06 Jun 2023
Asia and the shifting sands of geopolitics and globalization.
The geopolitical landscape in Europe—and beyond—has been permanently altered by the Russia-Ukraine war, unifying the West after years of strains in the coalition. Existing member countries have renewed their commitments to NATO (North Atlantic Treaty Organization) and the European Union (EU), and membership of both bodies is set to expand further; Finland has already joined NATO in April 2023. Russia stands increasingly isolated on the continent.
One key element of production that we expect to be significantly affected in this context is global supply chains. Strategic alliances have given increasing momentum to the concepts of nearshoring and friendshoring. The “old” globalization model of offshoring meant that companies tended to relocate production to wherever costs were lowest. As geopolitical tensions intensify, concerns have increased about, among other issues, reliability of supply as well as the physical location of production technology. This has resulted in issues other than just cost factoring into decisions about where to locate production.
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Investments entail risks, the value of investments can go down as well as up and investors should be aware they might not get back the full value invested.