom, France, and Germany, 42% “see their best growth opportunities outside of their home market.” That’s actually “5% higher than six months ago.”

So…no.

#TheRedPen #Globalization #InternationalBusiness

[sherrijosephine]

I don't think anybody should be left out when going for digital assets

[campbellpaul]

It is understandable how companies are concerned about their profits and edging out the competition. China showed the world's companies that it could not be trusted, nor would they be held responsible for patent theft as well as intellectual property theft. This is one area where the international community has to reconsider its investments, simply to stay competitive. Openness to networking is key in the digital age, and communication is at the forefront.

[campbellpaul]

Economics is somewhat an illusion where profits in foreign markets are concerned, as the price of goods drop in those markets to accommodate a lower valued currency. I don't know however, how or if those goods are subsidized (it would make a great video how that works).

[jhrusa]

If you are not an enemy of the state I don't know who is.

[hocheesiong]

if big business is not involve globally they are going to be small business very soon