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Global tensions strain weak links in tech supply chains 

 May 14, 2022

Technology often crosses borders. The Internet is the clearest example: a network that surrounds the world, connecting billions of people to everything from business to romance. Its role in enabling remote work was emphasized during the two years of the epidemic.

However, as it has become increasingly clear that the development, reach and success of the technology are highly dependent on a closely linked supply chain, the very structure of these relationships is becoming increasingly fragile. M e Russian invasion of Ukraine For national digital security concerns, geopolitics can threaten both the supply of physical components and the technology communities vital to innovation.

For business students, it becomes vital to understand that while globalization has benefited companies greatly, they must also be aware of the risks involved in an international storm such as trade disputes and security concerns – and consider ways to reduce them.

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The technology’s physical supply chains have been a topic of discussion and controversy for years, mainly focusing on the Chinese technology group Huawei. In 2019, USA In the blacklist The company for security reasons and warned its allies that they should not use Huawei equipment for 5G mobile networks.

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The inability to access crucial computer chips in the US has led to a significant change down Huawei’s revenue last year forced the company to try to expand other parts of its business, including its cloud services and components for electric cars.

But Huawei is far from being the only company with reliance on vulnerable international supply chains. Eric Thun, Associate Professor of Chinese Business Studies at Oxford University Said Business School, Says it has become harder than ever to isolate a business from risks to the supply chain. “You’ve seen increasing complexity in the supply chain and they’re expanding much faster than ever before,” he says.

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Increasing concentration of market share at each level of production has actually created a split – a company may control micro-chips, but it relies on another company for the raw materials. In turn, this makes it difficult for governments to secure the entire supply chain for complex products with dozens of parts, each of which is made up of smaller components.

Work to replace Huawei’s equipment in Hull’s tower building following UK government decision to remove Chinese company’s technology from 5G network © Ian Forsyth / Bloomberg

Employers must also consider that while the Internet, and the remote work it allows, means that workers can now be attracted from further afield, geopolitical problems can have a serious impact on their lives and the businesses that employ them.

Russia’s invasion of Ukraine highlighted this problem, given that both countries were technology hubs for companies elsewhere looking for relatively cheap but highly skilled developers and programmers. Some Ukrainian workers have fled the violence, while others are obliged, under government law, to stay and fight. Companies relying on Russian developers, meanwhile, may have difficulty settling their accounts as various banking and payment services have been suspended.

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“What was very interesting was that almost every company in Fintech was affected,” says Itamar Lesvis, co-founder and CEO of Crypto Argent. Encrypted currency Project developers and engineers.

It also creates a considerable moral imperative for businesses to actively intervene with local partners. “A lot of companies are considering moving teams to Lvov [in the west of Ukraine]And help those who can leave get out, ”Bruce McFarlane, co-founder and managing partner at MMC Ventures, told FT in March.

Some companies have supported the team at risk. for example, RevolutThe digital bank only, offered relocation support to Ukrainian workers domestically or abroad in February.

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But the situation does not end with temporary assistance to Ukrainian workers, McFarlane stressed. In the longer term, companies will have to deal with the issue of workers wishing to return to their home countries.

At a time when ESG (environmental, social and governance) concerns have come up, business executives and students need to carefully consider the ethical aspects of supply chains. The benefits of globalization and an increasingly remote workforce in sectors such as technology in the face of challenges and the need for employee safety must be considered.

It is difficult to navigate the geopolitics of the business, especially when the situation on the ground can change so quickly. The Russian invasion of Ukraine changed supply chains within a month, with companies forced to make quick political decisions. For those who work both upstream and downstream, the impact can be felt quickly and without warning.

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Such challenges require teaching in the School of Business Administration to address these issues. If tomorrow’s leaders address such concerns only as soon as they face a crisis, it may be too late.

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