“In today’s fragmented order, CEOs must integrate geopolitics into every business decision,” urges Jean-Marc Fenet

Tariffs, sanctions, and tighter state controls have ended the age of hyper-globalization, forcing companies to navigate a more fragmented and unpredictable order. On 11 September, the ESSEC Institute for Geopolitics & Business will host the conference “Welcome to Post-Globalization: Sanctions, Controls, Tariffs… How Are Companies Coping With This New Economic Era?”. In this context, Jean-Marc Fenet, Senior Fellow at the Institute, argues that firms can no longer rely on open markets and multilateral stability. From China’s selective engagement with Europe to India’s shifting alignments and the politicization of business negotiations, he explains how companies are rethinking supply chains, investment strategies, and risk management to adapt to what he calls the “brutalization of the world.”

The end of hyper-globalization is now visible through tariffs, sanctions, and tighter state controls. From your perspective, what are the main structural shifts in the global order that explain this move into “post-globalization”?

Jean-Marc Fenet - The global order we knew changed with the global economic shift to Asia, which became the locomotive of growth and the workshop of the world. The middle classes of our countries that have suffered from deindustrialization have begun to demand barriers and job protection. Similarly, the excessive fragmentation of value chains, which used to fuel half of world trade, has shown its limits when geopolitical risk has imposed itself even in the boards of the largest companies. The fragmented world that is emerging is less global, multipolar in both economics and politics, and above all much more unpredictable.

The U.S.–China rivalry has entered a new phase with Trump’s trade war. Beyond the short-term frictions, what deeper trends do you see shaping China’s economic strategy and its relationship with Europe?

JM.F. - China has developed an unbalanced economic model, driven by investment and exports rather than by domestic consumption. It generates tensions in itself, because it produces overcapacities and a search for external outlets. With the closure of the American market, Europe and its 450 million consumers are at the centre of China's priorities, but the failure of the last EU-China summit in July showed how much China is betting more on a few member states - known as dependent on its economy -, than on a real dialogue with the Commission.

India is positioning itself both as a partner of the West and as a leader of the Global South. How sustainable is this dual positioning, and what does it reveal about the rebalancing of power in Asia?

JM.F. - A few years ago, India chose "multi-alignment", meaning to be close to everyone without being dependent on anyone. This has led to a rapprochement with the United States without loosening traditional ties with Russia, and remaining very wary of China. The humiliation that the US is currently inflicting on India (50% tariffs, rapprochement with Pakistan, drop of H1B visas used by Indian engineers, etc.) is reshuffling the cards and bringing India closer to China. This movement was already underway because India's attractiveness also depends on its ability to welcome Chinese subcontractors of investors it is trying to seduce. This move allows India to buy time, but the rivalry between the two Asian giants is likely to remain long-lasting.

The EU–China summit in July highlighted both interdependence and mistrust. How do you assess Beijing’s current perception of Europe, especially in the context of its determination on Taiwan?

JM.F. - China despises the European institutions, which it misunderstands, and seeks a privileged relationship with the Member States. In the past, it has tried several times to divide the EU (Italy in the Silk Roads, 17+1 with Central Europe, localization of investments according to national positions in the European Council...), and continues to do so by commercially targeting certain countries rather than others. However, the EU remains a second-rate player in his eyes. We saw last July that a pre-agreement concluded with the US suddenly made an agreement with the Europeans superfluous.

Turning to business: how are European companies in practice adjusting their supply chains and investment strategies in light of these shifting dynamics in India and China?

JM.F. - European companies are gradually adapting their decisions to the new global context. They are diversifying their investments, shortening their value chains by focusing more on countries that are closer (nearshoring) or more reliable (friendshoring), and integrating geopolitical risk into their strategic decisions. This movement is very gradual and far from being generalized. It does not lead to disinvestment from China, which remains an essential market despite the access difficulties. The Indian market is promising, particularly in the context of “China +1”, but depends on the Modi government's continued modernization efforts (fight against bureaucracy, infrastructure development, tax reform).

Many firms now face politically charged negotiations—whether on technology transfers, market access, or regulatory compliance. What strategies are proving most effective when engaging with Chinese and Indian authorities?

JM.F. - Negotiating with Chinese or Indian authorities has never been easy for our companies. But today the politicization of economic relations is increasing in China, the unpredictability of decisions as well, the differences in more or less pro-business approach between Indian states are striking. More than ever, in both cases, it is essential to carry out the right due diligences, to manage the long term - you don't come to these markets to make a quick return – to know how to identify the right central or regional contacts, to adapt very quickly to dazzling developments (explosion of e-commerce in China, digitization of payment methods in India, etc.).

At the ESSEC Institute for Geopolitics & Business, we speak of the “brutalization of the world” as a new reality. Do you see this brutalization shaping the way firms approach risk management, for example through reshoring, diversification, or new corporate functions?

JM.F. - The brutalization of the world is increasingly imposed on companies. Some had to take their loss very quickly in Russia in 2022, others saw supply disruptions threaten their production (cf. Chinese rare earths), all live according to customs tariffs decided outside of any economic reality. Geopolitical risk has entered the boards without risk management skills always following at the same pace, on issues as important as the shortening of value chains, the location of investments, or the choice of whether or not to partner in R&D. Training our economic decision-makers in this new reality, preparing for these new skills, is what we are trying to do at the ESSEC Institute for Geopolitics and Business.

Finally, looking ahead to the 80th anniversary of the UN, do you believe multilateral frameworks can still provide a safety net for global business—or should CEOs accept that we are moving toward a fragmented order where resilience is built company by company?

JM.F. - The post-Bretton Woods multilateral framework, which ensured a period of unprecedented prosperity and helped lift more than one billion people out of extreme poverty, is now largely paralyzed. Even beyond the UN, the WTO no longer functions for lack of an appeal body, financial institutions are facing the emergence of new more politicized actors (AIIB, Bank of BRICS, etc.), regional free trade agreements can suddenly disappear (US Canada Mexico), international commitments be broken (US/Paris agreement). The daily news from Washington does not encourage optimism, at least for the next few years. CEOs have no choice but to adapt to an increasingly fragmented and unpredictable world.

ABOUT THE ESSEC INSTITUTE FOR GEOPOLITICS & BUSINESS

The ESSEC Institute for Geopolitics & Business was created in 2024 to help companies and leaders navigate a world of geopolitical disruption, economic fragmentation, and strategic uncertainty.

We examine how global power shifts transform business models, how firms are becoming geopolitical actors, and how corporate strategies must adapt to the end of business as usual.

Rooted in ESSEC’s academic excellence in Cergy-Paris, Rabat and Singapore, the Institute draws on 4 affiliated centers: flagship centers:

• the IRENE Center for Negotiation & Mediation,
• the Center for Geopolitics, Defense & Leadership,
• the Center for European Law & Economics, and
• the Chair Business & Industry in Africa.

Together, they bridge cutting-edge research, executive education, and strategic foresight.

Our ambition: to empower geopolitics-proof leaders and build resilient, vigilant organizations in the post-globalisation.

Contact: Thomas FRIANG, Executive Director of the ESSEC Institute for Geopolitics & Business - friang@essec.edu