• For companies looking for diversification into new markets, India, Mexico and Southeast Asia are prime contenders, former Australian Prime Minister Kevin Rudd stated Sunday. 
• India specifically has seen a pivotal shift in financial insurance policies over the previous yr that might flip it into a brand new market and manufacturing hub, Rudd stated.
• He instructed a German enterprise convention in Singapore that German Chancellor Olaf Scholz’s place on doing enterprise with China was balanced.

For companies looking for diversification into new markets — particularly given the geopolitical dangers surrounding China — India, southeast Asia and Mexico are prime contenders, former Australian Prime Minister Kevin Rudd stated Sunday. 

“When I look around the world, I see three sets, three zones of activity which are currently benefiting from let’s call it ‘the great diversification’ or … [the] ‘early decoupling debate,'” he stated on the Asia-Pacific Conference of German Business in Singapore. 

“One is Southeast Asia, where we are now, the second is India … And certainly from the North American perspective, it’s Mexico, obviously benefiting from the Nafta, or the Nafta-plus economic arrangements.” 

India specifically has seen a pivotal shift in financial insurance policies over the previous yr that might flip it into a brand new market and manufacturing hub for multinational corporations, Rudd, who can be president of the Asia Society, stated.

“As someone who’s dealt with India for the last 20 years, for the first time, I became convinced that they are about to attempt a significant policy shift,” Rudd instructed the convention.

“If they can pull that off, it can turn India into the next China in terms of a large scale consumer market, and also a reliable, global factory,” he added.

“Can [Modi] translate that into reality? Again, an open question.”

India, specifically, may probably present exporters not simply with alternatives to diversify provide chains, but in addition new end-markets.

The elevated competitors between the U.S. and China and the disruptions introduced on by the pandemic has heightened the significance of diversification for international companies. It has additionally heralded new commerce alliances and so-called “friend-shoring” — the creation of provide chain networks amongst allies and pleasant international locations.

‘The proper stability’

Rudd stated that Germany, as Europe’s largest financial system, will play a serious function in shaping the “China-specific debate” on the continent.

Germany has intensive investments in China and has confronted criticism for its reliance on the nation for commerce and enterprise, though business representatives have downplayed those concerns.  

Last week German Chancellor Olaf Scholz’s maiden in-person visit to Beijing ruffled feathers in Europe amid rising political pressures for Germany to scale back its reliance on China. 

“My German friends constantly underestimate their level of influence on the global debate, and underestimate their level of influence in the China-specific debate,” Rudd stated.  

“I had a look at Chancellor Scholz’s written statement a few weeks ago … before his visit to Beijing, I think he had the right balance on how he articulated German interests.” 

Prior to his Beijing journey, Scholz defined in an op-ed for the Frankfurter Allgemeine Zeitung and Politico  that he wouldn’t search decoupling from China, however as a substitute pursue diversification and financial resilience.

Rudd stated it was essential that international locations don’t “walk away” from the troublesome job of balancing nationwide safety pursuits, relationships with allies, human rights obligations and an financial relationship with China. 

Gunther Kegelk, CEO of German manufacturing multinational Pepperl and Fuchs, who spoke on a panel on the convention, stated that German companies had not been “naive” in organising provide chains and enterprise relationships in China and elsewhere.

However, Kegelk, who can be president of the German Electro and Digital Industry Association, stated companies might need to begin splitting up their corporations as a part of a brand new geopolitical playbook.

“And that would be exactly the opposite of what I did 30 years [ago] – [in globalizing] the company …  and globalization was right for the company in regards to strategy, in regards to sales … it was also right for the economy,” he stated.

“Now all of a sudden, everything is wrong. We were called naive or stupid to bring ourselves into these kinds of relations but we made a lot of money over the years. Not only us, but the entire European and German economies.” 

He added that many companies had been now struggling to regulate, particularly within the face of the sanctions and commerce guidelines imposed on China by the U.S. and others.