Good morning.
The growing animosity between the U.S. and China continues to be a hot topic in C-suites and board rooms. Many companies—in some cases, entire industries—have become heavily reliant on China for key components, while others have looked to a rapidly-growing Chinese market as an engine for growth. With tensions rising, most Western companies now look to diversify their supply chains and reduce their reliance on China. But it’s not easy.
In a recent interview with Fortune’s Michal Lev-Ram, Gary Shapiro—CEO of the Consumer Technology Association—underscored the difficulty. An excerpt:
“There’s definitely a bipartisan agreement (among politicians) that we have to do something, given supply chain issues and the different points of view that China and the U.S. have. We can’t be so reliant on just one country, no matter who that country is. So there’s an effort towards reshoring…I saw a recent survey that suggested 70% of affected companies are planning on ways to deal with this reshoring effort.
"The question is, how long will it take?...I think the realistic answer is 20 to 30 years, rather than the three or four years which some policymakers envision.”
The greatest concern is in the technology business. I spoke last week with tech industry veteran Tom Siebel, founder and CEO of C3.ai, an artificial intelligence software platform, who summed up the challenge this way:
“These tensions between China and the United States, in the both the geopolitical and military realm, are very real. Enterprise A.I. will be at the heart of the design of the next kill chain. Whether you're dealing with hypersonics, whether you are dealing with swarms, whether you are dealing with sub-surface autonomous vehicles, whether you are dealing with space, A.I. is very much at the heart of that. So we are in, I would say, an open hostile warfare with China, as it relates to A.I. right now. And whoever wins that battle will probably dominate the world.”
Both Siebel and Shapiro were recording taped interviews for the Fortune Global Tech Forum, which was held on Thursday in Guangzhou, China. For more than two decades, Fortune has been hosting events that bring global business leaders together in the belief, as Shapiro put it, that free exchange of trade and ideas will over time lead to “greater understanding and sharing, and you are less likely to have conflict.” But that belief is now being put its greatest test.
More news below.
Alan Murray
@alansmurray
alan.murray@fortune.com
