i3 | May 20, 2022

The 2022 Opportunity

Gary Shapiro
blue. green, yellow imagery

The consumer technology industry had a good 2020 and 2021. With low interest rates, government sloshing money everywhere and consumers stuck home unable to dine out, travel or attend events, our members selling products for the home and car did great! Sure, supply chain disruptions and chip shortages hurt our industry, but many companies simply shifted to a strategy of selling upscale products.

In June 2021, I warned that despite Washington assurances otherwise, inflation was not transitory and worker shortages were real. More, CTA released research showing supply chain shortages would not be resolved in the short-term.

Lemonade with lemon fruit

"A lemon of a year is an opportunity to start selling lemonade."

Sadly, I must now share a less than optimistic view on 2022. Gas prices are skyrocketing, food shortages are projected and inflation is approaching double digits. China is shutting down cities further impacting supply chain issues. The war in Ukraine has shifted resources and cut Asian and European economic outlooks. The Democratic administration and Congress seem intent on raising taxes and regulations. And, the Federal Trade Commission has decided that protecting old competitors is more important than allowing consumers to benefit from new innovation.

Barring a dramatic shift, it will be a rough 2022 with downward forecasts as inflation and interest rates rise and stock markets fall.

But ninja companies can and will survive. A lemon of a year is an opportunity to start selling lemonade. Energy efficient products will sell. Survivalism, health care and emergency planning will sell.

There are reasons for optimism.

The U.S. November Congressional elections will likely result in a Republican House and maybe even a Senate. The advantage of a politically divided Administration and Congress is that bad proposals can be exposed, debated, and negotiated rather than simply included into one-party bills.

Additionally, every positive movement to de-escalate war in Ukraine will boost markets and spending, and lower gas and food prices.

Savvy companies can take advantage of these changes. Look for the gaps. New customers, new situations and new workers, mean new opportunities. Look at your products and service offerings and reframe them to meet the needs of a changing world.

Consider where you make products. China may still have low-cost factories but consider the trends. President Xi is clamping down on dissent, he is eyeing Taiwan, and is increasingly aggressive to his Asian neighbors. Its mishandling of COVID, lengthy traveler quarantines, shipping challenges and growing hostility to tech business means operating risks have escalated.

At the same time, the American political shift away from supporting manufacturing in China has never been clearer and the populist calls for American manufacturing has never been louder. President Biden declared in his 2022 State of The Union that he wants everything to be made in the U.S. This is naive and unrealistic, at least for decades. We should be looking to American allies valuing liberty and respecting individual rights to see what types of alliances can be made to build things where they are best made, and share research and resources on critical technologies. Shifting to friendly countries with shared values is not only a good strategy, but also one that sends a strong message to shareholders, employees, and others that you value individual rights and democracy.

There is no denying that difficulties lie ahead, but look for the opportunities. Every company leader should access the situation, make some well placed bets and adjustments. I urge you to be a ninja leader: Smart, flexible, engaged and always doing the right thing.