I am a witness and product of the Asian century. Geopolitics is an important consideration in my role as the CEO for Korea and Vietnam of a German company. Additionally, having grown up in Germany as a child of South Korean immigrants, I have now spent the past 14 years in Asia, living in India, Singapore, Japan, and currently South Korea.
When I assumed my role leading PRETTL SWH’s Korea and Vietnam businesses in November 2021, pandemic policies were in the process of being rolled back in South Korea. As things slowly normalized, I was in charge of an organization that had been through a major restructuring due to market changes highlighted by the pandemic.
PRETTL SWH Group is a global company headquartered in Germany. Part of the PRETTL Group, PRETTL SWH develops sensor, connectivity, and electrification solutions primarily for the automobile industry. Our wiring harnesses play a critical role in connecting thousands of automotive components, including exhaust sensors, braking components, telematics, and connectivity solutions. Essentially, our products constitute a car’s central nervous system, relaying important information and electric power to all parts of the vehicle. Globally, we have more than 8,000 employees and 10 manufacturing sites, including plants in Vietnam, Mexico, Morocco, China, India, and Ukraine.
Cable solutions integrators like PRETTL SWH are particularly sensitive to labor costs because many manufacturing processes still require manual labor. Although automated solutions are being implemented, they remain quite expensive. This is one reason that countries with a focus on manufacturing (e.g., Mexico, Morocco, China, India, and Vietnam) are so important to automotive producers in North America, Europe, and more recently, China and India.
Given these industry dynamics, the rise of geopolitical risk factors is making it increasingly important to never depend on a single source for manufacturing. Due to this mentality, robust contingency planning, and experienced leadership, PRETTL SWH was able to continue our operations in Southwest Ukraine during the war. In contrast, other wiring harness manufacturers were offline for weeks or months, causing shutdowns at several OEM plants.
In a similar vein, vehicle sales dropped precipitously due to pandemic lockdowns. In Asia, this market dynamic was compounded as local governments introduced public health policies that heavily restricted operations. For example, only business operations deemed critical were allowed to continue in many countries. Specifically, in Vietnam, a major manufacturing site for our Korean operations, travel was restricted from state to state, making travel from Hanoi to our plant in Hai Duong extremely difficult. Having never encountered such a situation, this experience served as a meaningful reminder that companies need to account for local government policies and regulations in the context of both standard operations and their contingency planning.
When Western companies initially located manufacturing to Asia, cost was typically the determining factor. Given today’s geopolitics, cost is no longer the primary factor: variables ranging from logistics to sanctions to environmental, social, and governance concerns all come into play. This broader perspective has become a necessity for leaders as they navigate today’s geopolitical risks. It is certainly a lesson I have learned during my leadership tenure.
[For more from the author on this topic, see: “Geopolitics & Leadership in the Context of Rising Asia.”]
