Now is time to rein­vent glob­al­iza­tion

China Daily European Weekly - - COVER STORY - The au­thor is the Asia deputy pres­i­dent and se­nior part­ner of Roland Berger, a global con­sul­tancy. The views do not nec­es­sar­ily re­flect those of China Daily.

Beyond the fo­rum, six rec­om­men­da­tions to go fur­ther with the Belt and Road and bring suc­cess to na­tions re­lated to it

com­pa­nies have not waited for the ini­tia­tive to be ac­tive in Cen­tral Asia, South East Asia, Africa or Cen­tral and Eastern Europe. But bet­ter fi­nanc­ing con­di­tions, sta­bi­lized coun­try risks, more solv­able de­mand, more de­mand­ing Chi­nese and lo­cal clients go­ing for pro­duc­tiv­ity and com­pet­i­tive­ness will fuel new op­por­tu­ni­ties for so­phis­ti­cated Euro­pean com­pa­nies, which also have a stronger cul­tural and ge­o­graphic prox­im­ity to these mar­kets. What worked in the an­cient Silk Road can be re­vived.

3. A strong fi­nan­cial back­bone to the ini­tia­tive is para­mount. The Belt and Road starts with the devel­op­ment of in­fra­struc­ture, which will re­quire long-term fi­nanc­ing. A large bal­ance sheet, state guar­an­tees and bet­ter un­der­stand­ing of po­lit­i­cal and eco­nomic con­di­tions across the very di­verse na­tional en­vi­ron­ments along the route will be key. The Belt and Road Ini­tia­tive, the un­der­ly­ing po­lit­i­cal im­pe­tus and sup­port, and the as­so­ci­ated eco­nomic agree­ments should in turn work as an en­hanced safety net, en­sur­ing fi­nanc­ing and guar­an­tees on long term re­turns and pay­back.

4. The an­cient Silk Roads were not de­vel­oped in one day. The Belt and Road Ini­tia­tive needs time. Some ob­servers have stated that af­ter three years, while Chi­nese ac­tiv­i­ties in the Belt and Road geo­graph­i­cal space are de­vel­op­ing, this is “busi­ness as usual” la­beled as Belt and Road. This is for the best. The Belt and Road Ini­tia­tive can only be suc­cess­ful through a stag­gered ap­proach, start­ing with po­lit­i­cal align­ment, build­ing of trust, fea­si­bil­ity stud­ies, devel­op­ment of the ad­e­quate trade agree­ment, con­trac­tual and fi­nan­cial in­fra­struc­ture, be­fore the phys­i­cal (ports, rail­roads, in­dus­trial parks and dig­i­tal in­fra­struc­ture, un­der­ly­ing broad­band, mo­bile, in­ter­net, e-com­merce and pay­ment in­fra­struc­ture) can be de­vel­oped.

5. The Belt and Road has to be as in­no­va­tive, green and dig­i­tal as pos­si­ble, as stated by Pres­i­dent Xi Jin­ping and other lead­ers dur­ing the fo­rum. Mod­ern, in­clu­sive and mul­ti­lat­eral glob­al­iza­tion is not about al­lo­cat­ing cap­i­tal and la­bor re­sources across ge­ogra­phies, and lever­ag­ing com­pet­i­tive ad­van­tage only stem­ming from lower cost coun­tries, at a less ad­vanced stage of devel­op­ment. The ini­tia­tive is about in­creas­ing pro­duc­tiv­ity and com­pet­i­tive­ness through state-of-the-art tech­nol­ogy and in­no­va­tion, as well as en­trepreneur­ship in less ad­vanced coun­tries. Western­ers of­ten re­gard in­no­va­tion as dis­rup­tion or dis­place­ment of tra­di­tional busi­nesses. The Chi­nese in­ter­net gi­ants in­sist on the con­nec­tiv­ity po­ten­tial of new tech­nolo­gies: Alibaba and its var­i­ous avatars are not about dis­rupt­ing tra­di­tional com­merce, but cre­at­ing more op­por­tu­ni­ties by con­nect­ing man­u­fac­tur­ers and brands to con­sumers, oth­er­wise se­cluded. The Belt and Road coun­tries and their com­pa­nies are an­other space for con­nec­tiv­ity. Hence, the Belt and Road has to be at least as vir­tual and dig­i­tal as it is about phys­i­cal in­fra­struc­ture.

6. The Belt and Road Ini­tia­tive also has to in­vent new­forms of part­ner­ships: be­tween Chi­nese and Euro­pean com­pa­nies, be­tween State-owned and pri­vate com­pa­nies, be­tween fi­nan­cial in­sti­tu­tions and pri­vate banks, and be­tween very large com­pa­nies and smaller en­trepreneurs. Rein­vent­ing glob­al­iza­tion in the Belt and Road space en­tails cre­at­ing ecosys­tems where com­pa­nies are mu­tu­ally ben­e­fit­ing from each other’s spe­cial­ties and com­pe­tences. This is where Euro­pean com­pa­nies, which still have a head­way in in­dus­trial process im­prove­ment, pro­duc­tiv­ity im­prove­ment, man­age­ment of com­plex in­fra­struc­ture projects and man­age­ment of cul­tural dif­fer­ences, can bring not only prod­ucts, com­po­nents or sys­tems, but also knowhow and man­age­ment ca­pa­bil­i­ties. In China and else­where along the route, this ecosys­tem ap­proach should grad­u­ally re­place the legacy joint ven­ture, tech­nol­ogy trans­fer ap­proach.

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