Foreign PolicyForeign Policy

Corporations can’t ignore geopolitics anymore

By Elisabeth Braw

04 Jan 2023 · 6 min read

Editor's Note

The days of corporate neutrality are over, argues a FP columnist. Multinational companies are increasingly  "friendshoring"— moving their manufacturing and supply chains to friendlier countries.

When Apple, once enthusiastic about manufacturing in China, announced in December that it was planning to move some of its production to Vietnam and India, it was clear that something had shifted in the way globalization worked. Now a new report documents what many have already surmised: Countries are aligning into two blocs—one led by the West, and one led, so far, by China. This development has enormous implications for businesses, which, since the end of the Cold War, have been able to operate globally with little concern for grand geopolitics. Now companies have to get used to a world where corporate neutrality is no longer a winning strategy—or even possible.

At one point, 85 percent of Apple’s Pro-series iPhones and many other Apple products are made by some 300,000 workers at the massive iPhone City plant in Zhengzhou. But the mobile-telephone giant appears to have come to the same conclusion as companies including its rival Samsung, which has moved some of its production to Vietnam. Globally operating companies, in fact, became uneasy about their dependence on China for manufacturing and sales some time ago. The global insurance broker WTW’s 2022 political-risk report, released in March last year, found that the ratio of executives saying they’re concerned about political risk in the Asia-Pacific region (in reality, China) to those saying they are unconcerned is now nearly 20-to-1, up from 2-to-1 less than two years ago. (I have occasionally consulted for WTW since November 2022, but I was not involved in the report.)

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