One can apply the misquote attributed to Mark Twain that “reports of my death are greatly exaggerated” to the current spate of articles suggesting that globalisation as we have come to know it is in its death throes.
Globalisation has certainly been dealt a number of mortal blows in recent times, from Donald Trump’s trade wars and the coronavirus pandemic to new technological developments and now the Russia-Ukraine war. But the world is still a highly interconnected place and much of that will remain intact.
However, at the margin and perhaps even much further than that, globalisation is undoubtedly taking severe strain. In the mid-1990s, when I was an analyst with a large US-owned investment bank in Johannesburg, some bright spark from London came up with a great idea to save money and improve productivity when it came to producing research reports.
Notwithstanding the fact that at the time we already produced and distributed all our hard copy research in house with our own physical printing capability, this chap suggested outsourcing the whole lot to an outfit in Singapore. Even allowing for airfreighting it back to Johannesburg, his figures demonstrated quite clearly that it would be quicker, cheaper and more reliable to go the Singapore route.
Whether they eventually went that route is unknown, as I left the organisation shortly afterwards but it serves to demonstrate the potency and seductiveness of outsourcing certain functions to low-cost environments in Southeast Asia at that time. But technology has moved on since then and hard copy is no longer favoured by investors.
And even where it is still mission-critical, such as in clothing and footwear manufacture, 3D printing is making the process of apparel and footwear manufacture in the Far East Asia and Africa redundant.
In the not-too-distant future, consumers will be able to go into a store, specify what fabric, colour and style of garment is required and then watch the whole process take place on premise. Bespoke fashion at a cheap price. Alternatively, they will be able to order the garment online, specifying everything that is required and then just click and collect or have it delivered.
Manufacturing sports footwear by means of 3D printing has been happening for at least the past decade and the process is gathering momentum. Often referred to as “additive manufacturing”, this approach puts down successive layers in a sports shoe that don’t require any manual intervention in the form of cutting and trimming, for example.
It is easy to see why this process largely does away with the human touch altogether. And for those wishing to go the sustainable route, recycled material can be used along the way. The winning nations in future will not necessarily be those that can provide cheap labour but rather those that are prepared to invest the large sums of money required in 3D printing and related technologies.
So as China produces less internally as its workforce ages and is not replaced, thanks to exceptionally poor demographics, it will progressively be unable to maintain its complex network of global supply chains for its goods. Coupled with that in the short term is a slavish adherence to a so-called zero-Covid approach to the pandemic, which has resulted in severe lockdowns all over China in response to the Omicron variant.
Those countries wishing to insulate themselves from the worst effects of disrupted Chinese supply chains would do well to consider insourcing many more products using 3D printing technologies to overcome the loss in productivity that might otherwise result from such insourcing using human labour in their own countries.
So globalisation will remain, though in a different form from the way we understand it today. Low-cost industrial production in Far East Asia and Africa will be progressively put under extreme pressure from advances in technology. However, money and investment will tend to flow to those countries that embrace manufacturing technology, rather than just supplying cheap labour.
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