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Multinational companies can thrive in tough times
Jody Jonsson
Equity Portfolio Manager

A common question investors ask is about the impact of de-globalisation. The risks are clear: rising US-China tensions, conflict in Europe and the Middle East, increasing trade barriers, broken supply chains, a slowing global economy and bouts of volatility in equity markets.


Given the turbulence, aren’t multinational companies the most vulnerable of all?


Portfolio manager, Jody Jonsson believes the opposite is true.  Multinationals are in many ways best positioned to navigate an uncertain environment and develop effective solutions to disruptions. That includes an increasingly “multi-local” approach to business, putting them closer to consumers around the world.


Jody cites four reasons that multinationals can thrive in tough times.


1. Multinationals can adapt to trade tensions


A few years ago, the US-China trade war was just beginning to command headlines. Since then, there have been many twists and turns, including onerous tariffs and other trade restrictions. China has initiated more trade with Russia, despite international sanctions imposed by the US and European Union following the invasion of Ukraine. In the race for tech supremacy, targeted restrictions and increased tariffs have further stressed US-China relations.


In the meantime, however, companies that conduct business all over the world are doing what they do best: finding ways to adapt and succeed regardless of growing headwinds. Some global companies in the semiconductor industry, like TSMC and ASML, are expanding their operations in different regions and using technology to streamline their supply chains.


2. Experienced management teams can handle challenges


There is a reason multinational companies have come to dominate the global economy and financial markets. For the most part, they are run by managers who are smart, tough and experienced.


Health care company Novo Nordisk has faced supply issues due to the overwhelming success of its diabetes and weight loss treatments, Ozempic and Wegovy. You might say that this supply and demand dynamic is a nice problem to have. However, the ability of management teams to act quickly, identify issues and effectively manage resources is a skill set that applies whether challenges arise from a company’s own success or from external forces like regulatory change, geopolitical conflict or trade protectionism.


Multinational companies often have strong management teams and access to resources to overcome complex problems. Paying too much attention to short term challenges can be detrimental to successful long-term investing.


3. Reshoring supply chains is likely to benefit some companies


Many global companies are establishing successful operations in local markets, rather than retreating in the face of trade barriers. More and more it is becoming crucial for multinationals to produce where they sell. To succeed, they must be able to move swiftly and respond efficiently to local competition.


Notably, many global companies are moving away from single-source supply chains. Reliability and robustness are of greater importance than cost and efficiency. That means bringing some manufacturing back home, or “reshoring,” and moving some to other countries, such as India, Vietnam and Mexico.


Supply chain re-configuration has many drivers but multinational companies are typically well-placed to benefit from these trends, particularly the broader built-out of infrastructure.


4. Global champions thrive in emerging markets


A multi-local strategy is crucial for companies based in the US, Europe and Japan that are looking to stay relevant or expand into faster growing emerging markets. Many of those countries — China, India, Brazil — are nurturing their own multinational giants, as well as smaller, single-country-focused competitors and not waiting for the traditional global players to catch up.


A significant risk for some large multinationals is that they could be leapfrogged by smaller competitors who are more in touch with local markets. That dynamic is, arguably, a bigger threat than any geopolitical or trade-related issue.


Emerging markets consumers are looking for brands they can trust and companies that know the local marketplace. Large multinationals that can break themselves down, think locally, act nimbly and launch products quickly are more likely to succeed in the long run.


For more detail on how multinationals navigate major shifts in the global economy,



Jody Jonsson is vice chair of Capital Group and president of Capital Research and Management Company. She also serves on the Capital Group Management Committee and is an equity portfolio manager. She has 39 years of investment industry experience and has been with Capital Group for 33 years. Jody holds an MBA from Stanford Graduate School of Business, where she was an Arjay Miller Scholar, and a bachelor’s degree in economics from Princeton University graduating cum laude. Jody is based in Los Angeles.


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