GLOBALIZATION - reverse Globalization

last updated 2010 Jan 19
see witiger.com/internationalbusiness/globalizationSustainableDevelopment.htm
see  witiger.com/internationalbusiness/globalization-soverignty-issues.htm
see  witiger.com/internationalbusiness/globalization.htm
see  witiger.com/internationalbusiness/globalization-reverse.htm
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Reverse Globalization

UTSC MGTC46 student Kelvin L. emailed in jan 2009 to ask if we would be dealing with Reverse Globalization?. Kelvin explained "An example I can think of is Dell when they brought back their tech support to the United States because they found that shipping their tech centre off to India was not beneficial. " WTGR responds Thanks Kelvin,  1st Reverse Globalization (companies withdrawing from overseas ventures) is something business management students need to understand - however it is a term not yet "confirmed" and less well known because this "backlash" has only existed for a few years whereas globalization and outsourcing seems to be continuing to develop. 2nd "reverse globalization" is also coming to mean the way companies are responding to increased transportation costs - as noted in a recent (2008) paper “Will soaring transport costs reverse Globalization” published by CIBC (Canadian Imperial Bank of Commerce) and written by Jeff Rubin, and his colleague Benjamin Tal. 3rd - the term is not in use long enough to have a consistent meaning In 2007, the term was NOT used related to "bringing back activities", rather it was used to describe companies in emerging markets growing big enough to acquire companies in USA and Europe. Brad Setser writes "Nasser al-Shaali, chief executive of the Dubai International Financial Center (DIFC) Authority, recently used the term "reverse globalization" to describe one likely long-term consequence of the uphill flow of capital: Emerging markets will be buying companies – not just bonds – in the developed world. "

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Reverse Globalization

UTSC MGTC46 student Roshani T emailed in the 2nd class of Jan 2010 to comment on Reverse Globalization?. Roshani explained "I was reading an article in the Toronto Star regarding reverse globalization.  Google is thinking of leaving the Chinese market over censorship on its search engine. Currently Google owns 31% of the search engine market in China. China being the largest internet market, this decision to leave China may mean great losses for Google. When first entering the Chinese market both the government and Google agreed upon continuing discussions regarding ending censorship. However, it has been increasingly difficult for Google. This reverse globalization seems to have been brought on by a non-tariff barrier through strict regulation by the government." WTGR responds Thanks Roshani, this is indeed a good example of a large company pulling back. It remains to be seen (Jan 2010) if this a prudent saving of time and money, or a lost opportunity. Chinese Search Engine Baidu is extreeeemely popular and it might just be the case of Google saying "we make enough money in other parts of the world, no sense trying something that will be a major headache" - remember what i said that sometimes to be successful it is not about trying hard, or expanding, sometimes it is just being alert to avoid a major expensive mistake.

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Reverse Globalization - too expensive to do business overseas !!

UTSC MGTC46 student Prem A. emailed in the 3rd week of classes in Jan 2010 to comment on Reverse Globalization?. Prem's point was related to Reverse Globalization taking place for the simple reason it might be becoming too expensive to do business overseas. Prem wrote "I found an interesting article on reverse globalization. The article talks about how the oil production has peaked and that the world’s oil reserves are now being depleted. .  The author (Jeff Rubin) argues that even with conservation measures, increased efficiency and the current economic downturn, the overall trend for oil prices is dramatically upward. The projected consequences would be a 7$ per gallon charge for gasoline in the United States. This will cause reversal of globalization and a return of manufacturing to North America. This is because of increased transportation costs from higher oil prices, and will eventually outweigh the other cost advantages offered by manufacturing in China and elsewhere." WTGR responds Thanks Prem, some say increased transportation costs will indeed decrease overseas business, but other people say business will simply employ newer technologies to counter this increased cost". Prem is referring to Jeff Rubin, the controversial economist who recently stepped down as economist with CIBC World Market and is promoting his book  “Why Your World Is About to Get a Whole Lot Smaller”

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