Prof. Dr. Kai C. Andrejewski ist seit dem 1. November 2024 Senior Partner der Agora Strategy Group. Der langjährige Managing Partner und Regional-Vorstand bei KPMG bringt sowohl profunde akademische Expertise als Hochschullehrer, als auch die praktisch, operative als Aufsichtsrat, Wirtschaftsprüfer und Berater namhafter Dax-, und M-Dax Unternehmen, sowie als CFO der SIXT SE, eines global und dynamisch agierenden Unternehmens, in seine Mandate ein.  Mit seiner umfassenden Kenntnis als Nachhaltigkeits-, und Finanzstratege berät der Kapitalmarktexperte CEO´s und CFOs, Aufsichtsräte und Gremien hinsichtlich geopolitischer Entwicklungen und Fragen strategischen Agierens in global komplexer werdenden Märkten. Er sieht seine Aufgabe vor allem darin, seine Klienten mit maßgeschneiderten Strategien resilient aufzustellen und ihre strategischen Chancen nutzbar zu machen. Das von ihm im Rahmen seiner Arbeit für den Think Tank Audit Comittee Institute  entwickelte sog. „G.E.T Modell“, das Wirkungsparagdima aus Geopolitik, ESG-Normen und Technologieentwicklung ist dabei Blaupause für Beratungs-, und Lösungsansätze.         Expertise Strategieentwicklung, Internationalisierung und Lieferkettensicherheit

In dem Agora Strategy Group Geopolitik-Podcast „The Future of Power“ lädt Dr. Timo Blenk (CEO), monatlich Entscheidungsträger aus Diplomatie; Wirtschaft; Politik und Militär ein, um aktuelle geopolitische Entwicklungen zu diskutieren. Über die Einflüsse dieser zu informieren und fundierte Entscheidungsgrundlagen zu schaffen, ist der Kern dieses Projekts.   Im November sind Sie gefragt: Schicken Sie uns Ihre Fragen rund um das Thema Geopolitik & Unternehmen, welche wir dann im Podcast beantworten werden!   Die wichtigsten Themen des Monats Neue geopolitische Ära: Rückblick auf die vergangenen zwei Jahre & Zukunftsausblick Hotspot USA: Präsidentschafts- & Kongresswahlen Die Themen von Morgen: Afrikanische Konflikte, nukleare Drohkulisse & Pakistan Das europäische Projekt: zwischen Chancen & fehlender Führung   Hausmitteilungen   Alle weiteren Folgen des Podcasts „Agora Strategy Group“ Webauftritt „Agora Strategy Group“ bei LinkedIn   Aktuelle Projekte & Veranstaltungen des Agora-Strategy-Teams Agora Institute exklusive Mitgliedschaft Neue Publikation von Dr. Elli Pohlkamp - Südkorea & Japan

Executive Summary Vietnam has recently witnessed changes in political leadership at unprecedented speed. While the grip on power of the Communist Party of Vietnam (CPV) looks uncontested, fissures have become visible ahead of the 2026 party congress. Vietnam continues to be one of the fastest growing economies with an annual growth rate of five percent in 2023. The country benefits from the intensifying Sino-American rivalry as companies diversify from China to Vietnam. In quick succession, the leaders of the United States, China, and Russia visited Hanoi vying for closer ties due to the country’s strategic location in Southeast Asia. Implications for International Business Vietnam emerges as a manufacturing alternative to China in certain sectors such as garment/fashion or electronic devices. However, it still relies heavily on imports for high-tech components and its infrastructure compares poorly with China. International businesses increasingly use Vietnam as a strategic hub for accessing ASEAN markets and the wider region – a role the Vietnamese leadership continues to embrace and plans to expand on further. Vietnam faces geo-economic pressure from both Washington and Beijing as the two are locked in a contest for regional hegemony. International businesses must monitor closely how Hanoi responds to these pressures over time. State of Play Throughout the last 18 months, Vietnam has witnessed major political upheaval not seen for decades. An anti-corruption campaign led to the resignation of two presidents and high-ranking politicians, including Politburo members, as well as to hundreds of arrests and thousands of dismissals and reprimands. On 19 May, news broke that Nguyen Phu Trong, the General Secretary of the Communist Party of Vietnam (CPV) and driving force behind the anti-corruption campaign, passed away. The Politburo has appointed President To Lam, a former head of the country’s secret service, as interim party leader. He is also the likely successor to the party leadership after the next regular party congress in early 2026. While the power of the CPV remains uncontested and there are few signs of wider threats to domestic stability, considerably party frictions have emerged. Currently dominant in the power struggle is a faction of officials, led by Lam, with close ties to the country’s domestic security apparatus who seek to re-ideologize the CPV and strengthen the role of the party vis-à-vis state bureaucracy and society.   As one of the fastest growing economies focusing on export-driven growth, Vietnam is particularly vulnerable to geopolitical and geo-economic disruptions. It has thus put maintaining cordial relations with all major powers at the center of its so-called “bamboo diplomacy”. Specifically, it expanded bilateral relations with the United States and with U.S. allies such as Australia, Japan, and Korea as well as with Europe. At the same time, Hanoi maintained good relations with China despite maritime disputes in the South China Sea. It also reinforced its close relations with Russia, its largest arms vendor, not least by Russia’s President Vladimir Putin’s visit to Hanoi in June 2024. This includes its relations with the EU and its member states. The EU-Vietnam Free Trade Agreement has led to a huge expansion of economic ties, especially in exports by Vietnam to the EU in sectors such as textiles, footwear, electronics, and agricultural products (to a total of 47.6 bn Euro In 2023). Beyond economic ties and aid, however, EU-Vietnam relations have not progressed as quickly as imagined. Hanoi’s close ties with China and Russia have at times been at odds with the EU’s strategic interests. Moreover, concerns over the country’s abysmal human rights records, its violations of labour standards and intellectual property rights, endemic corruption, and slow progress in legal and administrative reforms have hampered closer cooperation. Key Issues A more assertive regional and geopolitical player Vietnam has profited substantially from current diversification trends, as even Chinese companies have diversified to Vietnam to circumvent export restrictions. So far, Hanoi has successfully maintained good bilateral relations with all major actors to sustain its high levels of economic growth. While increasing security and defense ties with America and its allies, Hanoi also strictly adheres to Beijing's "one China" principle, which claims Taiwan as an inalienable part of China. However, in the case of a Taiwan contingency its strong economic engagement with Taiwan plus the hundreds of thousands of Vietnamese citizens working on Taiwan would pose multiple simultaneous challenges for Vietnam. Hanoi has actively participated in ASEAN and associated multilateral forums, especially concerning issues revolving around the South China Sea. Its leadership also drives efforts toward an ASEAN Economic Community (AEC) as it seeks to profit from stronger trade and investment ties with other ASEAN states. Vietnam’s security and defense policy has been chiefly focused on its immediate neighbourhood rather than the wider region. The key issue for Vietnam’s leadership has been the South China Sea conflict, which it seeks to navigate primarily via diplomatic engagement. The CPV attempts to use its close ties to China’s leadership based on ideological affinity while also asserting its claims internationally based on international law. Nonetheless, Hanoi has itself militarized a number of islands and reefs it controls in the South China Sea and has made attempts to upgrade its navy and coastguard. The primary aim, besides providing illegal revenues through mark-ups and kickbacks for high-ranking military personnel, is for Vietnam to be able to “quietly” contest Chinese maritime expansionism in the South China Sea, in contrast to the Philippines more open confrontation. Yet, the official goal of modernizing the armed forces by 2030 has been effectively curtailed by budgetary constraints, mismanagement, and endemic corruption, and an earlier over-dependence on Russian arms exports which slowed to a trickle since 2022. Geoeconomics Vietnam is one of Asia’s most export-oriented economies and therefore very dependent on continued access to global trade and supply chains, as its high trade to GDP ratio shows. It has created a favourable environment for international companies seeking to establish manufacturing and export bases offering various incentives to foreign investors, including tax breaks, reduced tariffs, and simplified administrative procedures. Vietnam holds membership in all multilateral trade agreements (AFTA, CPTPP and RCEP) to enhance market access across the region, support regional supply chains and reduce tariffs. Its labour costs are low, with an average hourly wage at US$2.99 (VND 68.000) compared to China’s US$6.50. It thus has increasingly emerged as a regional alternative manufacturing hub to China in several sectors, such as textiles (boasting a well-established manufacturing infrastructure), footwear, and furniture making (particularly to the U.S.). Vietnam is also a major exporter of agricultural products such as coffee, cashew nuts, or seafood, effectively competing with China. In consumer electronics, the country has a growing sector with significant investments from Samsung and LG. However, while the country can handle assembly and some component manufacturing, it still relies on imports for high-tech components.   Challenges persist also in other sectors: In advanced electronics, Vietnam lacks the advanced semiconductor fabrication and high-tech component manufacturing capacity that China possesses. Its automotive industry is still developing, with some local assembly and component manufacturing successfully established, but unable to replace China’s established automotive manufacturing base. The same goes for machinery and heavy equipment as well as pharmaceuticals and chemicals. Also, much of the capital and the supply chains, as well as some of the infrastructure investments, that foster Vietnam’s growing clout are China-centric, so diversification to Vietnam does not necessarily mean reduced economic dependence on China.   Vietnam’s embrace of the Belt and Road Initiative (BRI), however, has been lukewarm due to general mistrust in China as well as past controversies with Chinese-funded infrastructure projects. Conversely China has afforded Vietnam a low level of priority within the BRI. Vietnam has actively courted other partners to develop its ageing infrastructure, most notably Japan and South Korea as well as international development banks. As part of its Global Gateway initiative, the EU is funding three major projects in the area of just energy transition as well as the development of a new metro line in Hanoi. US sanctions against China can be potentially undercut by re-routing supply chains via Vietnam, with the significant challenges and limitations mentioned above. Also, Vietnam may face geopolitical pressure from both the US and China regarding its role in circumventing sanctions. How Hanoi will respond to such pressures remains unclear given the current change in leadership.

Botschafter a.D. Dr. Peter Ammon ist ein ehemaliger Staatssekretär des Auswärtigen Amtes. Der promovierte Wirtschaftswissenschaftler war zuvor lange Jahre der Wirtschaftsdirektor des Auswärtigen Amtes und danach der deutsche Botschafter in Frankreich, im Vereinigten Königreich und in den USA. Ein Fokus seiner langen diplomatischen Karriere lag in der Unterstützung deutscher Unternehmen bei der Bewältigung der Herausforderungen durch die Globalisierung. In diesem Kontext unterstützte er als Sous-Sherpa über viele Jahre die Bundeskanzler Schröder und Merkel bei den G7/G8-Verhandlungen.   Seit Anfang 2024 ist Dr. Ammon Dean des Agora Strategy Institutes. Expertise USA, Großbritannien, Frankreich, Internationale Wirtschaftsbeziehungen und Exportkontrolle

Prof. Dr. Kai Andrejewski wechselt zu Agora Strategy: Experte für Kapitalmarkt- und Finanzstrategie stärkt Agora Strategy als führende geopolitische Unternehmensberatung   München, 05.11.2024 – Prof.   Dr. Kai Andrejewski , renommierter Finanzstratege und Kapitalmarktexperte, verstärkt ab sofort das Team der Agora Strategy Group AG  als Senior Partner . Mit seiner umfassenden Erfahrung als ehemaliger CFO der Sixt SE, langjähriger Bereichsvorstand bei KPMG sowie als Aufsichtsrat im Kapitalmarktumfeld wird er die geopolitische Strategieberatung dabei unterstützen, Unternehmen und CEOs weltweit an der Schnittstelle von Finanzstrategie und geopolitischen Risiken und Chancen zukunftssicher aufzustellen.   Hier bedient Agora Strategy einen wachsenden Bedarf an geopolitisch resilienten Kapital- und Finanzmarktstrategien . Die Kombination aus Kapitalmarktkompetenz und geopolitischer Expertise wird angesichts der wachsenden geopolitischen Risiken entscheidend. Diese Risiken beeinflussen den Zugang zu Kapital und die Finanzierungsbedingungen auf internationalen Märkten maßgeblich. Für Unternehmen wird es daher wichtiger, diese Faktoren in ihre strategischen Entscheidungen einzubeziehen, um langfristig erfolgreich zu bleiben.   Die Agora Strategy Group  ist führender Anbieter im Markt für geopolitische Strategieberatung. Zu den Dienstleistungen gehören neben Strategieentwicklung und Internationalisierung auch maßgeschneiderte Risikoanalysen, Business Development in komplexen Auslandsmärkten, globale Positionierungsstrategien sowie Regierungsberatung. In einer zunehmend vernetzten und komplexen Welt spielen geopolitische Entwicklungen eine entscheidende Rolle, die die Geschäftsstrategien von Unternehmen maßgeblich prägen. Zu den Kunden gehören führende DAX- und MDAX-Firmen, internationale Konzerne sowie der Mittelstand. Erst vor wenigen Monaten gab Agora Strategy eine umfassende strategische Partnerschaft mit Porsche Consulting bekannt.   Prof. Dr. Kai Andrejewski  bringt über 30 Jahre Erfahrung in den Bereichen Finanzstrategie, Wirtschaftsprüfung, Nachhaltigkeit und Unternehmensführung mit. Er greift auf fundierte Expertise in internationalen Kapitalmärkten zurück und wird diese nun in die geopolitische Beratung bei Agora Strategy einbringen, um Unternehmen beim Aufbau zukunftsfähiger und geopolitisch abgesicherter Finanzstrategien zu unterstützen.    Dr. Timo Blenk, Senior Partner, Agora Strategy: “Es ist mir eine große Freude, dass sich Dr. Andrejewski für uns entschieden hat! Damit gewinnen wir nicht nur einen internationalen Topmanager als Senior Partner, sondern stärken unsere Beratungskompetenz in einem strategisch wachsenden Bereich!”   Prof. Dr. Kai Andrewski, Senior Partner, Agora Strategy: „Ich freue mich, der geopolitischen Strategieberatung bei Agora Strategy eine neue Facette zu geben und CEOs, CFOs, Aufsichtsräte und Unternehmen dabei zu begleiten, wie geopolitische Entwicklungen ihre Finanzstrategien beeinflussen und, wie sie sich auf global veränderte Kapitalmärkte einstellen können!“ – Medienkontakt: Fabian Vetter +49 89 2153 693-32 +49 152 5106 9060 vetter@agora-strategy.com Über Agora Strategy: Agora Strategy ist ein geopolitisches Beratungsunternehmen, das 2015 als Spin-off der Münchner Sicherheitskonferenz von Botschafter a.D. Prof. Dr. h.c. Wolfgang Ischinger, Präsident des Stiftungsrats der Stiftung Münchner Sicherheitskonferenz, gegründet wurde. Agora Strategy ist spezialisiert auf politische Risikoanalysen, strategische Politikberatung und internationales Krisenmanagement. Die mehr als 300 Senior Advisors und Fellows von Agora Strategy, aus Politik, Diplomatie, Sicherheit und Verteidigung, Wirtschaft und Wissenschaft, sind weltweit, regional und lokal vernetzt. Auf Grundlage dieses einzigartigen Netzwerks bietet Agora Strategy mittelständischen und großen Unternehmen, Regierungen und multinationalen Institutionen maßgeschneiderte Beratungsleistungen. Agora Strategy hat seinen Hauptsitz in München und Büros in Berlin, Paris und Brüssel. www.agora-strategy.com

Dean’s Comment on the US Election by Ambassador (ret.) Dr. Peter Ammon Expect an unprecedented takeover of the U.S. administration  The unpredicted clarity of Donald Trump’s win including the Republican retaking of the Senate will make him an extremely powerful president. Moreover, he will enter office much better prepared than in 2017. A huge number of official positions will be cleared and filled with Trump followers. Especially if Republicans end the Senate filibuster, Trump will be able to put thousands of high-level nominees – and multiple judges over time – into office quickly. Should the party manage the “trifecta” by also winning the House (as is likely as of now), Republicans would have overall control of the legislative and executive branches. Given the existing conservative majority in the Supreme Court, America’s system of “checks and balances” would be greatly impaired. Trump 2.0 is a major political challenge with significant risks for business Domestic politics, especially the fight against his perceived “enemies”, will be at the forefront of President Trump’s agenda. Having survived not just actual assassination attempts but “political persecution” as he put it and emboldened by the Supreme Court’s decision on presidential immunity, he will feel vindicated to implement his promises. Moreover, his touted campaign against “wokeism” in the education system and media will add to the already existing division of the country in “Blue” and “Red” States. Foreign policy will become much more transactional than before, with Trump using America’s might to extract financial and strategic benefits from friends and foes alike. There will be no appetite to bear the burden for the upkeep of the international order. While he is unlikely to ultimately withdraw from NATO, the president will use the threat of doing so to force allies to shoulder a wider share of the cost. At the same time, there will be fewer US military interventions around the globe than under previous presidents. President Trump’s international instrument of choice are economic and financial sanctions, under the assumption that the cost is borne by others. The self-styled “tariff man” may use executive orders or invoke the International Emergency Economic Powers Act to quickly adopt high tariffs on China (at anything between 60 and 100%) and universal tariffs of possibly 10% on all imports. Even though the latter would likely be challenged in courts, Trump's actions alone would cause havoc on the international markets while legal action would take months to proceed. By and large, President Trump will remain unpredictable, which in itself will intimidate his partners. The world order, already heavily fragmented, will become more volatile and dangerous. In particular, major changes can be expected in the following policy areas: Taxes and Budget A further reduction of corporate tax from 21% to 15%, while Trump also promised to make the 2017 income tax reductions permanent. An end to some of Biden's tax credits (green energy), while allowing the deduction of local taxes from federal tax bills. $7.5 trillion added to the US deficit, which could rise from almost 6% to 8% of GDP under Trump, creating a risk for fiscal and financial stability in the long term. Immigration A much more rigorous turn in immigration policies, even if the promised mass deportation (of up to 15 million undocumented foreigners) is not likely to succeed. Further restrictions of legal pathways to enter the United States, such as bringing back family separation policies, forcing asylum seekers to remain in Mexico during their process, and slowing down visa application procedures. Climate and Energy Another withdrawal from the Paris Climate Convention, giving international efforts to fight climate change a huge blow. Complete termination of all Biden policies (e.g. the CHIPS Act, the Inflation Reduction Act (IRA), the Infrastructure Law) is unlikely, as these over proportionally benefit Republican states and districts. However, specific subsidies such as tax credits for EVs could be revoked and he could make it harder to spend money in Blue States. A slowing down of decarbonization efforts with fresh investment in fossil fuels and reduced support for green energy, even though investments in the energy transition that are already underway cannot realistically be revoked overnight. National Defense Higher defense expenditures with bipartisan support in Congress. Republican leaders have already called for a spending increase to 5% of GDP (today: $874 billion, or 3% of GDP). The cost of modernizing the nuclear forces alone is estimated at $750 billion over the next decades. More funds are needed and will likely be approved to secure supply chains, increase munition production, strengthen the industrial base and rebuild deterrence against China's rising capabilities. The Wars in the Middle East Despite Trump’s repeated criticism of President Biden’s efforts to restrain Israel's military actions, he is unlikely to authorize US involvement in military engagement against nuclear facilities in Iran. Yet dimmer prospects for a two-state solution, as Trump and his advisors have been outspoken supporters of the current Israeli government in general and the settler movement in particular. Russia’s War against Ukraine While Trump's rhetoric on Ukraine has been inconsistent, he will try to force an end to the war early on, not least to gain him the laurels of the peace maker. This will most likely mean forcing Ukraine to accept territorial concessions. US lawmakers generally are increasingly opposed to aid Ukraine, so US action will heavily depend on whether Trump will empower internationalists like his former secretary of state Mike Pompeo or ideological isolationists like Vice President-elect J.D. Vance. In any case, the Europeans will have to bear a larger share of the cost of war. China Strong bipartisan support for hawkish action vis-à-vis China, the three top issues being the deterrence of conflict with the US or in the South China Sea, the protection of US critical infrastructure and shunning cheap exports from industrial overcapacity in China. An actual decoupling of the US economy from China is in the offing, as Trump supports high tariffs and export restrictions that could easily trigger a trade war. China, already plagued by deflation, will find its export-led growth business model in dire straits, with two potential remedies: stimulating domestic consumption (good for European exporters) and re-directing surplus exports towards other parts of the world (bad for production in Europe). The Consequences from a European Business Perspective One of the lessons from Trump’s first term in office was to not be too afraid of his words, but to carefully watch what he does. European governments will have to adjust to the returning president’s transactional style, which only respects strength and tries to exploit (perceived) weaknesses. The dream of unfettered global trade and free movement of people as part of a just global order built on Western values and defended by US military might has ended. A second Trump presidency “on steroids” could therefore produce a much-needed push to re-invigorate the process of European integration. Given that the deepening of the EU has mostly been possible only in times of crisis, prepare for fresh moves in this field. Companies depending on the US market will come under fresh pressure to substitute their exports to America with local production there. New immigration policies will make it harder to find the human resources needed, and proper due diligence may be advised in which state (red or blue) the FDI might find its best location. For traders and investors, it will become more difficult to predict future US dollar exchange rates. With the US fiscal deficit heading for the sky, inflation may come back, and the Fed could be forced to increase interest rates and/or return to buying government papers (known as quantitative easing). With America sucking in global savings, interest rates all over the world may rise. Trump, however, has made it clear that he wants low interest rates and a weak dollar. Companies, trading with and investing in the US, may wish to internally hedge their trade and financial flows.

Executive Summary A high turnout and voters tired of political polarization helped the Polish opposition to win the election – despite a strong performance by the ruling party. A new centrist government will likely end disputes with Brussels over the rule of law, engage in EU reforms, and improve ties with Germany . Still, the next coalition will face programmatic internal differences and potential resistance from institutions controlled by the previous government . Implications for International Business Successful resolution of the rule of law row will give Poland access to the EU recovery fund, resulting in a significant rise in investment and GDP growth. It will also lower Poland’s risk premium due to increased legal certainty, greater predictability in reforms, and the effective exclusion of the Polexit option . State of Play Record turnout leading to opposition win The ruling Law and Justice (PiS) party received the highest support in last Sunday’s parliamentary election, but the next government will probably be formed by three opposition parties: the liberal Civic Coalition (KO) of Donald Tusk, the conservative-liberal Third Way, and the New Left. The fifth party in parliament and a potential partner for a PiS-led government, the far-right Konfederacja, suffered a surprising defeat with just seven percent of the votes. The election has been deemed free, but not fair, as PiS dominated the airwaves and involved officials and state-controlled enterprises in the campaign, such as through publicly funded picnics and a targeted reduction of gas prices by oil monopolist Orlen. What makes the vote special is a 74.17 percent turnout – the country’s highest since the end of communism in 1989. However, voting patterns seem to hold: In large and medium-sized cities, the opposition won, whereas PiS had a clear advantage in smaller towns and rural areas. The ballot also confirmed Poland’s old geographical divide: eastern regions of the country voted more conservative than the liberal west. Among young voters up to 24 years old, the ruling PiS took last place, with KO coming out on top. Only in the 60+ age group did PiS outperform the opposition parties. The path to forming a government will be bumpy. The new Sejm must convene within 30 days, then President Andrzej Duda has 14 days to nominate a candidate for prime minister. He will most likely propose the incumbent, Mateusz Morawiecki, as a sign of loyalty towards PiS. Failing to win a majority, the opposition's candidate can then be elected in the second round, with a cabinet formed around the end of the year. The new government’s political agenda is primarily to restore the rule of law and to depoliticize public media, state-controlled enterprises, and the judiciary. Setting a more detailed social and economic program will be a challenge due to ideological differences between the parties. Another threat will be a potential blockade by President Duda and conflicts with PiS-controlled institutions, like the Constitutional Court or the central bank (NBP). Key Issues The Polish vote also strengthens the EU… The election result signifies Poland’s return to the EU mainstream after eight years of hardening populist and nationalist tendencies. A KO-led government will settle the long-running rule of law dispute with the European Commission, unlocking so far withheld funds and thus strengthening Polish investments in energy transformation and digitization. It will also display greater openness towards reforms at EU level, including expanding the scope of majority voting in foreign policy or taxation. Other thorny topics will remain, like immigration regulations, nor is Poland’s accession to the Eurozone currently in the cards. At bilateral and multilateral level, Poland will aim to improve relations with Germany and revive the Weimar Triangle – a platform for cooperation between Berlin, Warsaw, and Paris. Divisive issues such as war reparations will likely be moved aside in favor of Germany increasing its commitment to strengthening NATO’s eastern flank or providing financial support for the energy transition. One possible way could be to upgrade the EU Just Transition Fund to accelerate the phasing out of coal and further boost the already rising investment in renewables. In Central Europe, one should anticipate a clash with pro-Russian and increasingly authoritarian Hungary and simultaneously closer relations with the Baltic states, Czechia and Romania, with which Poland shares security interests. The new government will also focus on building a strategic partnership with Ukraine, advocating for Kyiv's quick path to the EU. Warsaw will certainly try to settle the Ukrainian grain export issue within a European frame and mobilize funding to reassure its own farmers. There will be no changes regarding the alliance with the United States and the priority given to transatlantic relations. While Washington remains the main partner in security policy, Poland will also be interested in strengthening EU defense initiatives, e.g., joint anti-aircraft defense. Also, relations with China will remain shaky. Already the PiS government abandoned hopes for developing the cooperation format 16+1 (now 14+1) between Beijing and Central Europe. Now, the new government will work more on an EU-wide answer to the China challenge. …though economic uncertainties prevail The expected boost from the unlocked EU’s recovery funds will lead to a rapid increase in investments, which so far has underperformed with just 16,7% of GDP in 2022 (Germany: 22,6%). This will lead to faster GDP growth, and in general the appreciation of the Polish zloty. Markets pushed the exchange rate up by 1.5% immediately after the election results were announced. Further positive effects should follow from drastically lowered risk of the suspension of structural funds access. From an investor’s point of view, another important factor is that the new government likely delivers a much higher level of legal predictability in internal reforms of taxes and employment rules, as well it will devote more attention to private business needs than the statist and redistribution-oriented policies of PiS. The coming political change in Poland is also key given European businesses current efforts to diversify supply chains and reduce dependence on China. Many of them may seek for investment opportunities, particularly if they represent branches with high exposure to imports of critical components from other regions of the world. The recent decision of Intel to build a chip factory near Wrocław for $4,8 billion may herald a larger inflow of FDIs. Another reason for this trend is the expected launch of the reconstruction of Ukraine: given its geographical proximity, Poland is considered a good location for management centers and large warehouses. It might be particularly interesting for German business – already well positioned in the Polish economy with €41 billion of FDI and 9.500 enterprises, many of which consider further expansion to Ukraine. Poland's departure from the PiS-path does not mean that increasing engagement of potential investors is care-free. The economy of the country is sensitive towards geopolitical risks, like an extended war in Ukraine or rising tensions in the Middle East. Internal stakes are also high. Although Poland's public finances show a low level of debt (49% of GDP), rapidly increasing expenditure needs and the implementation of electoral promises can worsen the fiscal balance. The opposition parties will sustain social transfers introduced by PiS, add a tax-free amount to €12.000, and up wages in the public sector by up to 30%. Also, the war in the East pushes the country to boost defense spending much above 2% of GDP. On top of that, at the beginning of 2024, the anti-inflation shield expires, which may lead to an acceleration of inflation (with 8,2% in September much higher than EU-average) and uncertainty about possible return of the central bank to a hawkish monetary policy.

Executive Summary Positive development trajectories in Ethiopia, Kenya, and Tanzania build on population trends and the gradual emergence of wealth. To fully capitalize on this potential across various business sectors, trade and transport infrastructure in particular require expansion. The three countries’ pragmatic foreign policy is matched with large investments by members of the BRICS group. Especially China has emerged as an ally and key trading partner, casting a shadow over the significance of relations with the EU. Implications for International Business Ethiopia, Kenya, and Tanzania are modernizing their health, water, agricultural and electricity sectors as well as their service infrastructure and need high-quality technical equipment and know-how to do so. East African countries look to strengthen their transport and service infrastruc­ture , with European businesses standing a good chance to win supplier contracts for projects awarded by international donors. The recently launched African Continental Free Trade Area (AfCFTA) is expected to be a game changer in the coming years. Substantial business opportunities arise as trading and manufacturing in Africa will become easier and cheaper. State of Play Fragile but promising growth trajectories Ethiopia, Kenya, and Tanzania stand out for relative political stability and GDP growth rates consistently above five percent. The trio along Africa’s Eastern flank is home to 245 million people – roughly a fifth of the continent’s population. Currently, their development is hampered by economic difficulties and security issues. Kenya faces rising costs of living, recently leading to riots, as well as an external debt of 67 percent of GDP. Tanzania’s President Samia Suluhu Hassan loosened the govern­ment’s authoritarian grip, but her country, too, struggles with debt (38 percent of GDP), and unfavorable property laws discourage outside investment. Ethiopia, once considered a “rising economic star”, now faces a foreign currency shortage and the threat of hyperinflation, as it emerges from the interethnic 2022 Tigray war. Irrespective of these impediments, all three countries maintain promising growth trajectories. Kenya and Tanzania particularly benefit from economic integration with Burundi, Rwanda, and Uganda under the EAC. Ethiopia has begun to dissolve its Socialist heritage by liberalizing key markets. With donor support, Kenya, Ethiopia, and Tanzania have expanded technical and vocational education and training initiatives aimed at growing their skilled work force in order to utilize their immense labor market potential, as 60 percent of the population is under the age of 25. Key Issues East Africa provides a geopolitical entry point… International players, from the G7 to Russia and China, have sharpened their focus on the African continent due to its geo-strategic and economic relevance, including the 54 countries’ combined weight in international diplomacy. Here, anglophone East Africa has emerged as a strategic access point situated along main international trading routes. In a region that regularly experiences armed conflict and extremism, especially Kenya and Tanzania are stabilizing factors. They maintain comparatively calm political climates, only sometimes facing violent spillovers or insecurity during electoral periods. Even then, their past trajectories suggest that businesses are rarely affected. Although surrounded by conflicting states, Ethiopia’s relative stability and its market with 123 million potential consumers must not be overlooked, either. European countries as well as the United States have a longstanding history of development cooperation in East Africa, yet new partners like China, Russia, and the Gulf States (especially Saudi Arabia, Qatar, and the UAE) recognized the potential of the region’s untapped markets much faster. China, in particular, has become a key trading partner for the three countries: Its exports more than doubled over the past decade, and the total trade volume reached $19 billion in 2022. By joining the BRICS as of 2024, Ethiopia anticipates not only strengthened trade relations but also fresh credit from the bloc’s New Development Bank to ease its fiscal pressure. Neither Kenya, Tanzania nor Ethiopia possesses sufficient capacities to address their major internal challenges: The countries need to forge competitive economies with employment opportunities, to avail physical and service-related infrastructure, to modernize agricultural production, and to combat the effects of climate change. Following a largely pragmatic foreign policy, the aspiring low-income and lower-middle income economies hence eagerly foster political relations with those who emerge as potential investors. Despite warnings about becoming overly dependent on China, Beijing’s popularity remains high as it offers loans without conditions, delivers quick results, and practices a policy of non-interference. Despite its timid investments and vocal criticism of democratic deficits, the EU, in turn, still is a key export market and crucial partner: Its Multiannual Indicative Programme (2021-2027) pledges at least €1.5 billion in development cooperation to the three countries. …with infrastructure investment being the key to unlock continental trade Key drivers of economic development in Kenya, Tanzania, and Ethiopia are their growing populations, urbanization, and an emerging middle class. To satisfy the resulting demand for goods and services, such as in health care, Information and Communication Technology (ICT), electricity, real estate, water and transport infrastructure, all three countries need project development support, components supply, and technical know-how. Heavily affected by climate change, the farming sector requires agricultural engineering, import of pesticides, seeds and capital investment. A noteworthy investment opportunity lies in Kenya’s dynamic start-up ecosystem “Silicon Savannah”, with over 500 ventures in AgriTech, FinTech, GreenTech and E-Commerce. In a bid to grow the ICT hub (with a combined worth of $1 billion in 2018), Kenya’s President Ruto recently pitched to Microsoft, Intel, Google and Apple. Also, German building material supplier Knauf announced that it would triple its production capacity in Tanzania. The AfCFTA is set to gradually eliminate existing tariffs and non-tariff barriers, which currently place Africa's cost of trading among the highest in the world. Already, the three countries have begun to improve their trade infrastructures: In 2019, Ethiopia expanded the Addis Ababa airport to hold the continent’s largest air cargo terminal, now handling around 500,000 tons of air freight annually. The EAC has tabled plans for an East African railway network, and Kenya is looking for investors to implement its $15 billion proposal to expand its standard gauge network to the Ugandan border until 2027. Under the current $30 billion World Bank portfolio, around 10 to 20 percent of funds are attributed to transport development and roughly another 10 percent to the energy sector. Beijing, in turn, invests in infrastructure megaprojects like the Lamu Port-South Sudan-Ethiopia Transport Corridor ($25 billion, partially funded by China) and Tanzania’s Bagamoyo seaport ($10 billion, mostly Chinese assets). These major projects award large contracts for equipment suppliers and developers. Projects funded by contracting authorities from the BRICS bloc are difficult to win for outsiders; however, European businesses often gain contracts from international donors. Beyond this, the region remains responsive to European trade and investment: Kenya just closed negotiations on an agreement that will open up trade in goods and investment flows with the EU. The agreement will give companies preferential access to its market by liberalizing more than 80 percent of imports from the EU. With the prospects of improved infrastructures and the AfCFTA unlocking the entire African market, production sites and service delivery hubs will become more profitable. European businesses need to set up representations in at least one of the three countries concerned, as consolidated relationships with African partners will give them an edge at handling red tape and gaining crucial access to decisionmakers.

Executive Summary After 20 years of soft pushes for reform and poor prospects for actual enlarge­ment, the EU unveils a new economic support plan for the Western Balkans. Given Russia’s war in Ukraine and China’s increased influence in the region, the EU offers fresh money and access to its market in exchange for substantial reforms. However, lingering rule of law issues, widespread corruption, and the unresolved Serbia-Kosovo conflict remain significant risks to regional security and stability. Implications for International Business Regional economic growth is set to accelerate, while access to the EU single market will boost investment prospects. The region offers an opportunity for European businesses to diversify their supply chains, supported by public funding. Uncertainty around the Serbia-Kosovo conflict weakens this improved business outlook, and sustained reforms are key to long-term macroeconomic growth. State of Play The Western Balkans: The long road to EU integration The six Western Balkan countries are at different stages of EU integration. Most countries continue their efforts to join the EU through their commitment to economic and political reforms. However, challenges such as corruption, respect for the rule of law, minority rights, and bilateral disputes persist. Albania is praised for its economic reforms and alignment with the EU’s foreign policy, but further reforms are needed on corruption and minority rights. Bosnia-Herzegovina needs major efforts in socio-economic and judicial reforms to establish a functioning market economy. Kosovo has made some progress regarding the economic criteria; however, the normaliza­tion of relations with Serbia is a pre-condition for its European path. After a period of political instability following an inconclusive election in June, Montenegro is likely back on track after recently forming a new pro-European government (which relies on the support of a minor pro-Russian party, though). In North Macedonia, the government shows a high level of dedication, improving the business climate and embarking on further judicial and constitutional reforms. In Serbia , the dispute with Kosovo and pro-Russian foreign policies are the two main obstacles to EU accession. The overall business climate follows a positive trend. Increased investment openness and corporate access to finance, new energy policies, and growing use of digital payments have created a friendlier environment for firms. All six economies have recovered to pre-pandemic levels . After slowing down in 2023, regional economic growth is expected to increase by 3% in 2024, followed by 3.5% in 2025. Despite such progress, challenges to business remain. The Western Balkan economies record slow progress towards convergence with EU levels . Deeply rooted structural hurdles, barriers to competition and regulatory transparency, a stagnant informal economy, and high levels of corruption impact the ease of doing business. Key Issues Geopolitical pressure now drives EU enlargement… Russia’s war against Ukraine has put the integration of the Western Balkans back on the EU agenda, after increasing investments from China, in particular in infrastructure had already raised concerns in recent years. With this, priorities have shifted: If, in the past, Brussels prodded the countries to gradually reform and resolve their disputes, now it is a question of them not drifting into the Russian or even Chinese orbit. Russian interest is focused on maintaining political influence through business ties, which it uses to hinder the region’s Euro-Atlantic integration. Especially in Serbia and Bosnia-Herzegovina, Moscow is strong in energy, with Belgrade recently securing a three-year Russian gas deal at a favorable price. Also, over 5.000 Russian companies have registered in Serbia alone since the start of the war in Ukraine. China has invested in infrastructure projects, telecommunications, and energy ( €32 billion between 2009 and 2021) . This has created new dependencies: In 2021, the construction of a Chinese-funded highway outside Podgorica resulted in Montenegro’s debt rising to more than 100% of GDP. The China-Serbia FTA is expected to have wider economic implications, such as increasing Chinese trade access to neighboring EU countries, in particular in the technology, automotive and aluminum sectors at a time when the EU tries to reduce its reliance on Beijing. Moreover, the region, suffering from organized crime and informal sectors which often exceed 25% of GDP, has become a gateway for illicit financial flows, with funds emanating from Russia to avoid international sanctions being a key source. To at least diffuse one potential source of conflict, the EU has upped its efforts to negotiate a solution to the Serbia-Kosovo standoff. The conflict between Serbia and Kosovo remains the number one threat to the region's security. A former province of Serbia that was last to declare its independence following the break-up of former Yugoslavia in the 1990s, Kosovo has fought for international recognition since 2008. However, its efforts are stalled not just by Serbia’s allies, Russia and China, blocking its possible membership of the United Nations, but also by the non-recognition from five out of 27 EU member states – Cyprus, Greece, Romania, Slovakia, and Spain. While Kosovo has an overwhelming Albanian majority, its northern part is largely Serb-populated, leading to – sometimes violent – tensions both within the country and with neighboring Serbia. S o far, negotiations between the two parties , jointly mediated by the EU and the United States, have failed to reach progress, especially after a clash in the Serb-majority region of north Kosovo. Now, upcoming elections in Serbia are likely to delay any progress. ...in a region holding significant economic potential. As European businesses try to diversify their supply chains and relocate them closer to home, the Western Balkans region offers near-shoring opportunities thanks to its proximity to European markets and low labor costs. The Commission’s plan to offer these countries access to the EU single market in exchange for reforms , and the new €6 billion investment package for the period 2024-2027 are expected to boost economic growth and create investment opportunities. Businesses will also benefit from the reduced cost of cross-border payments and the region’s integration into European industrial supply chains. Other advantages of the six countries include a young and skilled workforce, and an influx of EU subsidies, particularly in sectors such as renewables, agribusiness, and financial services. Another key factor for investors is that the Western Balkans boast low statutory restrictions on foreign direct investment (FDI) and a resilient financial sector . In 2022, the region’s current account deficit reached 6,8% of GDP. In 2023, FDI inflows are expected to fully finance the respective deficits in Albania, Kosovo, and Serbia. In addition, the region’s labor markets continue to strengthen : In mid-2023, average employment reached 47,8%, a historic high – even though the high share of informal employment (between 18,1% in North Macedonia and 33% in Montenegro) remains a growth risk. Nevertheless, Montenegro being most advanced in accession talks marks a promising long-term investment opportunity. Serbia, in turn, tries to balance Russia-friendly economic and energy ties with trade commitments to the EU. In fact, the improved business climate faces several challenges. The pace of reforms, such as the management of endemic corruption , will determine the unlocking of EU funding . A lack of European financial support, in turn, will leave the door open for further Russian and Chinese economic expansion. Finally, an escalation in the conflict between Serbia and Kosovo would not only threaten regional stability and security; worst, political unrest could damage the prospects of economic growth and lead European businesses to give up their investment plans. European companies would therefore fare well in steering clear of investments in the border area of northern Kosovo and southern Serbia. Executives should prioritize safeguarding sensitive information and valuable materials in their Balkan sites as the region might further become a pawn for the big players, especially in industries like energy. That said, with robust risk mitigation strategies and scenario planning in mind, the business potential of the Western Balkans remains to be seized.

Executive Summary China remains a linchpin in global trade, but this central position is challenged by the country’s persisting economic problems and international firms shifting their operations away from the mainland. Beijing’s newfound willingness to cooperate with the United States and Europe provides a breathing pause for businesses worried about escalating geopolitical tensions, although the underlying contradictions will remain. Faced with risk and uncertainty, most firms have chosen to maintain operations in the country for now while exploring diversification options, others have started divesting, while an unfazed few have sought to even further localize their business. Implications for International Business As economic and political frictions could easily flare up again, firms should prepare for further curbs on trade with China, not least as the EU pursues its “de-risking” agenda and acts against what it views as unfair Chinese subsidies. Yet, poor diversification strategies could leave companies even more exposed. Meticulous planning is required to fully exclude Chinese suppliers or operators from supply chains, as complex trade patterns often obscure input from China. Alternatives to diversification include investing in recycling and redesigning operations to reduce waste, just as technological innovations can allow firms to substitute Chinese-sourced inputs for less scarce products and raw materials. State of Play Decoupling is difficult President Xi Jinping’s draconian pandemic lockdowns have left a mark on the Chinese economy. A year after the abrupt reopening in late 2022, households and businesses still spend less out of caution, putting a brake on a previously dynamic economy. This has added to structural challenges related to slowing population growth, weak private consumption, and growing debt. The Communist Party has also tightened its grip on the private sector, as evidenced by the sudden vanishing of high-profile Chinese technology entrepreneurs. In combination with U.S. export controls and restrictions on investment, investors have taken flight. For the first time on record, foreign direct investment in China went negative in the third quarter of 2023.   These disruptions have not dislodged China from its position as a world-leading trader. China is still the main source of imports for most of its neighbors in Asia, including among members of the Indo-Pacific Economic Framework (IPEF), a US-led trade initiative. The government is investing heavily to prop up the manufacturing sector, which contracted for the second month in a row in November. With low demand, however, overcapacity and subsequent cheap exports of goods like EVs, batteries, heat pumps, and electrolyzers could follow.   Europe’s plans to reduce its reliance on Chinese semiconductors, raw materials, and green technology will reshape trade patterns over the long term, as would EU measures to limit the import of cheap subsidized EVs from China. Yet the EU’s dependence on China is not lessening, at least not at any significant pace. China remains the EU's principal provider of rare earths and other crucial raw materials. The US also struggles to end its reliance on Chinese imports. After tariffs were imposed on a range of products in 2018, US imports of Chinese goods decreased, and American firms began to buy more from other Asian countries like Cambodia, Thailand, and Vietnam. The latter in particular has emerged as an important hub for manufacturers, with President Joe Biden signing a “comprehensive strategic partnership” in September, and Xi Jinping paying a visit to the country in December. However, some Chinese firms appear to have moved their assembly to these countries to circumvent US tariffs, essentially leaving American dependence on primary suppliers intact. Key Issues The geopolitics of trading with China Beijing is still firmly bent on displacing the United States as the world’s dominant geopolitical power. For now, however, Chinese leaders seem eager to limit the West’s economic decoupling as much as they can while expanding cooperation with groups like the BRICS. Joe Biden and Xi Jinping’s four-hour encounter in November provided a welcome pause in the otherwise escalating geopolitical rivalry marked by new trade restrictions. Beijing was also surprisingly forthcoming ahead of the EU-China summit in early December by allowing 15-day visa-free travel for citizens of France, Germany, Italy, the Netherlands, and Spain as a clear marker that it is again ‘open for business’. Moreover. the Chinese commerce ministry recently pressed local authorities to halt bias against foreign companies, including by ensuring new EV subsidies are accessible not just to domestic brands. However, underlying tensions remain, as the EU wants Beijing to limit support for Russia and curb its cheap exports.   China also continues to expand trade networks in its neighborhood as well as in the Middle East, Africa, and South America. One of its main conduits, the Belt and Road Initiative (BRI), has been used to develop supply chains leading back to China. This month, Italy informed Beijing that it would leave the BRI, but the initiative seems to be doing well in other places. 21 Latin American states have signed on to the BRI, while China has free trade agreements with Peru, Ecuador, Chile, and Costa Rica. The Regional Comprehensive Economic Partnership Agreement (RCEP), a trade agreement between 15 Asia-Pacific nations that entered into force in 2022, has also helped solidify China’s trading partnerships. The United States, meanwhile, tends to rely on its well-developed military alliance network to compete with China in the region, rather than signing substantive trade deals. Its unwillingness to offer market access or cut tariffs makes it harder to tie partners closer. Late this year, for instance, negotiations within the IPEF, involving countries like Vietnam, Thailand, and Malaysia, failed to yield anticipated results. There’s more than one way to “de-risk” Firms with clear national affiliations risk becoming collateral damage in the present geopolitical spats. Recent examples include Chinese restrictions and raids against U.S. companies Micron, Deloitte, and Bain & Company in what smacks of retaliation against American sanctions and export controls. Beijing also barred some bankers and executives from leaving the country and put pressure on due-diligence firms like Mintz Group for carrying out what authorities say are unauthorized investigations.   Executives therefore have to make hard decisions. Gradual and light diversification should be the best option for businesses who have faith in the Chinese economy and think their operations are unlikely to get caught up in geopolitical frictions. It allows them to capture growth and show shareholders they are taking action to address the mounting risks. The downside is that diversification can be costly, often takes time, and, even if it succeeds with the daunting task of isolating supply chains from Chinese operators, businesses’ foothold in the mainland leaves them significantly exposed. Those who do not think remaining is worth the risk have started to divest. This is the choice of companies with easy access to alternative supply chains or whose sectors are likely politicized. Also companies outside high-risk sectors have followed this strategy, as toymaker Hasbro, for instance, has shifted production away from China. Others, still, have put their weight down on the Chinese side, such as McDonald's and Volkswagen announcing major investments in China over the past year. Some have even gone further with “China for China” strategies aiming to localize operations and protect parts of their business from external disruptions. Merck, for example, has announced plans to enlarge its supply chains in China to lessen dependence on raw materials sourced from outside the country. Such moves should appeal to those who struggle to see a bright future for their company unless China is in the equation. Diversification is not the only strategy available to businesses who want to reduce their dependence on China. Investing in recycling schemes or redesigning operations to reduce waste can help alleviate reliance over time. Technological innovations also allow firms to replace inputs from China with less scarce products and raw materials. For instance, a recent breakthrough by Swedish battery maker Northvolt is expected to enable the production of sodium-ion batteries without critical minerals such as lithium, which are tied to China's dominance of the supply chain. Northvolt is, in fact, building a gigafactory in Heide, where battery production is set to begin in late 2025.