On April 16, the Danish newspaper Jyllands-Possten announced that two Chinese competitors have considered Vestas, a large wind turbine manufacturer headquartered in Sweden, for acquisition. Upon reception of the news, Vestas' shares, listed on the NASDAQ, rose by 9.3 percent.
A few minutes earlier, Alan Weiss, a consulting guru, sent his "Monday Morning Memo" to his tribe, informing them that "For most of the entire post-World War II period, there have been thee points of economic alliance: Japan, Europe and the U.S. That is now clearly changing for the first time in a half-century to an emerging six points, with the addition of China, Brazil and India."
What is of interest here to note is that for the first time ever, investors have more confidence in a Chinese-owned company than in a European one, which truly puts in perspective how much things have changed in our world economy.
The truth of the matter is that most U.S. businesses have still not adjusted to that switch of paradigms. Countless industries still hope things will go back to the way they were 20 years ago, dismissing the surge of new economic powers such as those found in the B.R.I.C. countries. Countless business leaders refuse to acknowledge that those new economic powers are here to stay and rule and that their leadership style must adapt.
For many, it all came into perspective last October when Nicolas Sarkozy, President of France, asked China for economic assistance to resolve the euro area's debt crisis. For some it seemed only fair to ask for help, as Europe generously provided assistance to many countries in need throughout the world for countless years. To others it was admitting defeat and silently acquiescing that the transfer of power had indeed taken place. People were not ready for that. It was too soon. They were still finding comfort in denial.
This same denial also exists within the International Monetary Fund. As elections to elect its new boss approach, many world economists concur that it is time for countries others than Europe and the United States to head the IMF. Over its 65 years of existence, the organization has been led by 11 Western European bosses, with the U.S. systematically hosting the second-highest post in command.
Economist Liam Halligan makes a great case against another Westerner heading the IMF in his column in The Telegraph: "After all, the emerging markets now account for four-fifths of the world's population and almost half of global GDP. Since 2008, they have also commanded a higher share of world trade than the West. After years of economic out-performance, these countries now have around three-quarters of the world's currency reserves and, in stark contrast to debt-mired Western countries, generally boast healthy sovereign balance sheets."
This being said, the election date is June 10, 2012, and the French finance minister, Christine Lagarde, is very well positioned to inherit the post against Mexican Central Banker Agustin Carstens. The transfer of power is imminent, but we keep delaying it because the West keeps hoping for a miracle to take place.
To me, what all this says is that the West needs to adjust its paradigms and learn to play with the rest of the world: no longer in a relationship that is hierarchical and where the West is on top, but rather equilateral where powers between East and West, South and North are fairly shared.
This apprenticeship should not only take place at the government level but also at the level of the business community. This assumption that the West owns the key to success is passé. It is time to realize that we have lots to learn and will only succeed as a group by accepting the way others conduct business. We must resign ourselves to the fact that their method might be as successful as ours.
We also have to mourn the fact that doing business under moral criteria, such as embargo on countries that do not respect human rights or penalties on countries that do not respect environmental mandates, is also part of the past. China is the economic super power that has not embraced democracy and for whom moral values that are dear to the West are not part of the agenda. Looking at the development and investment China has in certain African nations that are still ruled by despots, one quickly realizes that the moral side of the equation is of little importance to those new powers. They don't have time for that; they must snatch whatever is left to ensure their own growth, and they can't get bogged down by anything that is not primordial to their economic success.
Adjusting is hard. Nobody likes change. But the ones who admit that the time to ponder over our options is long gone will be the ones who will partake to this new world economy. It's time to move on and make do with the cards we dealt ourselves.