Making predictions for 2022, China's common prosperity drive and Indian-born execs at the helm
December 2021
Farewell 2021!
With Planet Earth about to complete another orbit of the sun, many of us are taking a breather to digest what felt like ‘2020: Act II’ (the sequel no one wanted).
It was a year filled to the brim with news and developments: the Capitol Hill riots, Joe Biden’s inauguration, Tesla’s staggering market cap, a subdued Summer Olympics in Tokyo, turmoil in the Horn of Africa, Angela Merkel’s exit from politics, an unprecedented vaccine rollout across the world, Hong Kong’s controversial legislative elections, the end of farmers’ protests in India…the list goes on.
As we cross our fingers for calmer waters in 2022, I hope you’re able to hit the pause button and enjoy the remainder of the festive season.
PEERING INTO THE CRYSTAL BALL
Predicting the future is a notoriously difficult task, especially in the volatile Covid era. However, many organisations have dared to peer into their crystal balls and make forecasts for 2022.
Specialist consultancy Control Risks is one of them, publishing its annual ‘RiskMap’ for businesses. The survey groups events into six categories: political, security, terrorism, cyber, operational and reputational.
To sum up, the top risks to watch out for are:
Disruptive geopolitical repositioning: The transition to a new world order (triggered by China’s meteoric rise) “will drive considerable disruption as countries, blocs and hemispheres begin to interact differently”.
Dysfunctional, vulnerable, and fragile states: A growing number of countries are unable to withstand external and/or internal shocks, such as inter-ethnic conflict, food shortages and disinformation campaigns. Lebanon, Ethiopia, Sudan and Venezuela are cited as examples.
A diverse threat landscape: According to Control Risks, terrorism in 2022 will be shaped by aggravated grievances caused by the pandemic as well as the Taliban takeover of Afghanistan.
Escalating cyber attacks: Companies are failing to detect, prevent and respond to frequent cyber breaches. Another worrying trend is the “overt collaboration between states and cybercriminals”.
The impact of climate change: Extreme weather and natural disasters will take centre stage by disproportionally influencing politics, economic policy, urbanisation, infrastructure and capital investments.
Bungling ESG commitments: Reputations are on the line as the climate crisis and governance concerns force firms to demonstrate responsible citizenship and manage regulatory action.
Since these reports often make for heavy reading, Saxo Bank likes to lighten the mood with its collection of “outrageous predictions”. How about artists using NFTs to claw back revenue lost to Spotify and Apple Music? Or a women’s Reddit army mimicking the meme stock phenomenon to bring down the corporate patriarchy in financial markets?
Feel free to share your forecasts, whether serious or improbable, in the comments section below.
ADDRESSING INEQUALITY IN CHINA
Xi Jinping’s reform agenda is among the most popular topics covered by this newsletter. So as the year draws to a close, it’s time to reflect on the Chinese president’s biggest (arguably) domestic policy push - common prosperity.
To quote Xi, common prosperity “refers to affluence shared by everyone, physically and intellectually”. He believes hard work and innovation are the key drivers, yet it’s important to note that “different regions and groups of people may enjoy different levels of prosperity and on various timelines”.
Narrowing the wealth gap is typically the cornerstone of any Communist or socialist regime. Indeed the concept of ‘common prosperity’ has deep roots in the CCP. However, China’s rapid economic growth is exposing disparities in incomes and fortunes. Analysts say the imbalance could fuel anger and resentment, besmirching Xi’s reputation at home. [Remember, the leader will break with convention and seek a third term in office in October 2022.]
Still, this current iteration of common prosperity is far more wide-ranging than expected. Investors, entrepreneurs and consumers have been rattled by crackdowns on the country’s tech giants, private tutoring firms and the entertainment sector.
Just last week, the social media accounts of a popular influencer were deleted and she was slapped with a US$210 million fine for tax evasion. And in recent months, numerous Chinese billionaires have upped their charity donations in an attempt to appease Beijing.
Meanwhile, China watchers remain divided over the motivations of the Politburo. Some are convinced that common prosperity is the latest tool to strengthen Xi’s nanny state - the slogan of choice adds legitimacy to his government’s interventionist behaviour. They also wonder why Beijing is punishing Alibaba and Tencent instead of implementing progressive taxation or European-style welfare, if redistribution is truly the goal.
The other school of thought claims that common prosperity is designed to restructure society over the decades. Rather than pour money into video games or ride hailing apps, for instance, Chinese businesses should allocate talent and resources to high-end manufacturing and green technology.
The flurry of questions and think pieces spurred Xinhua to publish an op-ed to settle the debate. The article said: “Common prosperity is not egalitarianism. It is by no means robbing the rich to help the poor...In the quest for common prosperity, there is no “ready-made experience,” nor a textbook for China to follow”.
REPRESENTING SOUTH ASIA
Two weeks ago, iconic luxury brand Chanel picked Leena Nair to be its global boss.
A former C-suite executive at Unilever, Nair’s promotion generated headlines for several reasons. Her background is in human resources, not finance or product development; she’s a fashion industry outsider; and she’s a woman of colour.
As a fierce advocate for diversity and inclusion, Nair is aware of the challenges ahead of her. “There's the burden of making it easier for those who come after you, and the burden of success,” she said in a podcast hosted by the World Economic Forum. “The last thing you want to do is fail, so you feel this enormous pressure and sense of responsibility to succeed at every job you're given.”
Interestingly, Nair’s appointment expands the pool of Indian-born CEOs at the helm of major multinationals. On 29 November, Parag Agrawal replaced Jack Dorsey as the head honcho of Twitter, joining the ranks of Google’s Sundar Pichai, Microsoft’s Satya Nadella, Adobe’s Shantanu Narayen and Diageo’s Ivan Menezes, to name a few.
Thanks for reading! Please get in touch to tell me what stories you’d like to see more - or less - of in 2022. Catch you on the other side 😊
Take care, Sara x