Are we experiencing the end of globalization?

Pharmaceutical raw materials from India, electronic components from China or Taiwan, vehicle components from South Korea, Canada or Mexico. The collapse of supply chains during the coronavirus crisis has shown with full force just how fragile the globalized world is. Quite a few companies and political leaders have now begun to question the strategy of global industrial networking.

However, with the protectionist tendencies in the US under Trump or China’s increasingly totalitarian state capitalism under Xi Jinping, which only allows asymmetric cooperation, there were already enough warning signs before the crisis that the system was no longer functioning smoothly.

So now the shock therapy caused by the pandemic. It is accelerating a process that should not be a swan song to globalization. If only because Germany’s prosperity is largely linked to its successful export economy. But also beyond self-interest: global trade and economic networks are so closely interwoven that a radical unraveling would inevitably lead to the collapse of many national industries. I would also like to remind you of Hans-Dietrich Genscher’s bon mot: “As long as people talk to each other, they don’t shoot at each other.” Or in relation to globalization: Those who trade with each other will not fight wars with each other. The best example of this is the coal and steel union from the early 1950s, which was a central building block for the friendship between Germany and France – and incidentally the nucleus for the EU.

Rather, cost minimization must no longer play a central role in the decision to outsource in the future. For key components, the focus must be on absolutely securing the supply chain. Proximity between supplier and customer facilitates this. However, even with geographical proximity, protectionism or other restrictive measures by populist or even authoritarian state structures can present further hurdles in the supply chain.

It is therefore time to incorporate mandatory ethical criteria into a globalization strategy and implement them in CRM and CSR, in line with the concept of “responsible management”. To what extent are human and employee rights respected in a country? How susceptible is it to corruption? Are freedoms restricted?

The Freedom House Index, the Global Peace Index or the Corruption Perceptions Index can be used as sources.