News / 'Retreating from globalisation can put your competitive position at risk'

DHL CEO John Pearson

Claims of a fracturing global economy brought about by deteriorating China-US relations continue to be overstated, but Russia’s international ties have been battered by its war on Ukraine, according to the latest Global Connectedness update from DHL.

Steve Altman, director of the DHL Initiative on Globalisation at NYU Stern’s Center for the Future of Management noted that the tracker indicated countries were “finding creative ways to preserve benefits they derive from globalisation”.

“In turbulent times, it is essential to look beyond the political crossfire about globalisation to make informed decisions based on how international flows are actually developing,” Mr Altman continued.

“While there is no guarantee the recent resilience of global flows will continue, it highlights how creative ways can preserve benefits of globalisation. As long as markets stay connected, a company unilaterally retreating from globalisation can put its competitive position at risk.”

Of particular note within the report was the diminishing trade flows between China and the US, with China’s share imports of US imports having collapsed from 21.2% in 2018, when then President Trump enacted a trade war against China, to 12.9% as of July this year.

In the same period, China managed to grow its share of the rest of the world’s imports by just a percentage point, up from 12.7% to 13.9%, with the DHL report noting the two countries “had an unusually high level of connectedness before the current separation trend began”.

The report added that “while geopolitically driven shifts in international flows – such as those between the US and China – naturally captivate the world, it is essential to keep their magnitudes in perspective”.

And despite being the buzzword of 2024, the report also suggested “diversified” trade flows may also lack some of the substance that press coverage had given it these past 12 months, with the report noting that the diversification of goods trade had remained stable this year.

Providing an update this morning, CEO of DHL Express John Pearson noted that “countless opportunities” remained for companies and countries alike to bolster their market growth “across the globe”.

“Outlines of this complex landscape remain in flux, but fundamental drivers and benefits of international engagement endure. Global trade enhances international exchange and fosters opportunities to empower individuals, businesses, and allows nations to flourish,” he added.

One country that has, however, experienced a more precipitous drop in capital, trade and information flows is Russia, which since its invasion of Ukraine has seen a 78% decline in a share of EU flows to or from Russia.

The report commented: “Unsurprisingly, an active military conflict and sanctions imposed in response has caused a far deeper split between Russia and western-aligned countries than tariff increases and other de-risking policies have between the US and China.”