What is nationalism?
Nationalism is defined as the ideology that promotes a country’s self-sufficiency, industrialization, political autonomy, military empowerment, and everything that affects the country’s economy in a positive manner. Emphasize on economic nationalism promotes the domestic industry, creating jobs for countrymen, and focus on the national economy over multinational corporations or trade.
Though globalization creates greater business opportunities, the coronavirus outbreak and its effect is slowly allowing the chemical companies to rethink globalization and cut the dependency on other countries. In the coming years, the concept of globalization may fade away in the chemical market, with companies majorly focusing on strengthening the national chemical market. Industrial experts foresee a different picture of the chemical industry after COVID-19.
Nationalism Vs Globalization
Nationalism is promoting the domestic economic growth and the well-being of the citizens, whereas, globalization is the process of interconnecting people, industries, and governments of different nations. Globalization is not new, the mention of globalization can be dated back to 1492 in history when Christopher Columbus sailed and found America or the voyage of Vasco de Gama in 1498. But the trend gained popularity only in the 1990s when the international trade made an impact on the global economy. Globalization has improved the interconnectedness of the countries of the world, creating bigger opportunities for investment and setting new & better economic trends for consumers worldwide.
Economic benefits of nationalism and globalization
|Strengthening the country’s economy||Greater business opportunities with a wide spectrum of consumers|
|Growing at every level- industry, agriculture, politics, entertainment, etc||Increase in the trade sector, and an increase in both imports and export|
|Terms such as social injustice and unfair working conditions with are popular during globalization are limited||Managed to spread the new technology throughout the world, for example smartphones|
|Creating jobs for the countrymen and focus on improving their standard of life||Increase in the wages, thereby, lowering the cost of consumption|
|No transfer of jobs to the lower-wage countries. Nationalism focuses on improving the lives of the citizens||Hiring the right skills has got easy as the market is wide|
|Focus on the self-sufficiency of the nation||Opportunity to explore the global market|
Is globalization good?
Globalization is the concept that brings the entire world on a common platform and allows people, companies, and the government to interact, trade, and integrate. Globalization not just affects a country’s economy but directly affects the life of the people. Globalization has definitely benefited all the countries across the world.
Here are some of the benefits of globalization:
- Helps in boosting development in developing and underdeveloped countries
- Helps companies to lower the cost of operation
- Wider business opportunities
- Sets new economic trends
- Wide range of consumers
- Outsourcing opportunities and hire skilled workforce
- Get work done at a cheaper rate
- Exploring the global market makes it easy to source raw materials
- Increasing household income
Coronavirus outbreak and globalization
China is the world’s largest chemical manufacturing hub and contributes about 35.8% of global chemical sales (as reported in 2018). The coronavirus outbreak in China’s Wuhan region last year has forced the countries across the world to rethink their trading partnership with China. The disruption in the Chinese supply chain has a huge impact on the global chemical market, majorly affecting the pharmaceutical industry, chlor-alkali market, pesticides, rubber industry, oil and gas, & the organic and inorganic market.
Countries are looking for alternatives and also focusing on improving their national chemical market to cut the dependency on China. The shutdown of manufacturing units in China earlier this year, and the global chemical dependency moving away from China, is leading to the country’s collapsing market. According to a report by Reuters, China’s economic growth is expected to slow to 4.5% in the first quarter of the year 2020. This is the slowest growth China has witnessed after the 2008 global recession. The impact is huge on the Chinese chemical industry after corona.
Chemical companies may rethink to strengthen nationalism after coronavirus pandemic
The trend of globalization that got popular during the 1990s is slowly losing its heat and forcing countries to think about nationalism. This came after the breakdown of coronavirus pandemic causing a major disruption in the global supply chain. With China being the central focus of manufacturing, the shutdown in China during December 2019 has hit the global supply/demand chain affecting all major industries including the chemical and pharmaceutical market. This situation is forcing the countries of the world to rethink globalization and focus on empowering the domestic market to stay self-sufficient during the time of crisis.
Japan to offer $2.2 billion to firms shifting production out of China
The coronavirus pandemic out broke in China during December 2019, has led to a major economic slump at the global level. With the virus still actively spreading across the world, has forced various countries to take some important steps to safeguard their people. Recently, the Japanese government had announced the allocation of an economic stimulus package of $2.2 billion to help the Japanese manufacturing companies to shift their production units out of China. The announcement came after the supply chain disruption and damages incurred in China.
In normal circumstances, China is Japan’s biggest trading partner, with over $148 billion worth of goods being exported from China to Japan.
US to move out of China?
Global chemical manufacturers are planning to diversify the chemical market and reduce the heavy dependency on China. Developed countries like the US who have invested in China for manufacturing and sourcing due to the lower cost, are also thinking of moving out after the coronavirus outbreak. The pandemic has worsened the trade relationships of China with the western countries and made it difficult for China to reassure its global presence.
The US companies should now rethink and reshape their investment in chemical trading and sourcing. The US plans to shift its focus from China to other Asian countries; Vietnam and India remain the top among the list.
India’s “Make in India” movement gaining popularity
The “Make in India” which was launched in 2014, has gained immense popularity in recent times. This was an initiative to make India a global manufacturing hub, and encourage the domestic and multinational companies to manufacture in India. The disruption of the Chinese chemical supply chain has forced the Indian companies to emphasize “Make in India,” thereby, focusing on the self-sufficiency of the nation.
The main aim is to cut the dependency on China. China is India’s second-largest export partner and supplies about $70 billion worth goods to India. Electrical machinery, cars, computers, nuclear machinery, optical instruments, furniture, specialty chemicals, white goods, medical instruments, vehicles, iron and steel, supply are dependent on China. The “Make in India” movement will slowly ease the heavy dependency and focus on making India the global manufacturing hub.
How will “Make in India” help the country?
- Encourage exports
- Create opportunities for domestic manufacturers
- Strengthen the Indian economy
- Manufacture for global market
- Cut dependency on other countries, and be self-sufficient during times of crisis like corona
Technology giant, iPhone makers, plans to move out of China
Wistron Corp., one of Apple’s manufacturing partners, recently announced its plan to move out of China in a year. The company had set up a new plant in Indonesia last year and now plans to start the construction of a new plant in Vietnam in 2021. The company further looks at India for new facilities.
The electronic firms are also looking for an alternative option to set up the manufacturing units. Taiwan and Indonesia are emerging as popular options other than China. Though China will not lose its position as the world’s electronics workshop anytime soon, the current scenario is a threat in the longer run.
Will globalization end after the coronavirus pandemic?
With the internet, easy international travel, global trade deals, and the rapidly developing economies, globalization has completely changed the world in the last 25 years. The global interconnectedness and the trade dependency of countries with each other has made the COVID-19 pandemic affect the global economy altogether. The coronavirus outbreak has already created a few barriers between the countries of the world and may allow companies to turn inward and focus on nationalism. It is expected that globalization may take a new form after the pandemic is over; probably the international trade may see a downfall and countries may try to strengthen them to cut the dependency on the other countries; maybe the globalization will be restricted to travel and entertainment only; or reduced movement of people from one country to other maybe seen. What really holds in the future of chemical industry will be revealed only with time.