I know about this stuff. The company I work for is so big it makes money without trying. In strategy meetings we very occasionally talk about London but hardly ever about the UK and never, in my recollection, about Brexit. It doesn’t figure because it’s not a company we can acquire.
But I also know what life looks like on the other side. I have walked behind Prime Ministers in Whitehall, in Downing Street and across the tarmac at Edwards Airforce Base. One of my souvenirs from that life is a Pentagon security pin.
So first off, I’d say this. Don’t get sucked in by the British media. They sell melodrama much like Unilever sells soap. Sometimes things can appear very dangerous partly because reporters, simply through competing with each other, hype up the narrative. Outside the UK, even in Europe, this drama is barely registering.
British business needs to rise above the Brexit fog into clearer skies and see what the world really looks like. For me, our future in the global economy will be shaped by the power play between American mega-corporations, the EU as de facto global regulator, and China as the world’s mightiest investor.
The big three
In August, Andy Haldane, the Bank of England’s chief economist, talked of the growing dominance of a diminishing number of mega companies which are grabbing a larger share of the global economy and changing the way it works.
If Apple were a country it would, by some measures, be the world’s 17th largest economy. The clout of America’s large corporations, their ability to buy up innovative smaller players and take exciting IP to scale faster than their rivals is the ultimate manifestation of Uncle Sam’s power.
The ties that bind these corporations to their host country are loose. The expectations of their shareholders, and the needs and appetites of their executives, are much more important to them than the national interest. Above all, the Trump administration loves businesses that create jobs in America, and, with certain exceptions that are too obvious to mention, it doesn’t really care who they are, what they do or where they come from.
In Brussels, officials have been known to mutter that more needs to be done to support large corporations within the European Union. Usually, such remarks are greeted with the kind of generic agreement that signifies that nothing will actually be done. Yet the EU has created its own powerful competitive advantage as the world’s regulator, developing standards and approaches and exporting them to other countries through trade deals which demand adherence to standards.
When it comes to developing policies around digital technology, for example, the EU seeks to use its 500 million citizens as a counterweight to America’s 350 million. The isolationism inherent in ‘America First’, the slogan with which Trump kicks off many official presidential statements, has helped the EU to consolidate its role as rule-maker.
China is actively expanding its global reach and influence. Massive state-backed conglomerates invest overseas where other companies fear to tread, often as part of its staggeringly audacious One Belt, One Road project. It’s good to see British investment in China growing.
You would be amazed by how quickly, at many of the meetings I go to, talk turns to the mysteries of the Chinese consumer. There’s always at least one personal anecdote, an awestruck reference to WeChat or Alibaba (or both) and a mind-boggling statistic. The one that stuck in my head is that China’s middle class will grow by about 40 million a year between now and 2030.
Hedging our bets
British businesses should watch what the mega corporations do and learn from them. They have succeeded, in part, by hedging their bets and striking alliances with all three power blocs. By situating material assets in each area, aligning with governmental priorities, companies are much more likely to find favour.
There’s not a lot of cross-Atlantic cooperation going on at the moment but ties of language, culture and commerce suggest that America is just too significant an opportunity for UK Plc to waste, especially with the present administration’s willingness to help any business that creates jobs.
So forget Brexit, don’t get emotionally swayed by the didactic political arguments, amplified by a media that has, not for the first time, lost its collective sense of judgement, and don’t worry about the UK national agenda because, at this moment in time, nobody can really say what that is.
Think only about your company’s place in the global economy and how the power play between the US, EU and China should shape your strategy.
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