In February 2016, China declared in its National Congress that there will be a battle for growth. This battle will consist of nation states fighting for global market share. As nations align themselves with the Eastern Eurasian cycle or the Western Trans-Atlantic cycle, the global playing field is changing into a full-scale economic competition.
Recession and Disruption
The global marketplace is shrinking. The transactions of the past are changing, as they are increasingly demanding better price, faster delivery, advanced quality, supportive aftermarket services, increased customer satisfaction, increasing shareholder returns, and more capable employees. The pressures on business to adapt are becoming intolerable.
Training demands increase daily as obsolescence within the business and the marketplace haunts the CEO at every turn. A head in the sand approach doesn’t work anymore. Threat levels increase daily with hydra-headed disruption coming from all directions. Small nimble competitors are appearing from all directions, and startups with little or no experience are taking on global corporations from nowhere and fighting for an efficient transaction.
As the market shrinks, so does the need for employment. Employees can find themselves without a job overnight. This then leads to recession as buying power evaporates and large numbers of people find themselves without a stable income.
This anger at the changing world economy leads to frustration and guilt, which turn to voter apathy, lethargy in leadership, and demands for change. This is why Donald Trump, the insurgent candidate, gained the Republican Party nomination.
Battle for Growth
In preparing for a battle for growth, China is getting ready for something that hasn’t appeared in the last 250 years. What the Chinese like to call the Dragon environment.
All economies around the world are going to fight for growth in a decreasing transactional environment. Take TATA steel in the U.K. as an example of what the future will bring. The Chinese are clearly fighting an industrial war here. Dumped Chinese steel exports at ridiculously low prices are meant to kill any possibility of doing business with other companies.
Because of the need to shore up shareholder value, there is constant pressure to cut costs. Any wrong move by a company competing with the Chinese may result in a loss in stock ratio, leading to a greater calamity of the share price falling. This is what the Chinese are hoping for.
Once the Chinese sell to distributors at prices marked down because of excess inventory in the Chinese marketplace, they will be looking to either shrink down their competition or eliminate it completely. This will allow ease of entry into the market at a later date.
Customers will have no choice but to buy from China because there won’t be any other competitors. The British know that when Tata steel closes down in the current crisis, imports of steel will have to be taken from outside the country. This then becomes something completely different, a matter of national security. Why? Because it takes decades to build up the infrastructure of an efficient steel industry, and once the foundation of these industries go, they never come back.
This Has Happened Before
You don’t have to go back too long to see these effects. The electronics industry in Silicon Valley, the motorcycle industry in the U.K., the automotive industry of Detroit, the aircraft industry and Boeing plant in Seattle, the textile mills of the past, the record industry of California. People speak of these changes as positive news, as if these jobs will go and better ones will come. Maybe. But these plants will not come back.
When Japan industrialized, it became a threat to the established U.S. brands in the 70s. The rest of the Asian economic tigers followed them in household goods production and automotive industry dominance.
This time however, the situation is different. The sheer size of the industrial giant stalking the world’s market place makes us quake in our boots. This is not Japan who follows our rules, or other competitors who play by the rules. This is China, which has dominated the world economy for 18 out of the last 20 centuries. They are returning to the number one spot, and they intend to make the world in their own image, just like the Japanese and Germans have tried to do before them with their respective drives for manufacturing dominance over the world economy.
The Battle for the Transaction
Indeed, disruption has always happened throughout history, whether in scientific, military, innovative, or social ways. Disruption is just another word for change. The key thing to remember about disruption is that it is based upon two concepts, defense and attack of the existing transaction.
The speed of the transaction in agriculture, manufacturing, and services is increasing. It’s not on-time delivery that matters any more, it’s now emotional delivery or instant delivery that matters. Can I get what I want with the swipe of my phone? Can I place one finger in the air and have a taxi turn up to take me where I need to go?
Disruption means one thing, can you attack a competitor’s transaction and compete with them on the elements of the exchange of goods and services? This is what Uber, AirBnB, and the Chinese steel industry are doing now.
They are disrupting the flow of finance from the customer to the supplier—in its basic form they are attacking supply and demand. You do this by analyzing exactly what makes up a transaction in its basic form and then you out qualify that transaction using whatever weapons in your arsenal you have designed, purchased, assembled, and created from scratch.
Overnight, competitors are disrupted using the basic attack strategy of a better transaction. Everyone in the marketplace is thinking about it right now.
It’s open season among nation states as well. In a recent infamous battle between America and China, Britain was in the center. America wanted Britain not to join the AIIB (Asian Infrastructure Investment Bank, a Chinese initiative that competes with the U.S.-dominated World Bank and International Monetary Fund), but Britain ignored the warnings and went ahead and joined anyway. And then Western nations followed them. The customers and countries flocked to the AIIB because they need to be involved in the economic development of Eurasia.
Essentially, Britain disrupted the World Bank and the International Monetary Fund by joining AIIB, which took the wind right out of the sails of the two previous banking flagships. So suddenly, the IMF and WB found that they were disrupted and had to change the way they operate in order to survive.
If they don’t change the way they do business and become competitive, they could easily lose out to entire countries, regions, and even continents as they become increasingly irrelevant to the smarter competitors who have attacked their previous nation of transactions with more value, capability and reach to the populations they intend to supply.
The British people followed suit and voted for Brexit, reinforcing the employment independence of the British people and Britain’s own preparation for the battle for growth.
Preparing for Battle
So how do you prepare for battle in such an uncertain and unpredictable world, where a competitor can spring up from anywhere? Where a trusted ally will just abandon you in the blink of an eye? When time has no boundaries and time to prepare doesn’t exist anymore? What do you do when there are absolutely no geographic boundaries to business and no interests except short term interest because of the enormous pressure balance sheets and uncertainty brings in the marketplace?
This is a very difficult proposition for every lawmaker, CEO, or shop floor employee who has pressures hanging over their head that they simply have not seen before. Each country, corporation, and enterprise will have to create their own plan to adapt to the world of disruption, depletion, and the rise of unrestricted warfare which everybody in the world is facing right now. We live through interesting times indeed.
Views expressed in this article are the opinions of the author and do not necessarily reflect the views of The Epoch Times.