Citi CEO Fraser highlights the advantageous outcomes of diversifying supply chains

Geopolitical tensions and macroeconomic shocks are driving businesses and governments to restructure their supply chains, leading to significant advantages, according to Citigroup CEO Jane Fraser. The global economy has been questioned since the COVID-19 pandemic and Russia’s invasion of Ukraine disrupted supply chains worldwide. Additionally, conflicts in the Middle East and tensions between the United States and Beijing have prompted calls to reduce reliance on these regions. In response, some companies are adopting “nearshoring” strategies, locating manufacturing facilities in Mexico to ensure more stable supply chains. Others are diverting investments from China to emerging markets like India, Vietnam, and Malaysia.

Fraser highlighted the shift in supply chain strategies, stating that there has been a long-standing focus on sourcing and moving goods efficiently to reduce costs. However, recent geopolitical and macroeconomic shocks have disrupted this approach, pushing the world to a critical turning point. Fraser emphasized that despite these changes, it is premature to declare the end of globalization. Instead, she argued for resilience and collaboration, stating that disruptions to the “old system” indicate a transformation of globalization, leading to stronger trade relationships and more diversified supply chains.

Fraser also praised free trade agreements such as the Regional Comprehensive Economic Partnership and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership. She believes that these regional frameworks can facilitate cross-border collaboration and pave the way for future economic growth.

Since assuming the role of CEO of Citigroup in March 2021, Fraser has been working towards streamlining the bank, narrowing its focus, and aligning its profitability with industry peers by reducing its international presence.

In conclusion, geopolitical tensions and macroeconomic shocks are driving businesses and governments to restructure their supply chains. While the focus is shifting towards diversification and nearshoring, Fraser emphasized that globalization is not coming to an end. Instead, she believes that these changes will lead to stronger trade relationships, diversified supply chains, and increased collaboration facilitated by regional frameworks.