Beyond the orthodoxy of globalisation

Seismic economic shifts in the west and China will see globalisation take on radical new meanings.

Globalisation is currently the subject of much debate. One argument, set out by François Bourguignon in The Globalisation of Inequality, is that globalisation must still be seen as the central, immutable force of the 21st century, albeit one that is bringing with it new patterns of inequality and the necessity of individual entrepreneurship.

Another view, from Sean Rein in The End of Cheap China, is that we are moving towards an era of reverse flow, in which the empowered Chinese worker (and consumer) will no longer be prepared to provide cheap goods to western markets. This will have a profound impact on current business models that are based on the assumption of the endless supply of cheap labour.

This raises a question about the sustainability of mass fashion retailers such as Primark, which continue to enjoy substantial year-on-year growth, despite the recent ethical questions lobbed in their direction. The fashion industry knows how to take a trend and make new styles available in the blink of an eye, but for how long will this be possible?

One of our key consumer trends for 2013 is de-globalisation

At heart, this is the active rejection of foreign goods in support of struggling home economies. Some readers will remember several versions of this that were led by governments, rather than consumers. ‘I’m backing Britain’ was a campaign from the Wilson government in the 1960s, while Cool Britannia was the brainchild of the Blair administration. So this is not necessarily a new idea, but a refreshed and fit-for-now version of its former self. Like so many trends, it comprises conflicting and contradictory tendencies that are difficult to unravel.

A long-established complementary Future Foundation trend is Local Preference – something that all our supermarket clients have been playing (Morrisons’ Market Street, for example). But is de-globalisation just a sentimental attempt to turn back the clock and create a new nationalistic form of consumerism – perhaps chiming with the current political mood? Maybe what we are really looking at is the idea of ‘glocalisation’ making a return from the 1990s. Tesco CEO Philip Clarke recently said it would be those who best harnessed the power of the internet, engaged with customers in a flexible and interactive manner, and married global innovation with local application who would prosper.

But I would argue that something more fundamental is afoot. In our newly-launched US trends service, this idea is encapsulated in ‘(Re)Made in America’. It revealed that more than half the population want to buy American for the good of the economy and it makes them feel good to do so. And they will be able to do so without sacrificing price – re-shoring is the buzzword in manufacturing, with GE, Otis and Buck leading the way. Whirlpool advertising now leads on the Made in America theme, as does upmarket men’s clothing brand Club Monaco.

We are seeing a greater interest in home-grown innovation and social entrepreneurship

In some ways, this reflects an earlier trend, the phenomenon of Frugal Innovation, in which leaner problem solving in emerging markets leapfrogs innovation elsewhere. But now this can happen in your own disadvantaged localities, rather than abroad. Examples include Farmigo, which connects farmers directly with consumers, and Cigar City Brewing, which brings a Cuban twist to local beer manufacture in Florida.

The tired assumptions about globalisation are also disrupted in other ways. For example, manufactured goods are not the only things that can now bear the Made in America seal. New science is playing its part: an increase in oil fracking and production of natural gas is seeing an energy revolution in the US, with the International Energy Agency (IEA) predicting the US to be energy self-sufficient by the close of the current decade and an energy net exporter by 2030. Achieving energy self-sufficiency will be a massive psychological and economic boost to the US and will reframe its relationship to the rest of the world, after decades in which so much foreign policy was about securing future oil supplies.

This astonishing reversal and the fact that, very soon, offers ‘made in China’ will be neither cheap nor inferior, raises the serious question as to whether a western model of capitalism, itself now in tatters, is the end goal or even desirable in the dynamic, growing Asian markets. This means we need to think afresh about what globalisation will mean in the decades to come.

The meaning and nature of consumption is being bent out of shape by powerful cultural and political differences. Good ideas and new services are being born in the digital environment anywhere in the world and often with an uncanny simultaneity that means globalisation is definitely no longer a one-way street. Globalisation now means agility and adaptability in either direction.

Melanie Howard is chair of the Future Foundation and a trustee of the Women’s Sport and Fitness Foundation [email protected]. This article was taken from the June issue of Market Leader. Browse the archive here.