SA business executives need to keep abreast of developments in the ever more complex global geopolitical game being played out. There is elevated political risk in China-US competition and the West’s proxy war with Russia in Ukraine. There is elevated sanctions risk through prohibitions on doing business with Russian entities. And new opportunities are emerging as, for better or worse, SA has hitched its wagon to the Brics (Brazil, Russia, India, China, SA) bloc, with other developing countries lining up to join the club.
Headline news now is that the US commerce department has made $53bn available to establish a semiconductor industry on the US mainland. Commerce secretary Gina Raimondo did not mince her words, saying this was to ensure the industry can supply the US military’s modern weapons systems. Companies that receive these funds are barred from expanding their semiconductor manufacturing capacity to “foreign countries of concern”, that is, China.
Instead of taking a nuanced approach to global politics the ANC government has decided to stand with Russia and China. In February the SA navy participated in exercises with those countries, raising the middle finger to the West. Ugandan foreign minister Abubaker Jeje Odongo summarised this anticolonial ideological stance well: “We were colonised, and we forgive those who colonised us. Now the colonisers are asking us to be enemies with Russia, who never colonised us; is that fair?”
Whether or not it is fair, the reality is when elephants fight the grass gets trampled. The ANC ought to have kept its head down and done what it does best: nothing. However, instead of just calling for peace and negotiations it chose to take a stand against the West. My concern is that this stance will harm SA businesses and our political interests when we so desperately need co-operation and trade with Western countries.
While it is important that SA businesses keep an eye on geopolitical developments, there is also no need to overreact. While the US is bent on preventing China from challenging its dominant technological position, indications are that trade and other commercial activity between China and the US are quickly returning to the pre-Covid-19 norm.
Now that Beijing has reversed its zero-Covid lockdown policy, its manufacturing sector is rebounding rapidly. The country’s purchasing managers’ index shows its manufacturing sector is expanding at the fastest rate since April 2012. Provincial and local governments in China have organised trade delegations for “revenge overseas trips” where planeloads of Chinese salespeople representing factories making everything from T-shirts to sunglasses are fanning out across the US, Europe and Asia to resume trade relationships that became stale during the pandemic.
As we saw over the past couple of years, government announcements in either Beijing or Washington can affect the markets in significant ways. We saw a big hit to the JSE when Beijing announced a clampdown on internet giant Tencent. US-led sanctions on Russian companies have directly affected business activities here in Africa. However, business needs to continue to be done, and as long as one is outside sensitive areas such as microchips or telecommunications it appears that Washington and Beijing have no plans to disrupt these activities.
When life gives you lemons, the saying goes, make lemonade. We know that Iran, Argentina, Saudi Arabia, Turkey and Egypt are all vying to join Brics. While it is mainly a geopolitical bloc, there are mechanisms for trade and commerce. The smart move for SA businesses may be to start investigating potential opportunities for trade with these developing countries. Their representatives will be in Durban for the Brics summit in August, and it will be worthwhile for SA businesses to set up some meetings.
• Dr Kuo, a former lecturer at the Shanghai International Studies University in China, is adjunct senior lecturer in the University of Cape Town’s Graduate School of Business.
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