Companies Thought They Could Ignore Geopolitics. Not Anymore.
93% of multinationals reported losses linked to political instability
68% of companies bought political risk insurance
48% predicted deglobalization would significantly strengthen
42% predict decoupling from China will significantly increase
“Companies’ ability to do business in Russia and China will continue to deteriorate,” Bergman [CEO of M&C Saatchi World Services] said. “When, and it’s when, China acts on Taiwan, the international reaction will significantly impact global businesses… The impact will be significant if not crisis-bringing.”
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“If the Chinese do invade Taiwan, any business or investor that is overly dependent on the Chinese market, including both suppliers and customers located there, will suffer. We want American businesses to deal with these risks responsibly, not stick their heads in the sand.”
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Contract rates on the short-haul run between China and Taiwan now cost the same as Shanghai to Los Angeles. Erik Devetak of Xeneta predicts that “geopolitics will affect the length of the contract people are willing to take, because with a more uncertain world, in terms of geopolitics and therefore also indirectly in terms of supply chains, longer-term commitments potentially become less appealing to the supplier.”
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“Nearshoring. Automation. Supplier diversification. Sustainability. Companies are adapting their operations to changing market pressures and geopolitics… You have to ask yourself, which do you want? Are we going to minimize risk for shareholders and customers or are we going to minimize costs?”
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