In the past, I have always been a proponent of the global economy and internationalization. The sharing of skills, knowledge, expertise, and cultural riches between nations has benefited many economically and culturally, and hopefully expanded our understanding and appreciation of the world beyond our own backyards.
That being said, ideally sharing between nations always works best when you can rely on your partner to be trustworthy, make decisions in the best interest of their population, and to be true to the foundation on which the partnership is based. Also, having compatibility through similar values around human rights and economic policies are significant factors in maintaining a long term mutually beneficial relationship. Unicorns and rainbows would also be nice. ‘Ideally’ is the key word in the wish list, since that type of relationship between countries is difficult to establish. There is a rethink emerging from the impacts of the pandemic environment on previous motivations toward globalization.
The recent events around COVID and each nation’s focus on protecting their own population’s health and economy has promoted a move back to more of a nationalist agenda. To win the purchase loyalty of their population, this will also require business and government to dig deep to utilize creativity and innovation to respond to the inevitable consumer demand for quality at a reasonable price.
We have come to realize that too much dependence on another nation’s supply of essential goods during a crisis presents some significant challenges. Even one of Canada’s closest allies, the USA, enacted a federal order to block exports of medical supplies by 3M during the pandemic, potentially cutting off critical supplies needed for Canada to support their own health sector. Also, the situation around medical masks supplied by China during this crisis is a further case and point. Canada sent medical supplies to China in their time of need early on during the pandemic, depleting our own supplies, a questionable decision knowing of the growing threat in Canada. When the pandemic then required Canada to ask for payback from China, not only was the response delayed, when the products did come, many of the masks Canada received in return from China were faulty and unusable.
Recognizing the importance of being self-sufficient and prepared for emergency situations, governments are now turning their attention to support for companies and initiatives within their own countries to ensure adequate supply of essential products and services.
“Today, we no longer have to rely on any other country or leader for our vital PPE. We can make it right here in Ontario and we’re going to keep stockpiling to make sure we’re ready for anything,” (Doug Ford, Premier of Ontario)
Speaking on rebuilding a devastated economy, Doug Ford, the premier of Ontario has urged consumers “to change their buying habits to buy locally” resulting in billions of dollars staying at home supporting their own economy rather than sending their money to China or the USA.
Past decisions on shopping only by price by many global consumers has augmented China’s ability to gain a significant foothold with global markets by offering goods at lower prices, largely due to their lack of enforced environmental regulations, high volume purchasing and production, and a low wage economy, albeit in many cases with less than expected quality. Distribution networks like Amazon and Alibaba have also provided China an efficient distribution method to access global markets and effectively respond to the price point assessment that has typically determined many of the world consumer’s ultimate buying decisions.
The old saying, “Made in China” used to come with an insinuation of low quality. At some point the consumer accepted that aspect of their purchase decision and assessed the lower price as being the determining factor. Also, clever branding by Chinese companies has made it difficult for the average consumer to realize exactly where the products they are buying were actually made. Just take a look on Amazon and observe the vast proliferation of products from China, moreover, select a product and then try to determine where that product was manufactured and ultimately being delivered from. It may surprise you, it’s not that easy.
There are many well-known ‘western’ companies (Apple, NIKE, CISCO) that have historically set up manufacturing in China because of many legal and financial reasons, resulting in significant economic benefits for China. Another strategy by China has been to gain control or influence within large companies around the world to secure the China connection for supply and manufacturing, and further economic benefit. Again, the list of China controlled global companies is slowly growing and some of the names may surprise you. In the USA they include; GE Appliances, AMC, Riot Games, Motorola Mobility, Starwood Hotels, and Legendary Entertainment to name a few. China also made a bid to buy the Chicago Stock Exchange, with the deal only being rejected by the Securities and Exchange Commission in the final hours. China is also making large investments in Canada and is moving on some of the country’s natural resources. The recent multi-billion dollar takeover of Nexen Inc., a large Canadian oil producer, by China was identified as a security concern by Canada’s own spy agency, CSIS.
China now owns 9 of the top 20 tech companies in the world, providing huge leverage and influence on a global scale. Also, China is maintaining its position as the global leader in 5G network development and is expanding beyond China seeking to integrate its systems into other international markets. Recent concerns with respect to national security and the integration of China’s Huawei 5G network have been raised by the UK and the USA. China is winning international contracts with their tech companies and integrating their technology into secure environments.
Governments need to lead by example. Unfortunately, the Trudeau government with all of its ‘Canadian’ rhetoric recently awarded a Chinese owned company, Nuctech, a 6.8 million dollar government contract to install security equipment in all of its Canadian embassies. Seriously? Not only does this not make sense from a ‘support Canada’ perspective, but also from a national security perspective. Given the current situation with Huawei’s Meng Wanzhou detention in Canada, and China’s response to arbitrarily detain two Canadians in China, giving a state backed Chinese company security contracts with our embassies seems somewhat reckless. Other companies lost out on the bid since Nuctech came in with a cheaper bid… but of course they were most likely subsidized by the Chinese central government to undercut other bidders.
China leverages the resources they have at their disposal, and capitalizes on global market demands. They are only responding to what the global market will accept. There is no doubt that some of our most favourite products would increase in price if manufacturing were shifted to the USA or Canada from Asia. The end cost of an iPhone could possibly double if all components were manufactured in America. If components were still sourced from Asia and then assembled in America, the cost is estimated to go up by about 10-20%. The other issue is the required workforce to make high volume products like the iPhone. As reported by the ‘Business Insider’, it is estimated that the Chinese workforce required to manufacture and assemble the iPhone is about 150,000. Is it even possible to find those workers in Canada and the USA?
It is really a personal choice dilemma for consumers. Keep buying the cheap foreign produced products and have more discretionary income and eventually your own local economy will suffer, or start paying a higher price now for your favourite purchases and contribute to the future of your country’s ability to support a good quality of life for its citizens. As consumers, our behaviour and buying decisions will determine the success and failure of global producers. As well, our governments need to be empowered by the people that elect them to set parameters around foreign investment and ownership to protect our future economy and national security.
Given recent positions by countries to provide a greater focus on supporting national interests, specifically by the Trump government in the USA, and the pressures of the global COVID pandemic, things are changing… companies are starting to leave China. Mainland China will likely lose their status as the world’s leading manufacturer with companies moving operations in favour of other global locations, outside of the trade wars, tariffs, and political risks. Staying a step ahead, China is investing heavily in the African continent, setting up manufacturing to diversify and take advantage of an abundance of natural resources, available labour and market demand. Mexico may also be another big winner in this transition of global manufacturing, offering an affordable workforce, extensive transportation infrastructure, and a stable currency.
Many people thought Trump’s nationalist rhetoric was something that was narrow-minded and would actually end up hurting the US economy. As it turns out, the impacts of the global pandemic have made Trump a bit of an accidental clairvoyant with many countries turning to nationalism as a means to save their economies, and to protect their own populations.
The nationalist attitude was actually alive and well before the pandemic and demonstrated for the world in June of 2016 when the UK voted to leave the European Union (EU). Time will tell if the BREXIT decision will be a strategy that benefits the UK, or because of further complications as a result of the pandemic and without the protection of the EU, the UK will experience serious economic hardship.
Lots to think about. The world is facing a rate of change like never before, altering perspectives, shifting attitudes, and age-old foundations crumbling. It is not all doom and gloom though. The evolution and re-evaluation of globalization has provided a deeper look into the pros and cons of countries and cultures relying too heavily on one another. And the pandemic has brought a significant focus to some of those issues, in a big way. At the end of the day, it is really about health, safety, and quality of life for each society… the pursuit of happiness, that determines an individual’s ultimate decisions. The synergy of the combined decision making by a nation’s people and their respective governments will define the new normal.
Ideally, governments should make decisions in the best interest of their populations. But all too often, corruption gets in the way and the people are held ransom to a regime that puts their country’s economy and individual safety at risk. If I were to ask you what country held the greatest oil reserves, what would you say? Well, the answer may surprise you. Venezuela currently has one of the worst economies on the planet, yet it holds the world’s largest oil reserves. So, what happened? Poor leadership, corruption, boom-bust cycles, inadequate investments in key sectors, and the list goes on.
So how do we as consumers support our own safety and security within the country in which we live? Beyond the aspect of holding those in government accountable through open and fair elections and thoughtful debate over policies and legislation by informed experts in government, the opposition, the business and scientific communities… we as consumers need to be informed and willing to invest in our own country through paying more attention to where we are spending our money.
Focus on quality and supporting our home economy will require consumers to assess purchases by more than just price alone. Remember, you get what you pay for. That always holds true. From my own experience, paying a little more now for a product provides greater satisfaction with the performance of the product, as well as the product’s longevity… which contributes to the product really paying for itself over time.
Recently I accompanied a friend who was shopping for a spa. We ended up at Jacuzzi and were subjected to the sales pitch, which actually was very impressive. By the way, the demand for home investment products has sky-rocketed given the realization by many that vacation and travel spending is not an immediate option, and time spent at home will be much higher… so why not invest in making living spaces more comfortable? Anyway, the part of the sales pitch that sold me was the fact that the product was manufactured in Mississauga, Canada. This was the result of Jacuzzi (an American Company), buying Hydropool a Canadian based company located in Mississauga.
The salesperson actually started their pitch with, “Jacuzzi isn’t the cheapest, but we are definitely the best.” Again, you get what you pay for. She went on to describe exactly why their products commanded a higher price, and she made a compelling case. To the consumer who will do their research and assess the information before them to make an informed decision, spending a little more will make sense… especially when you are receiving a superior product, supporting your own country’s economy, and ultimately doing your part to contribute to the nation’s recovery from a damaging pandemic.
I for one will do my best to always research where a product is produced before making a significant purchase decision, making sure that some form of support for Canada’s economy is considered through ‘at home’ employment opportunities, manufacturing, or provision of other product aspects such as provision of parts, service, assembly, or raw materials. Looking for some evidence of the “Made in Canada” aspect of a product as part of our purchase decisions will be a significant boost for our economy, and will ultimately benefit the quality of life for you and your family.