Listen to this article
Entrepreneurs are often among the first to experience disruption in turbulent times. President Donald Trump of the US has reversed his country’s long commitment to open trade and embarked on an “America First” policy that has prompted other countries to retaliate.
US tariffs on China and Mexico, Britain’s expected exit from the EU, and the politics of South Africa and India dominated the talk at the World Entrepreneur of the Year event this week, from the breakfast tables at the Hermitage Hotel to the seaside terrace of the Monaco Yacht Club.
“You cannot go a week without hearing of a new significant geopolitical event,” said Jonathan Shames, geostrategic business group leader at professional services firm EY, speaking to business owners from across the world.
Kevin Kajiwara, co-president of risk consultancy Teneo Intelligence, said the rivalry between China and the US would last for years as they vied to become the world’s biggest economy. The social contract in western democracies was failing, he added. People no longer believed their children would be better off than them so they increasingly turned to populist figures. “Political risk is no longer just happening in developing countries. It is everywhere.”
Canadian Germain Lamonde, founder and executive chairman of EXFO, a telecoms testing company, told the Financial Times that the pendulum was swinging back against globalisation. EXFO operates in 120 countries and has staff in 30.
“Entrepreneurs have to adapt fast to the changes,” he said. EXFO, founded in 1985, monitors and tests fibre optic networks for companies such as Verizon and Huawei, the Chinese telecoms company that has fallen foul of US authorities.
“Countries are getting closed. This is adding cost and this is adding complexity,” said Mr Lamonde, adding that in his view the populist surge would start to ebb within five years.
Sonia Bonfiglioli, who runs Bonfiglioli Group, an Italian manufacturing business, said her solution was “glocal”. The business, which makes gear motors, gearboxes and drive systems, has 14 plants in seven countries including Brazil, the US, Vietnam and India. It supplies local markets from those factories.
Others, especially those based in poorer countries with lower cost bases, believe the global turmoil could help them.
Siddhartha Lal is managing director of Eicher Motors in India, which makes Royal Enfield motorcycles. Although it exports to the US and Europe, he said the “big opportunity” was emerging markets. Selling motorcycles for less than $6,000, the group can compete with global brands for the rapidly growing middle class that wants to commute to work but also hit the highway for fun at weekends.
South Africa’s Mobicel sells its own-brand cheap phone handsets. Ridhwan Khan, chief executive, said China was the main supplier of phones but the tariff barriers imposed by the US “help us a little bit”. The weakened renminbi has helped his company buy products from China more cheaply. “We are managing,” he said. “It is a concern but at the level we are playing — the entry-level segment — we have room to manoeuvre. We are not playing in the global level. They get impacted a lot more in terms of their R&D departments and their reliance on what China brings to the party.”
Mr Lamonde of EXFO predicted that western companies would lose the chance to sell technology to China. “The repercussions in the longer term will be devastating. We are forcing China to develop these technologies.”
Karan Bilimoria, co-founder and executive chairman of Cobra Beer, said he wanted the UK to remain in the EU. His company, which has a brewery in Belgium, could cope if the UK remained in the single market and customs union. “A no-deal Brexit will be disastrous for businesses including our own in the short term.”
But Sergei Kolesnikov, president and co-founder of Technonicol, a Russian maker of building materials, said current problems should be kept in perspective. His business began just after the fall of communism and has survived civil strife, wars, sanctions, and changes in the economic system.
“I am Russian and all my life I have seen so much political turbulence nothing can pass it. I saw so many crises. Our business environment changes dramatically every year. We have 600 laws passed. Brexit is a small problem. Brexit is a flower.”
Get alerts on Entrepreneurship when a new story is published