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How these nations' industries boomed in the face of crisis

Written by Angus Shaw on Monday, 28 January 2019. Posted in Global

Brexit has made the future unreliable for British SMEs. However, a crisis can be a good thing. In fact, facing down adversaries made these nations’ industries stronger

How these nations' industries boomed in the face of crisis

Business leaders across Britain worry about what the trade deal between the UK and the EU post-Brexit will look like. But while many enterprises will certainly face challenges, going through adversity can actually be good for a nation and its different industries. For instance, British bosses can take a leaf from these seven countries that made global successes of industries and sectors in the face of crises.

Italy

Like many countries ravaged by fascism, Italy’s economy was in a bad way post-Second World War. However, dubbed the Italian Economic Miracle, the 1950s and 1960s brought sudden record-breaking growth as the nation’s manufacturing exports rocketed. But it’s still clear Italy faces a colossal debt worth 133% of its GDP in 2017, according to Country Economy, the international economic data site. In fact, its long period of political uncertainty and abysmal financial performance has from time to time singled out the nation, bestowing it with the sombre soubriquet the sick man of Europe.

But despite the nation’s overall lacklustre performance, Italy’s luxury goods remain a top export. In fact, they keep the country competitive on the world stage. “In a period of clear economic downturn, luxury goods is one of the sectors keeping high the flight of Italian competitiveness in the world,” says Alessandro Brun, director of the masters in global luxury management at MIP Politecnico di Milano, the business school. For example, roughly 40% of the planet’s clothing and footwear companies reside in Italy, according to Deloitte, the professional services network. Moreover, Italy houses more luxury goods companies than any other nation, which collectively generated sales of $1.4bn in 2018. No wonder one of the country’s few unicorns, the YOOX NET-A-PORTER GROUP, hails from the fashion sector.

Such strength didn’t come overnight. Luxury goods were destined to become a global attraction ever since the Altagamma Foundation was established in 1992, enabling high-end cultural and creative companies to join forces and boost their competitiveness. To this day, the foundation plays host to Italian luxury heavy hitters like Ferrari and Gucci. “It’s because of this that 67 years after the US-sponsored Marshall Plan ended, the luxury and fashion sectors are still boosting Italy’s economy,” Brun opines.

There’s no denying Italy’s yet to replicate its economic heyday of the 1950s and 1960s but recent economic struggles seem to have barely scratched its luxury goods.

France

Thanks to decades-old safeguarding policies, France’s nationalised nuclear industry generates more electricity exports than anywhere else in the world. However, modern attitudes and technologies are seeing private companies take its place. In reaction to the 1973 oil crisis – where Arab states sanctioned oil exports to nations supporting Israel – France introduced the Messmer Plan. It aimed to produce all French electricity by nuclear power and turn the country energy-independent. As a result, nuclear now generates 75% of France’s electricity, according to the World Nuclear Association. In fact, France stood as the globe’s biggest net exporter of it in 2018, according to the World Nuclear Association, bringing the nation more than $3bn annually.

However, it all happens across largely state-owned EDF’s 58 reactors, meaning the government has a near monopoly on electricity generation without much room for private companies. But thanks to emerging eco-friendly reforms and technologies, the playing field is levelling. “The French economy is experiencing a fourth industrial revolution based on new technologies and innovation,” says Eric Chauvigné, EMEA solution engineer and architect director at Cogeco Peer 1, the IT service management company. “The goal is to build [industries] that are increasingly interconnected and competitive while being ever more respectful of workers and the environment.” The Energy Transition for Green Growth Act enacted in 2015, for instance, committed France to have nuclear provide only 50% of electricity by 2035 and make way for eco-friendly alternatives. Consequently, gaps are opening for private providers like Direct Energie and Alterna to make electricity with renewable sources like natural gas.

Although low-cost nuclear got France’s electricity exports where they are today, natural gas-fired power plants are far cheaper in terms of capital costs according to the World Nuclear Association. So with nationalised nuclear gradually being phased out of the equation, there’s no better time for alternative energy companies to comprise one of France’s most lucrative export.

South Korea

There’s perhaps no country that intrigues economists more than South Korea. Plagued by the Korean War ending in stalemate, it became one of the poorest nations in the world with $64 GDP per capita in 1955, according to Ceic Data, the economic data company. However, in what’s called The Miracle of the Han River, manufactured exports saw the nation rocket to become the 12th largest economy globally by GDP, according to The World Bank.

And it’s in no small part thanks to its integrated circuit industry. “The Koreans produce semiconductors that end up in mobile phones, computers, TVs, everything you know well,” says Gregory Sutch, CEO of Intralink, the international business development consultancy. And South Korea rolls them out in vast numbers, with $86bn worth of exports in 2017 topping Singapore’s $80bn and China’s $67bn, according to ITC. In fact, South Korea’s giving fellow Asian economic miracles and electronics industries a run for their money. “A lot of the problems Japan has experienced in the semiconductor industry is a result of Korean competition,” he details. “Now, Samsung and LG are responsible for the demise of half the Japanese TV brands, the only one left standing I think is Sony.”

Speaking of which, Samsung Electronics is synonymous with the success of South Korea’s economy. “[Samsung] is around 17% of the entire country’s GDP, which is absolutely huge,” Sutch says. Clearly, this isn’t your average economy. Especially considering South Korea’s five biggest companies in its wealth clique, called the chaebol, controlled 62% of the nation’s stock index in 2018, according to Bloomberg, with Samsung Electronics representing 30% alone. “When you say Korea you’re basically talking about Samsung,” Sutch adds.

And, the chaebol clearly aren’t putting brakes on South Korea’s roaring integrated circuit industry anytime soon.

Sweden

Silicon Valley is the epitome of cutting edge tech to most. But, Sweden has a similar reputation. In 2014, Stockholm was labelled the second most prolific producer of tech unicorns per capita by Atomico, the tech investment firm. While the Bay Area has 6.9 billion-dollar businesses per million people, Stockholm sported a close 6.3. And its tech sector’s become even more innovative since.

After economic reforms remedied its 1992 banking crisis, Sweden’s been able to breed an impressive roster of $1bn valued tech startups. “As the home of globally recognised technology companies like Spotify, Skype, Klarna and iZettle [it’s] definitely fair to say that the Swedish technology scene is thriving,” says Johan Attby, CEO and co-founder of Fishbrain, the social network for fishermen. Indeed, one only needs to look at Bloomberg’s Innovation Index, which named Sweden the second best fosterer of innovation over 2017 and 2018 – even overtaking the States’ 11th position. “Today, Sweden can legitimately call itself one of the world’s most successful exporters of innovative technology,” he adds.

As well as English being common parlance across Swedish workplaces, the country’s way of life is a huge pull for entrepreneurs. “Sweden is also known for its high quality of life and has always ranked high when it comes to our education and social welfare system,” the Fishbrain CEO explains. Given Google, Facebook and other Silicon Valley workers famously hit bean bags and slides during lunch breaks, tech geniuses clearly appreciate good environments to work in. “These factors combined have made Sweden an attractive place for people from all over the world and a good place to also build a career,” Attby adds.

Although IKEA may still be most synonymous with Swedish ingenuity to some, tech unicorns are upgrading the country’s global reputation in a big way. The winner takes it all, right?

China

You’d think China’s obsessive coal imports mean environmental technology is the last thing the communist country’s contemplating. But its vast pollution issues have seen the government scramble to make Chinese environmental technologies incredibly lucrative. “The country is horribly polluted as a result of 20 to 30 years of rapid economic growth,” explains Sutch. “The air, water – everything.” 

The government put its foot down in 2013 by pledging $16bn to ease the capital’s pollution over three years, as well as committing a staggering $124bn in 2014 to increase its air quality. Shortly after, premier of the state council of the people Li Keqiang sealed the vows by “declar[ing] war against pollution”. “[In] the environmental space the government has lots of policies in place, so there’s a really big incentive on the part of Chinese companies to adopt the leading technologies,” Sutch says.

And it’s paying off. “There are awful problems with water contaminations but many companies focused around purifying water have appeared,” Sutch describes. Indeed, it means China now stands as the world’s biggest and fastest emerging producer of environmental technologies, according to the US International Trade Administration. In 2017, that translated to a $65.78bn market worth. “The opportunity to introduce innovative ideas and new cutting-edge technology for China’s needs, such as soil decontamination, are where the advantages lie,” he explains.

Transforming pollution problems into promising industries – now that’s a masterclass in turning a frown upside down.

Japan

Known as its post-war economic miracle, The Land of the Rising Sun shocked the globe by stepping out from the nuclear ashes of World War II and becoming the second largest economy in the world by 1968. And although that reign ended after the Cold War – with Japan experiencing frequent recessions and poor growth ever since – robotics may be its saving grace.

From artificial nurses to machine hoteliers, today robotics are becoming embedded in Japanese society. “[Robotics] are very important to just about everyone today,” Sutch says. “But that’s not just from a consumer perspective – robots are especially important in fixing productivity.” Certainly, the topic of artificial intelligence (AI) replacing people as favoured by dystopian sci-fi authors is becoming reality for many advanced nations and that’s no different for Japan. Machines are helping the country bridge huge talent gaps in its nursing sector as well as in warehouses. “[If] you have an ageing population, for example, that means a shrinking workforce,” he adds. “So either you get people to work until they’re older, in which case they probably become less productive or you use robots.”

And that’s just what this nation has done. “Japan has more robots than Germany, France, Italy and South Korea combined, it’s absolutely vast in the manufacturing robot space,” Sutch explains. Across 2017 it exported more industrial robots than any other nation with $2.2bn worth, according to the International Trade Centre (ITC), the UN international development agency, almost tripling Germany’s $858m second place figure. Thanks to its manufacturing might, this meant Japan delivered 56% of global supply in 2017, according to the International Federation of Robotics. “Historically, Japan has been very good at hardware and very bad at software, to put it in very general terms,” Sutch explains.

Having turned its skills shortages into a motivator to innovate, Japan is clearly leading the way in robotics. 

About the Author

Angus Shaw

Angus Shaw

With a keen eye for politics as Acting Commercial Writer, Angus can often be found scanning the horizon to write about the next big waves crashing against business shores. That makes up the time when he's not setting sail at Radio Caroline, the former pirate station, on weekends. Follow him on Twitter @Angus_Shaw for his latest cognition

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