Commentary / World

Firms need new strategies in new world order

by Radu Magdin

Special To The Japan Times

A new world order is in the making — the recent positions of key global leaders, some of them outright controversial, are just confirming trends that have been gaining ground the last couple of years. Irrespective of what they would want us to believe, politicians are not at the forefront of this change; as usual and somehow normal, they seek to adapt and survive. We are at a time when the winners and the losers of these global transformations are being decided and there are good reasons to believe that big business has drawn the short straw. New partnerships, alliances and strategies are needed to counter a strong reaction against globalization: There is a need for an updated strategy — and tactics — for Japanese companies in the “New World Order.” More than ever, the outward and export-oriented political blocs, countries and industries (such as Japan and the European Union) should mobilize and act.

Angela Merkel’s recent statements (in a nutshell, “We have to fight for our own future ourselves”) represent an acknowledgement of the reset of the post-World War II global order. Trans-Atlantic solidarity and cooperation, the fight against climate change, the attitude toward free trade — all these topics have found the United States and Europe on opposite sides of the argument and have informed the realist conclusion of the German chancellor. Simply said, it is all about protectionism and geopolitics again. Donald Trump is not an accident or a black swan. A premature end of his U.S. presidency would not end the causes of global realignment. His style is flashy and unpolished, but his gut feeling is well in place. What can be easily observed is that, with or without Trump, the tension between democracy and capitalism is growing.

Increased inequality in the West, coupled with a stagnation of real wages, has triggered a strong backlash against globalization. More and more people are joining what can be called the “losers of globalization” camp and they have become so influential in national politics that they can threaten not only the destinies of specific countries, but of the world in general (see the U.S. and French elections or the Brexit referendum). This evolution is an often-explicit critique of the way capitalism, as promoted mainly by multinational companies, has shaped the socio-economic realities of the past 30 years.

Like Germany, Japan depends heavily on the current global system. Lacking natural resources, it puts a high price on innovation, productivity and competitiveness. Its economic well-being depends heavily on trade and its presence in the U.S., European and Asian markets. Similar to China, South Korea and Germany, it saves far more than it consumes or invests. With industrial production at its highest level since 2008 and confronted by a labor shortage unseen in decades, Japan is an example of what success looks like in a functioning global system, and it can be heavily and negatively affected by major economic and political shifts. In addition to similar events in the U.S. and Europe, one cannot forget the vulnerabilities brought about by scandals in recent years involving Japanese conglomerates. As said earlier, in times of dramatic transformation, these big businesses, as an epitome of neoliberalism, have also contributed to the generalized lack of confidence in the way the world functions today.

Every economic actor should examine the strategy game again in the new context: As important as it is having a CEO and a CFO, in the new world order the CGS — chief global strategist, combining economic acumen with a political/power strategy mindset and intercultural charm — will be just as vital. The overall alternative to the current global landscape is too unclear for a counter-reaction not to be organized. Embedded capitalism, with a deeper understanding of inequality, access to equal opportunities and the role of the welfare state, should be saved. Free and global trade should continue to be the norm. Therefore, the business winners of global and open markets (such as Keidanren-member companies) should work together with the government of Japan to form new alliances defending a political and economic order that certainly needs an overhaul but not total abandonment.

Specifically, the business leaders of Japan and the EU should work together to force like-minded governments to better explain the benefits of real change and the major traps easy solutions entail. Reform is possible and the renewed discussion about technology, work and basic income shows how capitalism and democracy can again be brought together. Platforms of robust dialogue should be opened and allowed to flourish. Not only should an EU-Japan trade deal be completed as soon as possible, but these geopolitical and economic entities should rightly assume the role of representing a more humane and efficient West.

There has never been more need for cooperation and dialogue between the defenders of Western values. Business, political, professional and intellectual leaders should learn to act together and build bridges of realism, competence and humanist values. “Sauve qui peut” approaches will not work; cooperation and coordination are the only game in town for enlightened leaders. Strategists can guide the way to such success.

Radu Magdin, a former adviser to Romanian Prime Minister Victor Ponta, is vice president of Strategikon, a Bucharest-based think tank.