Globalization Perspectives in an Unstable World
Kirjoittanut: Xiaoqing Yang-Pyydysmäki - tiimistä FLIP Solutions.
According to the textual research of the British sociologist Roland Robertson in the “Encyclopedia of Globalization”, the word “globalization” originated in the 1970s, became popular in the 1980s, and became well-known all over the world in the 1990s. During that time, it was the most fashionable and media widely frequently used word. Globalization is a term used to describe how trade and technology have made the world a more connected and interdependent place.
Globalization also captures in its scope the economic and social changes that have come about as a result. Manfred B. Steger has described globalization in his book Globalization: A Very Short Introduction “Globalization is a set of multidimensional social processes that create, multiply, extend and strengthen the interdependence and communication while promoting a growing awareness of the connection between the local and the far-flung.” However, since the outbreak of the epidemic in 2020, the existing order and development speed of globalization have been broken, and the optimism of mankind about the world has also been broken. Anti-globalization activists continue to speak out that Covid-19 has ended the course of globalization, globalization is dead. What happened to globalization? Has globalization come to an end? In the post-epidemic era, people cannot help but ask: What does globalization mean now?
Before discussing globalization issues, there used to be a frequent topic about how to increase the competitiveness as well as the longevity of companies all over the world in the scenario of the intense race in technology and the trade war between US and China. After the hit of the corona pandemic in early 2020, the economic specialists have redirected their concerns to the discussion on the solutions for the companies to get over and survive the unforeseen difficulties of the pandemic.
However, another big shock to the global economy has begun when the Russian government started the war with Ukraine in February 2022. Disasters after another have knocked out many companies all over the world and made a lot of changes not only in the companies’ business situations but also in the world order. Since then, the perception of many countries, organizations, and companies about what had been the undisputed precedent of globalization has been put on the table to be reconsidered.
Dimensions of Globalization
Manfred Steger argues that globalization has four main dimensions: economic, political, cultural, and ecological (see figure1). Economic globalization refers to the widespread international movement of goods, capital, services, technology, and information. The International Monetary Fund (IMF) believes that economic globalization increases the interdependence of the economies of all countries in the world. Political globalization refers to the intensification and expansion of political interrelations across the globe. Cultural globalization is the intensification and expansion of cultural flows across the globe. Ecological globalization refers to social and environmental issues around the globe.
Figure 1. Dimensions of Globalization
Globalization changes caused by the Corona pandemic
Before the pandemic, the companies which do international trade were more agile and innovative in their business strategies, seeking new markets, developing new products, or finding more efficient ways of participating in the globalized market. All companies needed to learn continuously and fast how to adapt to develop in that scenario. However, nowadays, the issues that they are facing are more challenging and unpredictable. This requires them to create smart suitable solutions and urgent actions for not only being able to develop but mainly to keep their business operation surviving.
One of the efforts of globalization is to make positive changes in the global economy through transnational cooperation in many business fields in order to optimize enterprises and country resources. From there, they can reduce product and service costs and increase the competitiveness of the companies and the country’s economy. Naturally, accompanied by the development of the globalized economy are the increase in urbanization and the increasingly tight integration of the world economy.
From there, trade and tourism, as its essential components, have become significant contributors to the spread of infectious diseases. Since coronavirus news was published globally first in Wuhan, China, the commutation of passengers through countries has led to the rapid uncontrollable spreading of this virus all over the world. Before this Corona pandemic, there used to be many other kinds of pandemics spreading all over the world, however, globalization has made the disease transmission happen faster, causing a more severe impact on a global scale.
According to Our World In Data and JHU CSSE COVID-19 Data, until April 2022, besides causing the deaths of more than 6- million people, the Corona pandemic has affected people’s daily lives and the economy all over the world. One of the reasons causing that situation is the lockdown policy of countries. Obviously, the reduced consumer confidence in the marketplace has led to a decrease in market demand. Consumers have changed their shopping habits and hesitated to spend money in the early stage of the pandemic. The lockdown has restricted people from spending money. The restaurants, bars, shops, etc., were being shut down and air travel was suspended during the high peak period of the pandemic.
The economic consequences of the coronavirus pandemic have caused many people to think their household income would continue to fall in the upcoming months. According to The McKinsey & Company Consumer Pulse survey about how consumer behavior impacts the industries during the pandemic in the US, Brazil, South Africa, Russia, UK, France, Germany, Spain, Italy, India, Japan, Korea, and China, the expected spending on grocery and home entertainment industries had quite positive results in most countries in the list. Other industries, especially service, travel, and transportation have been impacted negatively.
Moreover, the pandemic has affected the mobility of globalization. The lockdown has frozen all tourism activities all over the world. Many employees in this industry lost their jobs when related services like restaurants, hotels, resorts, diverse ways of entertainment, etc., faced bankruptcy because there were no tourists. The gloomy picture of the tourism industry has been seen so clearly in Vietnam, which used to be one of the favorite destinations of international tourists before the pandemic.
The lockdown policy utilized by the countries also made a quite tricky situation for business, causing a shortage of transportation and high transportation costs. Many countries claimed the reduction of trading through seaports. For example, when Hekumu wanted to import herbal tea products from Vietnam, they faced the same transportation difficulty as many other companies all over the world at that time. Vietnam has locked down everything. There were not any companies offering oversea transportation services throughout Vietnam and even the customs offices have stopped working during the whole high peak period of the corona pandemic. For example, even though Hekumu has tried to contact DHL express delivery service, they were not working either. At that time only DHL in Singapore offered the service, but there were few shipments as before and the price was extremely high.
At the same time, the pandemic also affected badly to the business of many airlines all over the world. Most airlines have banned flights to countries restricted due to COVID-19 and, accordingly, the passenger number has been reduced significantly. There are many big airlines that announced bankruptcy or the stock prices have been continuously reduced during the pandemic.
In addition, the coronavirus pandemic also made it much more difficult for the global supply chain and the major industries. Besides the shortage and stagnation of logistics activities causing the supply chain disruption, the lockdown policy in countries indirectly led to the bulk reduction of orders in the consumer goods manufacturing countries like Vietnam due to the reduction of global consumption. From the sharing of my brother who is working as the vice manager in one of the biggest shoe manufacturing companies in Vietnam, the order amount has been cut down a lot compared to the orders of previous years.
Most companies decided to lay off half of their employees or reduce the working hours per week trying to maintain the production activities until the situation of the pandemic could get better. Besides, many strict restriction policies in the working place required by the government doubled the difficulties for the companies’ manufacturing activities. A bulk amount of unemployment, the significant loss of talented employees, and the reduction of productivity are common difficulties in all industries globally.
On the other hand, the pandemic has also changed the connectivity and exchanging activities of globalization. A series of events have been canceled or delayed till the following years and organizers have had to think of new ways to move events to online platforms. For example, the 2020 Summer Olympics to be held in Japan were rescheduled for 2021 or the festival events globally had to delay their plan until a new schedule which nobody could know when.
In Brazil, the entertainment industry found an interesting way to not let the industry die through live shows on YouTube for example. It was a way that artists and producers found of avoiding social contact and keeping some kind of money flow even though the result could not be compared to regular concerts. It was a way of bringing happiness and help to people in desperate times, and globalization allowed Brazilians all over the world to experience it.
Also, the business trips the international companies had to move totally to the online meetings or the annual export and import exhibitions events had no plans to open again for the unsure scenario of the pandemic. At the same time, the fear of COVID-19 and remote working or studying situations have made the workers, and especially many students fall into a psychological crisis and reduce their creativity and productivity.
Moreover, the pandemic also brought up the unbalance in the supply chain. From the very beginning of this global pandemic, there have been reports of severe shortages of medical equipment supplies, like facial masks, gloves, medicines, sanitizers, test-kit, etc., and push the demand and purchasing prices of these items to the peak globally. Together with that, there used to happen the global food supply crisis because of the disruptions in food and agriculture production as well as the supply chains and the disruptions in local and international mobility, delays in customs, etc. This supply resource crisis has alarmed all countries about the possible risks to their country’s supply chain security, change their perspective about what is taken for granted before in the global supply chain, and force them to reconsider a long-term national strategic plan accordingly.
The global supply chain is gradually turning into a supply network
The whole global supply chain has been designed to save maximum costs and the distribution network all over the world can operate and link rigidly across oceans and continents with cheap prices and high prestige. However, the pandemic has created a new world order in the global supply chain. The basic principles of globalization like looking for the suppliers which have the cheapest offers, no matter how far the distance is, and the must-haves of the global supply chain like raw materials should always be cheap and available, shipping only costs a small part of the goods’ value, or all shipping is always reliable, have been reconsidered by all globalized companies.
The US-China trade war since 2018, the coronavirus pandemic, and the sanctions against Russia have worsened the global supply chain problems. Because of that, the companies started to have new strategies to build more factories, in more places, and purchase materials from more suppliers, leading to the creation of the new trend of globalization: the supply chain of the world has gradually been changing to the supply network with an effort to make their supply chain stronger and less risky. The supply chain network is known as “multi-sourcing,” according to Nathan Resnick, President, and Co-Founder of Sourcify, a service company that locates and manages factories in Asia.
However, not only the globalized companies but also the countries’ leaders have changed their perspectives to find ways to strengthen domestic supply chains and seek to reposition nation supply chains within politically allied regional trade blocs.
As shown, the modern world depends on globalization in a lot of ways. A world without it, one where every country would be almost completely self-sufficient is hard to even imagine anymore. Not to mention that most people would not even want to imagine that. No traveling or ordering goods and raw materials from other countries – a modern man’s nightmare. All of this is why it is easy to see the current situation as a solely negative one, but there is one aspect that the decrease in globalization can have a positive impact on, global warming. Since the globalized world is one of the biggest reasons people in developed countries are able to live the life they do, people do not really like to question the system. To say out loud that the moving of goods around the world is killing our planet is to say that people should give up the luxuries they enjoy in everyday life.
Arguably the biggest change globalization has brought to the world is the way we are able to move raw materials and finished products from one country to another. In the past, most things that people needed were likely sourced, produced, sold, and used relatively locally. The reality today is that most people in Finland for example daily use goods produced halfway across the world.
The longer the journey to its destination the more fuel is used, which means a greater level of greenhouse gas emissions. According to the Finnish food and drink industries’ federation, Finnish people drank on average 9,9kg or 1100 cups of coffee per person in 2019. (etl.fi, 2020) These things are hard to put into perspective but considering that that is only one specific product, anyone can try and imagine the volume of goods delivered here every year on land, via the sea, or by flight. Also, the only problem is definitely not fuel use. Building roads and bridges destroy habitats and transporting by the sea always mean risking oil spills or introducing invasive species.
Another devastating impact of globalization is overspecialization. Overspecialization is when a country, due to global demand, starts to heavily focus on its economic strengths which often leads to the overuse of natural resources. Although this is often overlooked or only seen from the perspective of the income it brings to a country, it is one of the leading causes of the destruction of our environment. The world’s dependency on Brazil’s meat production has led to illegal deforestation, coastal areas in Southeast Asia suffer from decreased fish populations and oceanic pollution, and areas of tropical climate bear the cost of coffee and cocoa overuse.
Interview about effects of Globalization, COVID-19 pandemic, Ukraine-Russia conflict, and multiculturalism
In this globalized world, it is quite common nowadays to work for companies, large or medium size, that operate in various parts of the world. The COVID-19 pandemic increased the possibilities of remote work, as the need to escape its effects, mainly economic and health-related, also started to grow in a rapid way. The uncertainties regarding COVID, the high numbers of death and infection, and the indispensability of social distancing to control the virus has made remote work and study a viable option to continue living in one way or another.
Below, an interview with a Brazilian employee of a large Canadian company shows the views of a Project Manager regarding globalization, remote work, the effect of wars on the multicultural work environment, and much more. The interviewee has experience in team leadership, customer support, and a degree in Business Administration. She is a B2B startup marketing specialist and is currently working on her Master in Science of Marketing in the USA.
1 – How do you feel about working for an international company?
I feel very good and if there are no limits. The environment is really nice and I get to have contact with people who work in the complete opposite of the continent I work from. I am able to understand them regardless of the distance and their life stories, which are completely different from mine. It is actually a personal realization to work in an international company because I have always liked to get to know different cultures and I am happy for this opportunity, I feel super privileged. All the time and every day I learn something new from those people from all over the world.
2 – Do you see the relationship between globalization and how the current way of working was built?
For sure, I believe globalization nowadays is completely linked to technological advances and the way of working is totally related to computers and phones. I can work from anywhere if I have my computer and my phone with me, the internet is good and the number of available platforms to perform my work remotely are huge, they have developed a lot. As a Project Manager, I work with different platforms related for example budget control, management of activities and tasks, control of working hours, communication, etc. Certainly, in a non-globalized world, I would not be able to do what I do today.
3 – What are the pros and cons of working with different cultures?
Starting with the pros, you get great personal and professional growth because you start to understand how people are and behave, this requires a lot of one, and communication skills develop a lot. Not just the communication regarding speaking in a language that is not your native, but the communication in dealing with people from completely different cultures. When it comes to professional growth, education in different countries is completely distinguished from each other. Today, I work with a multicultural team of people from Georgia, another one from Colombia, Canada and Panama. These people have a totally different education but in the same field, so their references end up becoming references for me too and I end up having contact with this new valuable information from different countries.
The cons of working with a different culture are that diversity is difficult to deal with. If someone is more open or more closed, this also has to do with culture and not only with the individual. It can end up in a good relationship or having a communication conflict. I, as a Brazilian, am more open and I like to mix my feelings a little and talk about things that are not about work during work. There are many people from other cultures who don’t like to do that, such as Americans or people who come from cold weather places in Europe, that’s what I’ve already noticed. Some don’t like to mix the personal side with the professional. Time zone is also a problem because the difference is very big and it delays the work a little or makes someone have to work outside normal hours.
4 – Has the COVID pandemic affected the business you work for in any way? What about your performance at work?
The pandemic directly affected where I work for two main reasons, the first scenario is people needed to take time to take care of themselves or family members because they were going through difficult times. So, naturally, the company’s workforce is reduced and harmed because people had to take this time. The other scenario is related to customers, the number of project proposals dropped absurdly, and some that were already on the table were not closed. I realize our clients were probably also working with cost containment and had to prioritize other things, thus, deprioritizing the type of work my company does for them. Sales had a very large gap, and consequently the project operation team too. Some months I couldn’t fulfill 50 percent of the hours of my contract because especially in 2021, sales weren’t able to close as many contracts as usual.
5 – How do you feel about remote work?
Sensational! I don’t see myself working in an office anymore. I like to know that there is an office that I can go to whenever I want but at the same time, knowing that my main one would be my own home. I like this because I can organize my routine a lot better, cook what I want to eat, sleep more, follow a diet and balance my attention to things at home, and exercise. The issue of spending time in traffic also used to annoy me and I don’t need to spend that time on it anymore, which is great. Flexibility is also another positive point because I work for a company in Brazil, another in Canada and I study in the United States. I think that’s really cool and I wish I could travel and work all the time.
6 – Do you believe wars affect employees’ performance or the business in general, especially in multicultural companies? Have you seen the practical effects of the war Ukraine-Russia so far?
Of course, I working for a company that is originally from Poland, even though its main headquarters is in Canada, many of our employees are from Western Europe, and I personally know many people from Ukraine. We received several emails about how the employees could help, either by donating or opening doors for refugees. I’ve seen a lot of this situation happening, several committees have come together to figure out how to help as a company.
In addition to me being a marketing and communication professional, there are small details that the company can do to express support, such as changing logos with the colors of the country’s flag, or being proactive when campaigning with employees to help. We work with a freelancer platform and we noticed that they suspended operations in Ukraine and Russia, causing us to lose contact with them and it became difficult to, for example, pay the employees from those countries through another platform, etc.
7 – Do you see yourself today working in an environment without cultural diversity?
I wouldn’t like to work in a place that doesn’t have a diversity of cultures. I think it’s really cool to see these different things and challenge yourself to speak another language. I feel that if I was working only in a Brazilian company I would be doing the same thing all the time, talking only with a colleague, a friend, with someone from my day-to-day life, and that makes it just a regular job. In a multicultural environment, I don’t feel limited. I feel freer and as if I have access to more things. It’s more different from my daily life, I even have a clear division in my head that when I’m speaking English, I’m working. When I’m speaking Portuguese, I’m just living and enjoying life. I wouldn’t like to change that.
As this essay shows, globalization has affected our lives in numerous ways. It could even be argued that it has completely shaped the world we now live in. The pandemic hit the world heavily and helped shine a light on the problematic side of this phenomenon. As the world collectively recovers from the effects of the corona, many are wondering what the new normal should be.
From students to the global economy, the world is at a pivotal point where we get to decide if we just go back to the way things were or take the learnings from this time to action. Even though studies have shown that remote work and isolation have led to an increase in mental health issues, there are also people who prefer it as the person interviewed. The same is true in so many things concerning this topic. What is preferable to a country’s economy might not be that for the environment. It’s easy to look from afar and say that someone shouldn’t be growing crops in an unsustainable way, but if that is what’s making a local community thrive or feeding a family, then who are we to make the rules? Hopefully, the world will take this opportunity and create a more just and sustainable system in all aspects.
Written by Luiza de Oliveira Vago, Saana Keränen, Suong Tran Thi Ha and Xiaoqing Yang-Pyydysmäki.
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