Economy

The tension between nationalism and globalisation is reshaping the world: Kumar Mangalam Birla

Our Bureau Mumbai | Updated on January 14, 2020 Published on January 14, 2020

Rules of commerce are being re-written in a world where nationalism has surpassed globalisation, according to Kumar Mangalam Birla, Chairman – Aditya Birla Group.

Penning down his thoughts in an article titled '2020: My Reflections, My Learnings', Birla said, " The tension between nationalism and globalization is reshaping the world and, will perhaps be the most defining trend as we head into a new decade."

Referring to the phrase coined by Thomas Friedman- the world is flat- Birla said the world was a very different place. "Back then he (Friedman) opined that technology and geopolitics were reshaping our lives while we were sleeping. Now that we are wide awake, I see a very different world, dealing with the consequences of globalisation and its discontent," Birla wrote in the post, first shared on LinkedIn.

"While the march of globalization is perhaps inevitable, what is certain is that the world is no longer flat. As globalisation makes way for ‘slowbalisation’, the emerging pattern of trade is more regional," he added.

Birla said that this new world is not for the faint hearted as one-third of Fortune 500 companies drop out every decade, and the average life of a company on the S&P 500 list has shrunk from 60 years in 1960 to under 20 years today.

Birla said that digital technology continues its determined march, providing outsized returns to a few winners. Scale today is being generated with very unlikely players coming together to form ecosystems, united by the insight that by collaborating, value can be created for both consumers and businesses alike.

"Cheap capital has sought exciting returns. The five years since 2014 have seen record flows of venture money across the world into attractive new technology-led opportunities. Some recipients have undoubtedly proved themselves worthy. However, 2019 has created a new respect for gross margins and cash flows. These trusty old concepts have been extricated from the archives, as businesses seek a renewed understanding of fundamentals. For most businesses, digital and otherwise, unit economics have begun to matter again," Birla added.

Published on January 14, 2020
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