The international context of business has shifted markedly in recent years, with globalization under US hegemony giving way to the twin forces of de-globalization and a growing Sino-American rivalry. Symptoms have become hard to miss, with manifestations such as the trade wars and the US ban of a range of Chinese companies including Huawei representing just the tip of the iceberg.

Viewed from the perspective of International Relations (IR) theory in political science, de-globalization and Sino-US conflict are no accident. Under current conditions, further exacerbation of conflict would be consistent with theory. Even short of global war – which theory suggests is possible – the implications of these changes for businesses worldwide would be profound.

My editorial essay in Management and Organization Review lays out initial thoughts on the possible impact of these changes on Chinese enterprises. It argues that Chinese firms may face a range of novel challenges as a result of de-globalization and superpower rivalry. For example, in a world that is at least in part increasingly hostile to Chinese business, Chinese firms will need to devise new ways to catch up and keep up with advanced technology, to resolve critical dependencies on foreign suppliers, and to avoid being perceived or treated as enemy firms in host markets. At a minimum, these and other adaptations will provide novel empirical settings for testing existing theories. At the same time, it also seems likely that they may present opportunities for theory extension or new theories of international business and global strategy.

The essay first describes why IR theory suggests that de-globalization and Sino-American rivalry are not an aberration but to be expected under present conditions. A possible and increasingly likely scenario growing out of these considerations is a renewed cold war, with separate economic spheres of interest around China and the United States. This scenario connects with the possible implications already mentioned – technology, dependencies, as well as political strategies abroad. The essay concludes with thoughts about possible alternative scenarios for Sino-US relations.

Based on the article ‘China’s Challenge: Geopolitics, De-Globalization, and the Future of Chinese Business‘ published in Management and Organization Review.

Michael A. Witt, Faculty profile INSEAD