To navigate in today’s highly competitive international trading space, let us get some fundamentals as starters. Today there are 192 countries in the world. Since only the 20 years or so, a large majority among these countries have entered the global international trade space, thanks mainly to globalization, digital technology, advanced communication tools via satellite, cloud computing, search engines, IOT, hand-held apps, disruption in various fields, AI and the ever increasing social media.
The result of all these technology advancement in the last 20 years has resulted in a highly competitive global marketing world with new avenues of transportation, trading platforms, an array of financial services worldwide where time has become money and, added to this, the level of “greed” has increased to astronomical heights. One of the first casualties on a global scale, of the VUCA (volatility, uncertainty, complexity and ambiguity) world of trade, was the infamous “Libor Rigging” of late 2008 by known international banks which has large financial repercussions still running high till date.
The next stage was a wave of high end of global economic discussions via global summits on the ifs and buts and benefits of a new unity for undertaking global business, trade and investment partnerships via multilateral and bilateral relations among the so-called “like minded” countries. While all these was happening, technology took off with great speed and new types of business, products, services evolved and customer needs for new things grew at super high speed across the continents. The greatest beneficiaries were the tech savvy companies who concentrated on new methods of communication. Again, greed and money crept in and the globe started dividing – the rich, tech savvy and the not so lucky countries.
Consumerism saw a huge increase across the globe in the last 20 years, but the most pronounced were in those countries which had huge growing populations, starting with China, India, Indonesia, rest of Asia and the USA. Every country wanted a piece of this pie. By this time it was quite apparent that the world trading currency was by default the U.S. dollar, notwithstanding all the pressures and pulls by the G7 countries and later by the G20 countries. Added to this, some of the rich economies started saturating from 1995 onwards with low population growth and they started depending on China for all types of goods and services; the rest is history as they say.
China knew at least about 30 years ago that for a country to become known globally, one vital tool they need is to build a strong “foreign exchange reserve” in their country as all international trade billing was in U.S. dollars and U.S. dollars always remain in the USA. This is exactly what they have been doing, “building foreign exchange reserves,” and today after the U.S. economy, the next country in the global list is China. China, out of sheer grit, today is the only world supplier of goods and services to all the 192 countries of the world and their billing is in U.S. dollars. Their foreign exchange reserves is mind boggling.
Something had to be done, but was undone. Today, welcome to the global VUCA international trading world, where there is a divide creeping up. Again, greed is a factor. It was well known that there was a uniting partnership on a global scale between the USA and the growing Asian/Oceania continent. This partnership in the growing Asian region could have been the biggest “free trade partnership” without any barriers and it would also serve as a security shield in the region. This would have given the USA a new meaning for furthering international trade in the Asia region, particularly in the present times of digital technology partnerships and advanced communication tools.
Under the current Industry 4, scenario, this is affecting all parts of the globe both directly and indirectly but particularly so the enhanced Asia region, including India, where global business has kicked in with huge business potential as countries in this region has a young and growing population and consumerism is on increase. India predicts a GDP of 7.5 percent for the present year. All countries in the region have one goal, to increase their respective “foreign exchange reserves.”
In the midst of all this, the USA had pulled out of the Trans Pacific Partnership. The result of this is that they have given a clean highway of trade to China in the region. How to salvage this situation and how to secure this region are questions to be answered. A “win-win” situation is the name of the game and is the order of the day. This can be achieved by the USA on one hand and countries such as India, Japan and Australia on the other hand. This is only to balance the trade, investment, payments and security situation in the entire Asia region, which is on a growth trajectory as never seen before. It is already late in the day, but still if the USA plays its cards well, the only partner they can expect now is India.
Ramesh Kumar Nanjundaiya