Also: Wage transparency, UBS layoffs and Elon's blue checks.
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 Friday 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
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Be transparent
The National Bureau of Economic Research finds that when managers make their salary information public, it can lead to improved productivity from employees. However, most pay transparency policies that have been enacted are horizontally focused and reveal pay between same-level peers, which can lead to decreased productivity when workers find out they earn less than their peers. Additionally, pay transparency policies have been found to reduce gender pay gaps and improve wage adjustment policies. Fortune
UBS job cuts
Following its takeover of Credit Suisse, UBS is reportedly planning to cut its workforce by up to 30%, leading to an estimated 36,000 job losses globally. This number of job losses exceeds Credit Suisse's previously announced cuts of 9,000 jobs. Meanwhile, Switzerland's Office of the Attorney General has launched an investigation into possible crimes related to the takeover, though it has not specified whether its focus is on government officials, bank executives, or journalists who reported on leaks from private negotiations. Bloomberg
Times tickin’
Elon Musk has given verified users a deadline to purchase a premium subscription or lose the verification checkmark on their profiles. The New York Times' main account lost its verification badge on Sunday as it refused to pay for verification of its institutional accounts. Notably, other high-profile figures, including the White House and celebrities, have also declined to pay for verification. The Associated Press
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