India, Southeast Asia, Mexico offer diversification, former Australian PM

Kevin Rudd, former Prime Minister of the Commonwealth of Australia and President of the Asia Society Policy Institute

Leigh Vogel | Getty Images

For companies seeking to diversify into new markets – especially given the geopolitical risks surrounding China – India, Southeast Asia and Mexico are prime candidates, the former prime minister said on Sunday. Australian Kevin Rudd.

“When I look around the world, I see three sets, three areas of activity that are currently benefiting from let’s call it ‘great diversification’ or… [the] ‘early decoupling debate’,” he said at the Asia-Pacific German Business Conference in Singapore.

“One is Southeast Asia, where we are now, the second is India… And certainly from a North American perspective, it’s Mexico, which obviously benefits from NAFTA, or NAFTA-plus economic agreements.”

India in particular has seen a sea change in economic policies over the past year that could turn it into a new market and manufacturing hub for multinationals, said Rudd, who is also president of the Asia Society. .

“As someone who has dealt with India for the past 20 years, for the first time, I was convinced that they were about to attempt a meaningful policy change,” Rudd said during the interview. conference.

“If they can achieve this, it can make India the next China in terms of a large-scale consumer market, as well as a reliable global factory,” he added.

“Box [Modi] translate this into reality? Again, an open question.”

India, in particular, could offer exporters not only opportunities to diversify supply chains, but also new end markets.

Increased competition between the United States and China and the disruption caused by the pandemic have reinforced the importance of diversification for global businesses. He also announced new business alliances and what is known as “friend-shoring”. the creation of supply chain networks between allies and friendly countries.

“The Right Balance”

Rudd said Germany, as Europe’s largest economy, will play a major role in shaping the “China-specific debate” on the continent.

Germany has large investments in China and has been criticized for its reliance on the country for trade and business, although business representatives have played down such concerns.

German Chancellor Olaf Scholz’s first in-person visit to Beijing last week ruffled feathers in Europe amid growing political pressure for Germany to reduce its reliance on China.

“My German friends consistently underestimate their level of influence in the global debate and underestimate their level of influence in the China-specific debate,” Rudd said.

“I looked at Chancellor Scholz’s written statement a few weeks ago…before his visit to Beijing, I think he had the right balance on how he articulated German interests.”

Ahead of his trip to Beijing, Scholz explained in an op-ed for the Frankfurter Allgemeine Zeitung and Politico that he would not seek to decouple from China, but rather pursue economic diversification and resilience.

Rudd said it was important that countries “not stray” from the difficult task of balancing national security interests, relationships with allies, human rights obligations and a relationship economy with China.

Gunther Kegelk, CEO of German multinational manufacturing company Pepperl and Fuchs, who spoke on a panel at the conference, said German companies had not been “naive” in setting up supply chains and business relationships in China and elsewhere.

However, Kegelk, who is also chairman of the German Electro and Digital Industry Association, said companies may have to start splitting their companies under a new geopolitical playbook.

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“And that would be the exact opposite of what I did 30 years ago [ago] – [in globalizing] the business…and globalization was good for the business in terms of strategy, in terms of sales…it was also good for the economy,” he said.

“Now, all of a sudden, everything is going wrong. We were called naive or stupid to get into these kinds of relationships, but we’ve made a lot of money over the years. Not just us, but l ‘together of the European and German economies.’

He added that many companies are now struggling to adapt, especially in the face of sanctions and trade rules imposed on China by the United States and others.

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