Welcome, Nikolaus.
Thank you for having me. Here at Davos,
everybody's arrived at a time where we're seeing wars, we're
seeing disruptions and supply chains changing the way global
trade is happening.
You've recently done a report on this.
Just give us a sense from your findings.
How do you think the dynamics of global trade are changing right
now?
Well, actually the good news is it's not as gloomy as you might
think when you listen here around, because the first thing
to see is that actually global trade will continue to grow.
Despite us talking about deglobalization or the end of
global trade, we see actually global trade growing by 2.8% in
the next 10 years, per annum.
This is, however, less than GDP, which is growing at 3.1%.
And this is also much less than what we saw at the beginning of
the year 2000, where we were growing by 6 and 7%.
So both parties are right.
Trade is growing, but not at the pace we had in the past.
That's so interesting.
How is that happening?
Are there some countries that will be making use of
globalization more and others who are sort of retracting?
Yeah.
Well, I think the interesting thing is that we see shifts in
global trade.
And without being too complicated, I think you have a
#1 winner in this whole development, and that's
Southeast Asia.
Southeast Asia will have 1.2 trillion additional trade in 10
years from now.
So this is a country,
this is a region that is actually very profiting of that
development.
But you also have a positive development, for example, in the
North Atlantic.
Trade between the U.S. and Europe will grow.
We have a massive development of trade in North America.
Some people call it the stronghold North America where
Canada, Mexico, and the U.S. will see an immense development
of trade.
So that's on the positive side.
On the negative side, I think you have of course traditional
trading lines that are going down. China, U.S. obviously, but
also Russia, Europe, for obvious reasons.
Last but not least, also UK that sees the strong impact of Brexit
on its trading routes. That's amazing.
So geopolitics is really playing out in the way people are
trading.
How do you see this playing out over the next decade in terms of
these shifts?
Well, I think over the next decade we have five big shifts.
I mentioned a few of them.
First, North America will get more regional.
Mexico is the big winner vis-à-vis United States and
Canada is also going there.
So that's number one, which will be important. I think second,
U.S.-China trade tension will not be easy.
Third element is what I mentioned before: ASEAN, the
superstar, the super winner, Southeast Asia, 1.2 trillion.
Number four, India is getting really on the global stage with
Free Trade Agreements with a very capable population that
will drive it.
And fifth, not to forget, a redirection of Russian trade.
Given Russia doesn't trade with the West anymore, we see booming
trade with China and with India.
So the trade is happening.
It's just happening elsewhere.
For countries who want to be part of the globalization
success story, looking at ASEAN, what is it that's working for
them so well at the moment?
Is it that they're not in, you know, they're not getting
involved with sanctions?
Is it the, you know, is it geopolitics?
Why?
Why is this such a success story?
Well, I think ASEAN and the countries that are in Southeast
Asia have a great combination.
So there are external factors like companies looking for a
China plus one or two strategy, so moving business from China,
to Vietnam, to the Philippines, to other players.
But the countries themselves are very attractive when you look at
the quality of infrastructure, the quality of talent, still
relatively low labor cost, a stable political environment,
and huge logistical abilities like the port in Singapore, but
also the development of ports in Vietnam.
So I think that's this combination what favors that
specific region specifically.
So they'll be benefiting the most.
For companies who are trying to navigate this at the moment,
it's difficult.
I mean, there's so much instability, it's really hard to
know how to work around it.
What are your tips?
What are the things they could be doing that they won't regret?
Yeah, well, you just said it.
I think there are few no-regret moves that every company can do
that is acting on a global stage.
I think first it's really around developing a geopolitical
muscle. In understanding what geopolitics mean.
You know you have specialists for legal, you have specialists
for M&A, you have specialists for finance, but
very few companies really understand what free trade
agreements mean, or what tax and tariffs will have on their
growth.
So that's one thing, geopolitical muscle.
Second thing: be prepared to the fact that we'll have an
environment of inflation and price volatility in the years to
come.
Cheap money will not come back very soon.
So we need to take that into account.
We also need to think about setting up our organization in a
way that we are adapted to different regions.
Yeah, we are in a fragmented world, so we cannot have a
uniform organization.
We need to think about the risk and cyber control going forward.
So I think these are just a few no-regret moves.
And last but not least, the most important one is actually to
think about supply chain resilience, which means don't
put all your eggs in one basket but try to find different
sources for your product. Look for different markets so that
you're not becoming dependent on a ship that just happens to
strand in the Suez Canal.
Thank you so much for talking us through that report.
That's Nikolaus Lang here at Davos.