The world order of the last decades has had as main protagonists multinational companies that, thanks to their power of cross-border influence, have managed to influence world geopolitics. However, the pandemic has been a setback for globalization, exposing the weaknesses of the value chain and forcing the recovery of state interventionism more typical of the last century. In the new world order established after the health crisis, multinationals – especially US and Chinese ones – will continue to play an important role in the global economy and politics, but they will have to adapt to new rules of the game. In the case of large Spanish companies, their strategy should be based, according to the experts consulted, on the search for emerging markets, without disappearing from those in which they began their global expansion three decades ago, such as the Latin American market.
The covid-19 pandemic is a clear example of globalization, the process that connected markets, societies and cultures around the planet after World War II and accelerated from the 1980s with advances in technology. and transportation. But this health crisis also invites reflection on this economic model. The liberalization of trade, promoted by private companies that requested the elimination of tariffs and the signing of trade agreements between countries, gave way to a financial scenario of offshoring and production dependent on third countries, as explained by Marc Ibáñez, collaborator of the Research Center of International Relations of Barcelona (CIDOB). “With this crisis this model has been called into question, mainly due to the lack of vision on national security around value chains,” says Ibáñez, adding that “it is necessary to rethink how to minimize this dependence on third parties with new alliances of markets, for example, applying near sharing policies ”.
GAFA against BATX
For the CIDOB collaborator, this will not translate into a complete loss of power for multinationals, but it will translate into a new scenario and new rules of the game that will change their way of acting and influencing the world economy. The government of the United States, without going any further, intends to cut the power of its large technology companies (Google, Amazon, Facebook and Apple, known by the acronym GAFA) through six bills that were admitted to the Congress. A measure that could weaken the hegemony of GAFA in the information technology sector and the global economy, compared to its Chinese competitors, the BATX (acronym for Baidu, Alibaba, Tencent and Xiaomi).
“Protect the competition of its domestic market, while trying to ensure a robust business structure capable of competing globally,” explains Federico Steinberg, principal investigator at the Elcano Royal Institute, on the dichotomy facing the Government of Joe Biden. “Instead, the EU should take advantage of its intermediate position between the United States and China, to negotiate with both,” he adds. “The most important thing is that Europe is capable of modifying the rules of the game in its market to favor competition and protect European companies.”
As Lourdes Casanova, professor and director of the Emerging Markets Institute at the Samuel Curtis Johnson Business School, explains, Spanish multinationals have to react to this new economic context, “looking for new investment markets, but without withdrawing from those in which they achieved its global expansion ”. Casanova refers to the Latin American market that led to the rise of large Spanish companies in the 1990s.
The serious economic and political crisis that Latin America has suffered in recent years has forced Spanish multinationals to reorganize, losing their presence in this market. Although Spanish direct investment in Latin America currently represents 42% of the total, the expert warns about the rise of Chinese companies in the region and the danger that dropping this market would pose for the Spanish economy.
Spain continues to belong to the exclusive club of 32 countries that have companies in the Fortune magazine ranking, those with the most power of influence due to their investments abroad (Santander, Telefónica, ACS, Iberdrola, BBVA, Repsol and Mapfre). However, the closure of markets due to the States’ commitment to their own business infrastructures will force Spanish multinationals to make new decisions. “The United Kingdom aimed to be a primary partner for the United States, good news for Spanish multinationals with a presence in the British country; But we are already seeing that the Biden Administration follows the path of the previous Donald Trump administration of putting its internal market first, ”says Casanova. “Faced with this situation, it is necessary for Spanish companies and the Spanish Government to explore and negotiate other ways of internationalization”, he concludes.