Another week, another crisis. This time it is a shortage of kimchi, South Korea’s national dish (based on fermented cabbage), which is causing alarm. A poor harvest has meant that, according to the Economist, annual cabbage-price inflation has hit 400 percent in Seoul. Koreans have taken to the blogosphere in droves to express their dismay.
So what does the state of the kimchi market have in common with the fate of 33 trapped / freed Chilean miners, and the fate of the last-but-one Australian government? The answer, of course, is shortages of natural products and basic resources. Would the San Jose mine even have been open for business if the global price of copper wasn’t at an all time high? And wouldn’t Kevin Rudd still be in power if he hadn’t tried to increase taxes on some of the huge profits made by mining companies operating in Australia?
The state of the markets for natural resources is alarming, all the more so given that part of the world is still mired in recession. But this is no time for Malthusian, we’re all doomed, despair. The same forces driving the price of copper and kimchi – or indeed maize, which have also surged recently – are driving development across the world, not least in countries like Chile and Brazil. High prices for raw materials are also forcing companies, particularly mining companies, to make big deals – though the latest plan for greater co-operation from BHP Billiton and Rio Tinto has stumbled today in the face of regulatory concerns. And worries about securing natural resources are forcing countries to change their policies wholesale, not least to secure the energy they need to keep the lights on.
In other words, every challenge brings an opportunity. Current global shortages are no exception. What is needed is a calm head and an appetite for risk – and reward.
Shortages of foodstuffs create opportunities for biotech firms. Depletion of coal and oil means that governments are turning to nuclear, renewables and shale gas. The state of water supplies globally is forcing policy-makers to look at proper market pricing, which in turn drives innovation and change. And a lack of access to metal ores is driving us all, finally, to recycle.
Some companies succeed, some fall back. The role of businesses is – as ever – to align their strategy with the opportunities out there, not the threats. It is to make the deals. It is to inform the policy process so that governments make intelligent decisions. It is to explain to all of their stakeholders how they will flourish in a world of shortage (and austerity) just as they have in a world of plenty. It is, in short, to maximise shareholder value.
Today’s world is more difficult than yesterday’s, but smart, well-advised, companies will always make the world work for them. South Koreans may be choking on kimchi prices that are four times what they were a few months ago, but you can be sure that someone, somewhere, is making a killing.