A global survey across five countries has discovered that consumers are placing higher importance on local production, forcing manufacturers to act. Is the curtain coming down on globalization?

In August 2022, Oliver Wyman and GFU Consumer & Home Electronics GmbH surveyed more than 5,000 consumers in five countries — China, India, US, Germany and France — for a study called “The Way Back Home”. All five countries are among the seven largest economies in the world and have extensive international trade relations.

According to the study, manufacturers of household appliances and consumer electronics around the world are facing increased awareness of consumers from these countries. Shoppers are paying more attention to where companies are based and attaching greater importance to factors such as local production, climate protection, and fair working conditions.

Exhibit 1: How much do you agree with the following statements about globalization?

Source: Oliver Wyman Consumer Survey 2022, n=5,207; 1011-1092 per country

Key finding of the study. A major share of consumers (from 44% in US to 91% in India) felt the world is too globalized. And compared to a time before COVID-19 and the war in Ukraine, 66% of consumers now have a stronger interest in the origins of products, resulting in local companies gaining a competitive advantage.

In Germany, for example, just over half (54%) of people believe that today’s world is too globalized — only just under a quarter (22%) thought the opposite. People in India (91%) and France (70%) are particularly sceptical about globalization, whereas in China (46%) and the US (44%), those who questioned a global division of labour make up less than half of the population.

Concerns differ across the regions. Quality and sustainability concerns are found in all countries, while protecting local brands and jobs is especially important to Western respondents.

Although the young and highly-educated are the most globalization-critical group, the internationalization of the economy is questioned by all demographics in all countries. And generally, according to the survey, interdependencies between countries is being seen as increasingly problematic.

At the root of the issue is a perfect storm. The combination of a still ongoing pandemic and the war in Ukraine. Both have not only highlighted our dependence on autocracies but have also had a knock-on effect by severely disrupting supply chains. In this environment, local presence and production is gaining increasing importance.

For German consumers, for instance, the increase in agreement with the statement “It is important to me where a brand is headquartered” was particularly high — 19% compared to the period before 2020.

Our study found that two-thirds of respondents preferred brands headquartered in their home country; while around three-quarters of those polled attributed increased importance to local manufacturing.

When posed with the question “Key reasons to buy locally for me are …,” the answer “confidence in quality” was strikingly high (68%) across all territories, followed by sustainability considerations.

The study shows that, across the world, manufacturers need to prove and communicate more clearly that their products are good for people — and good for the environment. Consumers predominantly see climate protection as a global community project, and French consumers, especially, consider globalization to have a very negative impact on the environment.

The study concludes that manufacturers could score points with a good sustainability strategy. Companies with a green supply chain could have a good chance of expanding their market position; aggressively emphasizing that they are not part of the problem, but part of the solution.

Supply chain transparency is also becoming crucial. The Way Back Home suggests that companies with a green supply chain will have an increased competitive edge in the market.