In recent months, there has been increasing talk of Friend Shoring, a new approach to the global  market. 

Because of the market crisis caused by global events such as the Pandemic and the war in Ukraine,  countries have seen the need to diversify supply chains in order to make their economies less  vulnerable to external risks. The US has chosen the Friend Shoring approach: a tool aimed at  promoting economic resilience by relocating supply chains to “friend” countries. 

Friend Shoring: Meaning and Market Impact

In fact, it is a solution that the US decided to implement even before the conflict in Ukraine erupted. 

In essence, it is a matter of relocating some stages of production to countries that share the same  set of values or interests, as well as the reference country’s geopolitical alignment. 

Consider the following example: Because the Beijing government has committed human rights  violations against Uighurs and other ethnic and religious minorities, the Biden administration has  begun to limit imports of goods produced in the State of Xinjiang, including cotton and tomatoes. 

A sustainable approach that could have a significant impact on the international trade of those  countries that have always made trade agreements with everyone. 

Global market risks are pushing towards offshoring.

The need for a Friend Shoring approach stems from the need to defend global economic integration  by increasing the reliability of the supply of goods on which the various world economies rely. 

There are three major risks to trade relations that have been highlighted by pandemics and wars: 

  1. the excessive concentration of critical goods production in a single market, which makes  supply chains vulnerable and potentially dangerous;  
  2. geopolitical risks, such as Russia’s control over the transportation of natural gas and grain  deposits;  
  3. the presence of supply chains that violate fundamental human rights.

The Friend Shoring should be developed in response to these challenges, with the goal of making the  global market safer and more sustainable. 

Italy’s position

Our country appears to have already started down the path of friend shoring. Trade with European  countries, North American countries, and Mediterranean countries increased in 2022. According to  the most recent Censis data, 364.4 billion euros of Italian exports to the world were simply friend  shoring in the first seven months of 2022. 

Not everyone believes the Friend Shoring is truly sustainable. According to some economists, this  approach could widen the gap between developed and developing countries. However, the  transformation has already begun. The past year has highlighted the vulnerability of a global market  that has failed to account for environmental and human factors in manufacturing processes. The  same market that is threatened by climate change.