Questrom senior lecturer Gregory Stoller says he tells his students: “You can never put all your eggs in one basket strategically or geopolitically.” Photo by Jackie Ricciardi

International Business

Teaching Business, Economics, and China in the Age of Trump

With the news cycle changing daily, Questrom’s Gregory Stoller preaches the importance of having a Plan B

A day doesn’t go by without China appearing in the American news cycle. That’s what happens when a US president imposes tariffs on hundreds of millions of dollars of Chinese products arriving in our ports daily, igniting a global trade war, upending stock markets, and making investors, businesses, and ordinary consumers jittery. 

Now imagine you’re a University business school faculty member trying to help your students understand how business and economics work in a world where business norms are changing constantly and nobody knows where global industry is headed.

Good luck with that.

BU Today caught up with Gregory Stoller, a Questrom School of Business senior lecturer in strategy and innovation and a 2019 Metcalf Award winner, for some perspective on how significant this moment is for the Trump administration—and for the American economy. He’s traveled to China almost 60 times since 1994, and these days his visits, where he brings about 13 graduate students overseas, are often connected to both international consulting projects based in Beijing or his Spring Break trips for BU undergrads, the culmination of his Global Management Experience course. This year, he’ll be taking BU students to Hong Kong and Shanghai. 

Here are some of Stoller’s most interesting observations regarding the US-China trade war and what it’s like teaching business classes in a Trump-oriented world.

The world’s economy is hopelessly intertwined. No one country has been able to successfully be self-reliant. North Korea has positioned itself through its Juche (주체) state ideology, but it still needs to import large numbers of natural resources. Being self-reliant maybe makes you feel better, but it’s not going to work for any country on a permanent basis. No nation can produce everything it needs because it’s impossible to do that.

Natural resources are an example. We are pretty good with oil, and with fracking, here in the United States, but we need to periodically buy oil from other countries, including the Middle East. It doesn’t make sense for us to produce it all domestically if we can get it from a trade partner. 

Our labor costs and material costs would make a pair of sneakers run $300 in the United States. Consumers will simply go someplace else, outside the country, where labor costs and material costs are cheaper. 

Why is it so much cheaper to manufacture goods in Asia? The cost structure differs so much from country to country or even city to city. Why does a bottle of water cost $1 in one place, like Boston, compared with $2 in New York? Costs are different in one place than in another. Labor rates are different, too. Minimum wages here are $14 or $15 an hour, and are much cheaper in China.

If it’s a pair of underwear or a pair of shoes, people want to support US-based businesses, but not if they have to pay double.

This news cycle is so bizarre in terms of what’s happening all over the world, with Trump and China. I recently took our students to Hungary, where they are having a similar issue with their president. People are watching politicians do things and say things that are unique. That doesn’t mean they are bad. We’ve just never heard them before. Most people think it’s temporary, but it could be the new normal.

What is Apple going to do about China? Can Trump really make US companies operating overseas “come home”? It’s a tall order, given how much of the iPhone is produced in China. Tesla is opening up a new manufacturing plant in China and employing only Chinese workers. Why? Because it’s cheaper. You can say we’ve been buying bananas from the local corner store and then someone comes along telling you to buy them from someplace else. No problem. But you can’t just say to Apple: “Go down the road.” You’re talking about billions of dollars in infrastructure invested in these products.

The one lesson I’ve been telling my students is that you always need a Plan B. You can never put all your eggs in one basket strategically or geopolitically. Change is a constant, especially today. You can’t ever make blanket assumptions or rest on your laurels. You might spend hours, weeks, and months on deal terms, contracts, operations, and all of a sudden the rug could be pulled out from under you.

With your Plan B, you have to spend as much time on it as on Plan A, even though you know you might never implement the contingency approach. But it’s still money well spent. For example, why do you have insurance for your house? You hope it’s never used.

All industries wish they had a Plan B. Manufacturing is really hard to shift. These assembly lines are not just round peg and round hole, where you can do the work anywhere in the world. We’re talking about millions of dollars in precision equipment that you can’t just pick up and move. 

The scariest moment for me as a business professor was the recession of 2008-2009. The second worst or worst since the Great Depression of the 1920s and ’30s. At least with the recession, I could work through it, because it was economically based. This current cycle is equally stressful. But this time it’s not just business. Neither is it simply politics, nor geopolitical relations either. It’s everything all together, and there’s no beginning, middle, or end.