Corona's consequences – how the pandemic is changing globalization | DW Documentary

months into the coronavirus pandemic with no end in sight it's already clear that the economic consequences will be drastic the coronavirus crisis is certainly the most serious event since world war ii germany's corporations have long profited from cheap labor in far-off countries now they're experiencing the downside of globalized labor and long supply chains is it time to cut back on overseas production this total dependence on asia for far too many active ingredients that has to stop as soon as possible so what does that mean for germany is its well-being hanging by a thread if we decided to bring production back to germany we'd also be giving up a fair amount of prosperity then there are the millions of people at the other end of the supply chain the countries where cheap production takes place are being hit even harder no job means no money and no money means no food many more people will die of starvation than will die of the pandemic this is the biggest development disaster in all of our lifetimes the pandemic-related crash has left globalization's critics feeling vindicated the market's not capable of justice so globalization came as a plundering process so you want to continue that plundering process i said no that's not what human beings are all for is the pandemic the beginning of the end of globalization as we know it this is the port of hamburg it's a hub for a large portion of the goods germany exports and imports hardly any other country in the world is as highly connected or as dependent on the uninterrupted flow of trade germany's prosperity depends on well-functioning international supply chains that's why the cranes here never stop moving on these docks it's become especially clear just how much the crisis has slowed the global economy more than a third of germany's foreign trade with the far east passes through here the head of port operator hhla is angela titzrat when the virus paralyzed china in spring of 2020 she could gauge the pandemic by container numbers the crisis arrived some ship owners took out every tenth ship and at times especially in may and june capacity and volume were down by up to 40 percent even then at the height of the crisis so far germany's supply of goods was never seriously threatened but for a time many companies felt pressure on their supply chains is the pandemic a glitch then a one-time impactful event i don't think the damage will be permanent but i definitely think the recovery will take several more months if not years global trade is slowly recovering initially trade and the economy came back faster than expected but rising worldwide infections and more looming shutdowns will be setbacks to recovery there are fears that supply chains could come under renewed pressure the pandemic has been an alarm bell for german companies what lessons are they learning from it let's zoom in on the volkswagen automotive plant in wolfsburg the pandemic has hit the german economy here especially hard in mid-march germany's biggest company and its most important industry were suddenly paralyzed assembly lines ground to a halt the coronavirus was the perfect storm affecting vw's vital supply chains production and voice pork requires parts from around the world vw has 26 locations in china alone unsold cars piled up at the plant and employees feared for their jobs vw boss habedis felt compelled to temporarily close factories [Music] in view of the current deteriorating sales situation and growing uncertainty over the supply of parts to factories there will be immediate interruptions to the production of our brands globalization is what made volkswagen's success story possible in the first place competitors daimler and bmw have also spread their production sites around the world the pandemic brought home the risks of that level of international integration producing goods outside of germany is often cheaper than doing it at home so many industries have moved parts of their operations abroad and it's not just about the goods themselves money people information and ideas are all racing ever faster across borders globalization is interconnecting business politics and people more and more and increasing their dependence on one another [Music] is the pandemic now calling globalization into question and with it the very basis of many national economies at oxford university professor ian golden researches the implications of globally distributed production long before the pandemic he warned that the worldwide linking of supply chains trade and transport could lead to a standstill in the event of a crisis it's got many good aspects that help us like vaccines like all the things that make our lives better at the same time it also has very negative things about it many countries have been devastated by the pandemic economically and medically i i don't believe that we should be stopping it i believe we should be seeing this as a wake-up call that we need to manage it more effectively we recognize that the pandemic is the result of badly managed globalization so what do you think will be the reaction of companies going forward with the pandemic in mind supply chains have been fragmented too much i've been arguing for a long time that we need to have a more resilient system that the just-in-time delivery system is very bad for resilience but i do not believe that means less globalization because actually what we need for that for resilience is more diversification we need more suppliers from more places the franco-german pharmaceutical giant zanofi recognized exactly this risk outsourcing production is often cheaper but the fewer suppliers you have the more vulnerable your supply when it comes to medicine diversification can literally be a lifesaver here in frankfurt hurst zanofi produces active ingredients for many drugs tons of chemicals are mixed in huge machines like this one for example fexophenidine an allergy drug they're then combined with other ingredients and made into medicines explains zanulfi manager matias brown how important are global supply chains for sourcing these ingredients [Music] sanofi typically still has relatively high vertical range of manufacture which means we produce quite a lot ourselves for quality reasons and sanofi has a policy that for every product we purchase we have at least two suppliers located in different regions so we can ensure our supply chains aren't dependent on a single country or supplier with production in europe barely profitable the last few decades have seen many drug companies move factories to asia labor is cheap there and environmental and safety standards are low as a result 60 of active pharmaceutical ingredients are now only produced in asia in western europe the number is about 28 in north america 5 and 7 in other countries this dependence particularly on india and china has led to dramatic shortages during the pandemic to avoid this in the future zanufi is planning a new venture to champion european pharmaceutical ingredients it will split off six of its factories and attract external investors for the new company the ipo is planned for spring of 2022 under the leadership of manager jacques prom risk shifting 100 of production to asia is too risky it's too risky for many essential drugs so called life-saving medicines this crisis shows very clearly the limits of our current system do you think europe can regain its independence in this area we we're not going to bring production of all active pharmaceutical ingredients back to europe but this total dependence on asia for far too many active ingredients that has to stop as soon as possible why should people invest in this project well in the coming months we're going to show that the company we are creating is profitable but given the experience of this pandemic we are asking governments to help us with subsidies we need to strengthen europe's sovereignty europe mustn't put all its eggs in one basket multiple suppliers in different countries sounds like a good idea but when every country is affected like in a global pandemic even that doesn't help much so will this crisis change the current system if you can make something cheaper somewhere else you need to outsource it or even go there so do you think that this pandemic fundamentally alters that calculation part of the reason why things were outsourced why there was this fragmentation of supply chains was to take advantage of cheap labor around the world but in a world where reparative tasks are done by machines are automated done by robots cheap labor is no longer an advantage robots replacing workers seems like the way of the future but in most industries low wages are still a competitive advantage [Music] for example when it comes to face masks during a pandemic everyone needs them but decorative cloth masks like these are no good for doctors and nurses they need high quality masks made of non-woven fabric that's why it was all the more disastrous that supplies halted at the beginning of the pandemic because of wage costs mass production had been outsourced to asia the non-woven material that's used to make masks often comes from germany from europe the machines used to make the masks often come from germany from europe but because of labor costs right now it's all put together in other countries like china in china in london the german government hopes subsidies will encourage firms to restart domestic production british south african company mandi has a factory at cornau on the dutch german border monday normally makes plastic film and components for diapers and hygiene products but now the firm is working flat out on a large-scale plant to produce medical face masks maundy plant manager jung schneider shows us the empty hall where the factory will be set up when everything's ready so-called melt-blown non-woven fabric will roll off the line here it's made entirely of plastic under high pressure it's atomized into microfibers thinner than a human hair the high-tech fabric can filter bacteria and viruses from the air we breathe it'll be used to make 300 million masks a year the first prototypes have already been created all of it made in germany how will you make german mass production profitable in the long term right now it's so much cheaper in china the essential point is that we're setting up fully integrated production that means we'll produce the non-woven fabric ourselves we'll make the masks here at high speed with our machine we'll be able to produce about a million masks per day and that will mean increased efficiency and in turn more cost-effective production but the government subsidy must have been important for monday in this decision right it plays a big role it's important to secure things here in germany and europe in the long term of course it's an important element monday finances up to 40 percent of costs through subsidies manufacturers can get a maximum of 10 million euros for a facility in return they have to sell the masks solely in europe until the end of 2025. masks are in high demand because of the pandemic do you think things will stay that way long term we're talking about medical masks that require high quality standards and we see high demand for them in the medium term too companies in germany are responding to the pandemic arming themselves for future crises through better warehousing diversification and shorter supply chains and some are bringing parts of their production back to germany for goods like pharmaceutical ingredients and masks it seems to make sense but whether they'll be produced in germany in the long run is uncertain and intervening in supply chains won't come cheap for taxpayers the government is handing out high subsidies to encourage more expensive production in germany as opposed to cheap production in asia is it a viable way to turn back the tide of globalization either way the issue is a big concern for many even before the pandemic there was criticism of globalized production and its consequences [Music] the fridays for future movement has long protested unsustainable consumption and dependence on international manufacturing climate protest and criticism of globalization go hand in hand that's why demonstrations like this don't just attract environmental activists the corona crisis was a call to arms for those already critical of globalization the activist network attack has been protesting the excesses of global markets for years activist and trade expert roland zeus sees the pandemic as an opportunity for change i think lots of people have started to think more about the corona crisis and they're becoming more aware of how everything is connected there's an awareness that we can't just leave certain things to the markets because markets aren't in a position to react appropriately only rich countries are able to support companies and people through the crisis the coronavirus has exposed how vulnerable globalization has made the world's economy and its people [Music] are we seeing the end of i think we have over globalization in certain areas we really need to think about what sorts of international trade makes sense it's not as if we're saying there shouldn't be any more global trade at all but a large portion of it just makes no sense around 60 percent of all germans now perceive globalization as a risk while only 40 percent still see it as an opportunity and just three years ago it was the other way around [Music] even so it's unclear whether scaling backworld trade and globalized labor is even possible at the munich-based ifo institute trade expert lisandra flach studies the effects and risks of globalization she's worried about how much germany is closing itself off to the outside world in the wake of the pandemic we can't forget that germany benefits a lot from globalization if we decided to bring production back to germany we'd also be giving up a fair amount of prosperity in a deglobalized world we'd see a decline in real income of almost 20 percent that's a lot does this feel the choice is between more supply chain security or lower costs what if germany withdrew from globalization the solution to the current crisis isn't regionalizing the supply chain but diversifying it in terms of suppliers that means companies would consciously source products from several suppliers from different regions to minimize the risk of supply problems but more suppliers means higher costs for a company so products would be more expensive right so companies have to weigh up the risk of supply problems against cost minimization and the cost supply chains that are too long have become a risk in the pandemic but simply cutting them out is no solution after all globalization relies on growth without it there would be less prosperity that's true for germany and even more so for the rest of the world the effects of globalization are highlighted in one industry more than almost any other textiles here the advantages and disadvantages of globalized production are plain to see the industry has a worldwide turnover of 2.5 trillion dollars featuring mass production and low prices this berlin exhibition shows how the industry works more than any other it thrives on the international division of labor clothes sold in germany have largely been produced by workers in asia thanks to their low wages fashion labels spit out mountains of clothes at low prices there are discount battles and constant new collections the result is that a large portion of the clothes and german closets never get worn and much is thrown out before a pair of jeans reaches a german store it is traveled halfway around the world the cotton comes from uzbekistan it's woven in india died in china and sown in bangladesh when the pandemic arrived in germany the big clothing chains had to close for weeks they still haven't recovered from the shock ashim back works for the management consultancy mckinsey he's an expert on the business of global fashion even he's never seen a slump like this we're seeing a massive increase in online trade but it's very difficult to get customers back into stores as long as they have to wear masks socially distance and disinfect their hands when they enter a store the experience isn't as fun and fashion shopping is not just about fulfilling a need it's also entertainment that factor is missing we expect that 20 to 30 of businesses won't survive this crisis in their current form according to mckinsey fashion brands are looking to pull out of some manufacturing countries because of the crisis bangladesh is being hit particularly hard less clothing bought in a country like germany means less work in bangladeshi factories how dependent is bangladesh on textile exports massively textiles account for 84 percent of exports in 2018 which is where this graph ends at first glance you can see it's a success story the country has generated massive growth in the last 20 years from 2000 to 2018 through textiles an eight-fold increase in less than 20 years in vinegar why is bangladesh so strongly tied to exporting textiles many developing countries textile production is the gateway to industrialization there are fewer hurdles in terms of capital and labor as opposed to other industries like say the automotive industry so essentially sewing is easier to learn easier to learn easier to build up easier to develop of course there's high dependence if fewer textiles are bought in the west production will suffer bangladesh lies to the north east of india it's home to 165 million people more than double the population of germany in some ways globalization has been a remarkable success story here since the 1990s the economy has grown continuously by between four and eight percent the main factor being the textile industry germany is the biggest buyer of the nation's cheap clothing at factories like this one in dhaka an army of textile workers toils endlessly making products for western labels like levi's marx and spencer and bershka millions of jobs have been created in this way but the single export strategy is now coming back to bite bangladeshis like in germany businesses had to close because of the pandemic and global fashion companies have cancelled orders worth billions hundreds of factories have shut down poverty now threatens tens of thousands of mainly female workers and their families one of them is 35 year old charming actor malika she lives in gazipur a textile town near dhaka she used to earn about 125 a month as a seamstress but since her factory closed she no longer has a proper job she hardly has any money to buy food for her three young sons globalization didn't provide her a western standard of living but it did at least provide financial stability until now [Music] we've faced starvation thanks to the impact of the coronavirus we've become poor before our income was bigger and goods were also cheaper now money has been devalued and prices have risen it's okay for people who earn a lot but for poor people like us it's made things extremely hard this is the reality now there's no drama or fiction in it it's just the way it is she's had to borrow money and get a job as a cleaner she can't pay back the debt everything she earns goes towards food and school fees i have no way to survive i lost my father and i have no brothers i'm alone and my children are still young my husband married another woman and left me with the children getting married again would bring a stigma to my name i have to think of the children [Music] there's no unemployment assistance in bangladesh no welfare and no measures to keep employees on when business is slow often factory owners don't even pay the mandatory severance pay the state can't afford to spend billions on economic stimulus so workers like malika have no choice but to show up at the factory gates and ask for a job every morning long lines of unemployed people gather there activist kalpona actor knows these problems well she began working as a seamstress in a factory when she was 12. more than 30 years later she helps textile workers assert their rights she says it's not only the government that's to blame the brand and retailers has acted so irresponsibly like they just run away cancelling the order or responding the order they did not think about this business group whom they business with for long many years and also did not think about this worker who made them profit for years they just left them just empty hand the geneva-based united nations international labor organization the ilo is warning that the pandemic threatens the lives of millions of people in developing countries ilo estimates that nearly five hundred million jobs have already been lost due to the coronavirus sanghonli is the director of the ilo's employment policy department for him the pandemic is worsening a massive equity gap between the west and the rest of the world especially emerging and developing countries [Music] germany for example they the government immediately mobilized you know trillions of dollars to support enterprises and the to support workers but in lower mid-income countries the governments do not have their fiscal resources so essentially the richer countries have to help the poorer countries get through this pandemic this is a really difficult time for everybody but this is really time for global solidarity and we have to be really worried about the serious risk of the poverty and also the hunger and also relating really serious consequences on health so it's a question of survival [Music] western countries have spent trillions propping up their economies but there's no aid for those at the other end of the supply chain some companies however have given charitable donations to help the h m foundation for example has donated 1.3 million dollars to help bangladeshi textile workers through the pandemic critics say that's a drop in the bucket and mainly a pr exercise in general terms companies social responsibility towards their suppliers has so far been voluntary but germany's supply chain act could change that it would oblige companies to make sure their suppliers were complying with humane labor and social standards in other words ensuring fair working conditions outside germany wouldn't be charity it would be law the most controversial proposal would hold german companies accountable for violations by suppliers workers from developing companies could then sue in germany is development policy spokesman for the center-left social democrats the supply chain act is close to his heart if you allow production in a factory where the walls are falling apart as it was in bangladesh with rana plaza and if that factory collapses then no one can say oh what happens on the other side of the world doesn't concern me a year on from rana plaza i spoke to seamstresses who'd been left disabled they told me the evening before that they could see cracks in the walls if there had been basic workers rights like a staff council this disaster could have been prevented the rana plaza disaster shows what roles a supply chain law could play in extreme cases in 2013 a multi-story textile factory in dhaka collapsed due to gross negligence the building was only designed to hold offices even though it was dangerous seamstresses were coerced into working more than a thousand died and more than 2500 were injured [Music] it was only later that fashion labels agreed voluntarily to give compensation could the supply chain act prevent such incidents how much responsibility should german entrepreneurs bear [Music] if allah we ask is that they go to a reasonable amount of effort to check whether the working conditions are okay but they should be liable for failures that are intentional or the result of gross negligence so it's more about the deterrent than actually taking german companies to court for us it's really about prevention if companies know they're also liable they'll really try to create mechanisms to prevent something like this from happening many corporations are at least paying lip service to the idea of taking on more global responsibility and some big players in the german market say they'll support the law like riva kik primark chibo and nestle many think the supply chain act would be a step in the right direction but will it fundamentally change the global divide between rich and poor muhammad yunus founded a bangladeshi bank that gives micro loans to the poor for this he was awarded the nobel peace prize he's a tireless fighter against the injustice brought about by globalization almost 70 of the population of the entire world are in that category that they're leaving by daily or weekly incomes and like that there's no shortage of wealth in the world but all the wealth of the world is concentrated in few hands extreme concentration of wealth which is generated by the economic system is the reason for what this is happening some people would say that as long as everybody benefits it doesn't matter how big their piece of the pie is in comparison i don't think it's a good thing if you got a million i got a penny uh that's not a good thing what should it be so you're sitting at a ticking time bomb by creating an economy like that because we are in a party we are making money we are enjoying ourselves but the house is burning so is the pandemic a turning point for our current economic system pandemic has created a situation where we can reflect because all the normal like quote unquote normal activities has stopped so we have plenty of time to reflect what pandemic has done has stopped the trend no it gives us an opportunity we can now build a new train and a new track go another direction not to the direction here but how exactly can the pandemic really make people change their way of thinking the coronavirus has brought home how our way of life harms the environment other people and ourselves nature has had a brief respite during the first shutdown in the spring air pollution dropped dramatically as satellite images show over china for example there was only half the usual amount of nitric oxide [Music] the smog over los angeles disappeared in india himalayan peaks could be seen on the horizon and nitric oxide emissions fell by up to 50 percent in cities like milan madrid and paris the western mantras are cheaper and cheaper faster and faster and more and more don't come without a price now that everyone is being forced to slow down it's dawning on many that it may not have to be that way german companies are also beginning to rethink the way they work including insurance company allianz after corona hit it told almost 90 percent of its employees to work from home the offices are still far emptier than they were before the crisis it's the same at many corporations because of the pandemic more and more people are working from home across germany everyday office life has changed completely there aren't many we have staff who come to the office 100 of the time even that staff who work from home 100 of the time and everything in between people want to be able to choose nobody here wants to go back to the old way one side effect is that it saves money right that's right and that's not a bad thing you save on things like electricity and of course reducing business travel we want to have 50 less travel and more digital meetings so yes it's definitely also a saving for the company that's how it is with many german public companies they don't want to go back to the pre-corona way of working at least not if the new way saves the money the ecological potential is also huge if just a quarter of the german workforce worked from home one more day per week it could reduce co2 emissions from commuting by five percent two additional days of working from home per week would eliminate eleven percent of emissions [Music] for allianz manager bettina dietscher this future is already a reality since the pandemic she's essentially been managing her team from home in the morning she has breakfast with her family as normal at 7 30 am when her daughter goes to school her work day begins her husband also works from home [Music] she rarely has time for a break between constant phone calls and meetings her employees are located all over the world and the working language is english [Music] bettina used to travel frequently in europe and asia meeting colleagues in singapore or attending the munich security conference now she rarely takes business trips even though there are advantages it took a while to get used to working from home there were moments when i longed for the office that's probably the way in every family being together so much the home schooling my husband and i both working there are some stressful moments my team is global i always have someone in the world working so you're never finished but it's about how you manage yourself you can't let yourself get sucked into working 24 hours a day bettina no longer needs a business wardrobe or a desk to do her job and the executive office looks a little different these days [Music] so is it really possible in the long term to run an entire insurance line from the living room table necessity has shown us that we can that's actually something that makes me smile the myth that you couldn't work from home or that you're not productive at home was dispelled overnight i'm not sure it's the case for everyone i think we have to accept that and let people decide for themselves does it work when does it work and how does it work we're also consuming differently even beyond the initial shutdown the coronavirus has left its mark on the clothing industry more people are buying online with stores complaining about a loss of customers and some people are realizing that they need far fewer clothes and that items can be worn for longer than one season the slow fashion trend is catching on like the used clothing exchange clothing swap thank you for having us its founder is canadian jenna stein she's happy whenever used items find a new home you have to bring at least five items and you can take as many as you like hey there look what i found i mean this is um two i would say two dress shirts and one two three pairs of uh dress pants this is crazy i know why are people throwing it away well i think you know we we buy in a lot to the trends and the fads and the idea that we need to have new things um and i generally think that people we over consume according to a mckinsey survey young people in particular are more interested in secondhand fashion because of the pandemic three quarters of respondents say they want to use their clothes for longer half want to buy less whether these opinions will translate into behavior remains to be seen how do you think the pandemic has changed people's awareness of sustainability and fashion i think that people are just starting to slow down a little bit even you know even the fact that you're having to wait in lineups again to h m i think people are starting to not have the patience for that and looking to alternative options also with people losing jobs and with the economy going you know so uncertain i think a lot of people also have stopped those spending habits and are rethinking how they can make the best out of what they have already the whole idea is you know one person's trash is another person's treasures if the pandemic does change consumer behavior the fashion industry would respond with more sustainable in higher quality goods what effect would that have on low-wage countries what would happen to textile workers in bangladesh for example there'd be less production we'd hope that in exchange better quality goods would be sold and that we'd see the corresponding production of those things but for bangladeshi textile workers that's more of a threat than an opportunity at least in the short and medium term no one here wants to forego globalization globalization good because it has given a free access to free market access to the people the business group it creates jobs but people has to remember a globalization doesn't make any difference if people don't have jobs with dignity because of corona skepticism about globalization is at an all-time high but this crisis doesn't mean the end of globalization nevertheless there's hope for a fairer system the pandemic has exposed global inequality like never before real change will take courage we know what to do but we are not doing it uh similarly wealth concentration you know who is contributing to the wealth concentration why it is happening we know that simply we don't want to change it it's a profit maximization the whole thing the economic machine that we built the only thing we put in the center of it is a good profit maximization when we look back on the crisis as the incident that led us to change globalization for the better my hope is that it will be judged as a rupture as a time a wake-up call when we recognize how dramatic the failure of our existing system is so my hope is that we can regulate globalization and manage it so it's more inclusive more sustainable uh and that we can harvest the good side and stop the bad we don't need 205 countries to agree but what we do need is the big actors that make a difference to make a difference those responsible for the status quo have now been asked to change the rules of the game so that globalization no longer means just unlimited profits for few but a higher standard of living for everyone and after this pandemic this will be more important than ever

Channel: DW Documentary

Views: 584,916

Keywords: Documentary, Documentaries, documentaries, DW documentary, full documentary, DW, documentary 2021, documentary, Coronavirus, pandemic, lockdown, globalization, economy, digitalization, Asia

Id: j1z-gVc6HZg

Length: 42min 26sec (2546 seconds)

Published: Wed Mar 17 2021