Technology: One World, Two Systems

In this issue of Trends Reinforced, Chetan Sehgal explains why the global pandemic and US-China rivalry has driven demand for greater resilience and security of supply chains.

Chetan Sehgal, CFA

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In recent years, international supply chains have come under mounting pressure. Even before COVID-19, a growing number of companies and countries were already looking to diversify away from a perceived excess dependence on China, borne from rising Chinese labor costs paired with escalating trade tensions with the United States.

As Sino-US rivalry has extended from trade to technology, we’re seeing the development of “one world, two systems” in which geopolitical considerations play an increasingly dominant role in driving technology and trade patterns. This is already evident when it comes to the online giants—US companies regarded as household names such as Google, Amazon and Facebook do not have much, if any, presence in China’s online ecosystem.

The global pandemic has driven demand for greater resilience and security of supply chains, further reinforcing this structural shift. Global supply chains are starting to fracture, which poses challenges but also opportunities for those companies able to effectively navigate this changing environment.

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