Source: Fortune
Summary
Dominic Barton, chair of Rio Tinto and former McKinsey leader, told Fortune that geopolitical risks are no longer peripheral for companies. He cited U.S. tariffs, trade wars, and shifting global power dynamics as key challenges. Barton emphasized that CEOs must now engage more deeply with governments and rethink business strategies. He noted that China’s growing influence has changed supply chain dynamics, with Rio Tinto increasing purchases from Chinese suppliers despite higher costs.
Our Reading
The numbers tell one story.
Barton warns of a world without rules.
CEOs are now diplomats in disguise.
China is both competitor and supplier.
Business is no longer just about profit.
Author: Evan Null
Moving away from the after-dinner speaker
Barton argues that geopolitical risk is no longer a side issue for companies. He criticizes the old model of bringing in former politicians for a quick talk. Instead, he says, executives must engage directly with governments. This shift is necessary as global tensions rise and trade policies become more unpredictable. Barton’s own career reflects this evolution, from consulting to diplomacy to corporate leadership.
Rio Tinto’s China shift
Barton highlighted how Rio Tinto is adjusting to China’s growing technological influence. Despite higher costs, the company is buying more from Chinese suppliers. This reflects a broader trend of companies rethinking supply chains in response to geopolitical shifts. Barton’s comments suggest that China’s role in global business is becoming more central. Companies are now forced to navigate both competition and collaboration with China.
Geopolitical risk as a core business issue
Barton emphasized that geopolitical risk must be embedded in corporate strategy. He questioned traditional assumptions about free trade and international institutions. Companies must now consider factors like supply chain security and data management. This shift requires more than just compliance—it demands strategic foresight. Barton’s perspective is shaped by his experience in both business and government.
The new CEO playbook
Barton pointed to leaders like Tim Cook and Elon Musk as examples of CEOs who engage deeply with governments. He said these leaders understand the importance of navigating complex political landscapes. This approach is becoming essential as trade policies and regulations change rapidly. Barton’s message is clear: companies must adapt or risk falling behind.
China’s rising influence
Barton described China as both a competitor and a major source of innovation. He noted that Rio Tinto is increasing its purchases from Chinese suppliers, despite higher costs. This reflects a broader trend of companies relying more on China for technology and materials. Barton’s comments highlight the growing importance of China in global business. Companies must now balance competition with cooperation in this new era.
