Knowledge Exchange

It is a normal working day. Like many others who work in my industry, when reviewing the quarterly objectives for 2020, I must dedicate a tremendous amount of time collecting, analysing and planning. It is headache-inducing work due to the increase of operating costs caused by the changes of international trade and the corresponding solutions to fix the problems.

“I can’t believe the air freight cost from Hong Kong to Sydney is now 300% more…”

“Seriously? the import duty of that product is now 25%? Wasn’t it just 5% last month??”

“We need to review the overall operation cost tomorrow – this is severe!”

Those are voices around me every day – from our business partners and internal teams.

A series of trade frictions that began at the end of 2018 have not been resolved in 2020. My industry, consumer electronic products, is the first to bear the brunt. What’s worse, impacted by the COVID-19 pandemic, job opportunities and incomes are reduced, which causes many to show up on the streets for political protests. These political activities, with names for kinds of fairness and justice, have different political purposes. A considerable part of decision-making thus has been made to restrict the process of open trade and economic globalisation in order to lock jobs at home.

In the United States, relations with nine of the top ten trading partners in 2018 are in a state of uncertainty. In Canada, customs announced tariffs on a range of U.S. goods worth 12.63 billion U.S. dollars. In the European Union, the four countries jointly issued a statement saying they would impose a 25% equivalent tariff on a range of goods imported from the United States.

These trade conflicts and measures have had a great impact on the daily operation of multinational companies. It happens that the price of the product specified last month will need to change immediately, otherwise the business will face a loss of profit. The decrease in the volume of goods due to the reduction of trade between the two countries will immediately be reflected in the increasing operating unit cost. From 2018 to 2020, trade friction obviously made the daily operation of the international supply chain tortuous and inefficient.

The impact of international trade on the global economy has allowed countries to exchange in larger markets. This is the first time that individuals have been able to gain more market and profit without conquering by force. Since 1990, after years of development, the pattern of the world supply chain has formed a complex relationship. A new tech developed in Seattle may be installed into an end product from Chinese manufacturers and put into scale production. Then, it can purchase product accessories from Germany. Finally, it is assembled in Cambodia, stored and labelled in Hong Kong, and delivered to the United States and Canada for sale. If Seattle fails to transfer the division of labour to Europe and Asia at the beginning, or if there is a problem in any part of the division process, other regions will also be affected on different levels. In the end, retailers in the United States will not be able to obtain the same price in the short term.

At the same time, in 2020, as a derivative of international trade, the flow of international talents who sell their professional skills and knowledge and experience is also restricted. Some developed economies have introduced different levels of control measures against the work permit of foreign talents. The cultivation of talents is not overnight, but a long-term investment and cultivation. Allowing the flow of talent plays a positive role in the R & D expenditure and efficiency of a country. If political decision-making places more restrictions on the circulation of talent and even directly drives them out of the country, the demand for high-end talents in the domestic market cannot be met in the short time, which may lead to the weakening of competitiveness in the domestic market.

With all of the above problems, international trade is in a relatively still status in 2020 and is not able to devise the positive effect on the global economy.

As a professional manager in this industry, I feel massive pressure with the significantly reduced development opportunity due to the global trade conflict, as well as the constraint on globalisation.

The views that the reduction of work should be attributed to the evil result of globalisation and that only reducing international trade is fair and good sounds rather contradictory and ironic. A country’s position in global trade should be defined by the value it creates, and core competence should be strengthened through international competition.

If I could also fight for some kind of fairness and justice on the street, I would call for the market to restore the autonomous function of resource allocation, let the value determine the job allocation in the world, and let the supply chain return back to normal.

Only when the economy is released from political kidnapping, cost efficiency determines the international job allocation, and the benefit of globalisation is allowed to be reviewed at a global level will we win back the long lost fairness and justice from 2020.

Industry: Information Technology & Services
Company: CMS Distribution
Job Title: Head of Operations