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Forecasting the biggest challenges facing companies in 2022

David Brancaccio and Rose Conlon Jan 5, 2022
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Corporations will have to navigate an increasingly polarized world — and economy. Chris Hondros/Getty Images

Forecasting the biggest challenges facing companies in 2022

David Brancaccio and Rose Conlon Jan 5, 2022
Heard on:
Corporations will have to navigate an increasingly polarized world — and economy. Chris Hondros/Getty Images
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From the COVID-19 pandemic to mounting tensions between the U.S. and China, institutions and corporations will have to navigate an increasingly polarized world — and economy — in 2022. These are just a few of the global risks highlighted by the Eurasia Group, a political risk consultancy, in its annual “Top Risks” report for the new year.

Eurasia Group founder Ian Bremmer spoke to “Marketplace Morning Report’s” David Brancaccio about the report. The following is an edited transcript of their conversation.

David Brancaccio:  I’m rooting for you here on this prediction: the pandemic will turn a corner in the developed world as March turns into April. But a lot depends on how this actual pandemic — the disease — plays out in not just the U.S., but around the world.

Ian Bremmer:  Yeah. Economically, a lot depends on how it plays out around the world. In the United States, we can increasingly live with the pandemic becoming endemic. In China, they can’t. Their vaccines don’t really work to stop omicron, and they’ve got this zero COVID policy that means they’re going to have to lock down much harder in the coming year. And for those of us that rely on things like supply chains, Chinese goods and exports, this is going to be a challenge.

Brancaccio:  And it doesn’t say much about easing this back-ordered economy; the supply chain problems with so many of those chains starting out in China.

Bremmer:  That’s exactly right. The fact was, they were, back in 2020, the fastest economy that was able to get their supply chain back up and running. But that was with a variant that was much, much less transmissible. What does that mean as they try to continue that? It means that the global factory for the world is going to be stop-start, stop-start.

Brancaccio:  And speaking of China, what is the company to do if they operate both in the rest of the world and in China? That’s a tough place to be.

Bremmer:  It’s getting a lot harder. The Biden administration itself has said that China is engaging in acts of genocide against Uighurs. But if you say anything about that, then the Chinese government is going to tell you, “How dare you? We’re going to hurt your business.” So for companies, it’s best to stay quiet, because anything they say is going to sound like it’s coming from both sides of their mouths. And, of course, in an environment where everyone’s on social media and everyone’s talking about their brands, this is becoming extremely difficult for CEOs who have a lot of business in the U.S. and a lot of businesses in China.

Brancaccio:  And in the U.S., for instance — and other places in the developed world — there are new questions being asked of companies. I see on your list “corporates losing the culture wars” — what do you mean by that?

Bremmer:  Well, the United States is both the most powerful country in the world, but we’re also the most politically divided. And if you’re a corporation, you don’t want to have to play to a political divide — either between the U.S. [and] China, or between red states and blue states. But if your customers are telling you that they’re demanding that you take the political side of an issue, the other side is going to hit you hard and say, “We don’t want to buy your product.” And that’s been a problem for the NBA and Major League Baseball. It’s a problem for Coca Cola and for Walmart. Any company out there would rather its CEO focus on the business of doing business than having to take a political side.

Brancaccio:  Companies like Nike and Apple know this already, but you’re saying other boardrooms, other companies, need to pay attention to this?

Bremmer:  In the last couple of days, we have heard from so many CEOs saying this is a principal problem for our company going forward, and we are trying to navigate it. It’s not easy.

Brancaccio:  It’s not easy. Now on the subject of Jan. 6 and the investigation into those events; the insurrection in the House of Representatives — this is about the future of democracy, of course, but in terms of running the country in this coming year, policy, is it a sideshow?

Bremmer:  It’s a sideshow this year but it affects, of course, the midterm elections — which will be the most important of American history. There are a large number of Americans, a majority, that believe that American democracy is in crisis. Fortunately, it’s not a crisis of global democracy; most other democracies around the world don’t have this problem. Just in the last few months Canada, Japan, Germany, all held elections just fine. But in the United States, which happens to be the most powerful country in the world, it’s a very serious problem. It’s one that Americans are deeply concerned about. It’s the one that I’ve gotten the most heartfelt responses to from people all over the world saying, “What’s happening to your country? And is there a way out?”

Brancaccio:  Do you have much of an answer to “Is there a way out?”

Bremmer:  There are a lot of things I’m optimistic about right now, but the political division inside the United States — when increasingly large numbers of Americans think that their principal enemy is not outside their country, but is the political opposition inside the U.S. — we have to address that. Unfortunately, this is something that’s been coming for decades. The U.S. is the most economically unequal of the G7 economies, it’s the most politically divided of the G7 economies, and it’s the country where animal spirits have been most vested in outcomes. That’s great for growing stock prices; it’s not so good for civil society. And it’s gonna take us a long time to get out of that.

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