BRICS, Offshoring & the Great Global Profit Shift

Multinational corporations are redrawing the map of global trade. They offshore production to BRICS economies like China and India while hoarding profits elsewhere – a strategy that’s thwarting trade policies and reshaping who gains from globalization.

Quick Insights

• Tariffs vs. Reality: Years of U.S. tariffs on China barely dented a massive trade gap. In 2024, the U.S. goods trade deficit with China was still around $295 billion, the lowest since 2009 yet America’s biggest with any country.
• Where Value Lives: Global companies increasingly make goods in BRICS nations but book profits in headquarters or tax havens. This production-profit split means moving factories doesn’t necessarily bring wealth back home.
• Offshoring–Financialization Loop: Corporate giants like Apple, Microsoft, Nike, and Pfizer built a self-reinforcing loop. By offshoring manufacturing and exploiting intellectual property, they create big offshore earnings – which are then plowed into financial assets or shareholder payouts instead of new factories.
• Winners & Losers: Tech and pharma firms reap the rewards, enjoying high margins and stock buybacks. Meanwhile, local suppliers in BRICS get slim profits, and American workers see few new manufacturing jobs despite political promises.
• BRICS Response: China and fellow BRICS economies are striving to move up the value chain – investing in innovation, pushing local brands, and even forming new trade alliances – to capture more of the value that multinationals currently extract.

Opening: A Trade War That Missed Its Mark

Was the U.S.–China “trade war” really fought in the wrong battlefield? Washington’s tariffs since 2018 were meant to shrink a gaping trade deficit and bring manufacturing back home. Yet today, the overall U.S. trade deficit still hovers near $1 trillion, virtually unchanged as a share of the economy and only slightly smaller with China. Factories did move – some assembly lines left China – but the imbalance persists. Why?

The answer lies not on the factory floor but in corporate boardrooms and bank accounts. Multinational corporations (MNCs) have turned global trade into something far more complex than a simple exchange of goods. They’ve created a circuit of value: design in California, assembly in Shenzhen or Bengaluru, profits in tax havens, and cash ultimately flowing to shareholders. By doing so, these companies can sidestep the intent of tariffs and industrial policies. They make where it’s cheapest, book profits where taxes are low, and invest earnings not in production but in financial markets. In short, they have decoupled where products are made from where value is taken – with profound consequences for BRICS economies and the world.

What if the real contest in the trade war wasn’t between countries at all, but between governments and the corporate strategies that transcend borders? As BRICS nations (Brazil, Russia, India, China, South Africa) seek a bigger say in the global economy, understanding this hidden corporate circuit is crucial. It reveals why traditional trade weapons (tariffs, quotas, subsidies) often misfire – and how countries like China and India are responding by trying to capture more of the value within their own borders.

Key Developments: Factories Shift, Profits Stay

From the outset of the U.S.–China trade conflict, changes on the ground were evident. By 2024, U.S. imports from China had declined, and some production had shifted to other countries. American imports of electronics and machinery from China dropped from their peak, and factories began sprouting in places like Vietnam and India. Indeed, India – a key BRICS member – has been a major beneficiary of this diversion. Apple, for example, accelerated iPhone assembly in India, shipping $2 billion worth of iPhones from Indian plants to the U.S. in a single month. By 2025, Apple aimed to make the majority of iPhones for the U.S. market in India rather than China.

Yet, despite these shifts in production, America’s overall trade deficit barely budged. The bilateral goods deficit with China fell from about $375 billion in 2018 to roughly $295 billion in 2024. That’s a noticeable dip, but far from a fundamental fix. Meanwhile, the U.S. simply started importing more from other low-cost hubs. As one analysis noted, tariffs largely failed to divert trade away from China – instead, production moved and the U.S. began purchasing Chinese-made goods via other trade partners such as Mexico and Vietnam. In effect, the “Made in China” label was replaced, but the trade gap found new channels.

Why didn’t tariffs succeed? It turns out that multinationals adjusted far faster than national policies. Big firms re-routed supply chains to skirt tariff pain. Chinese factories sent components to Southeast Asia for final assembly, masking their origin. Global retailers shifted orders to non-tariffed countries. And critically, U.S. companies continued to rely on overseas suppliers within their own corporate families. Nearly a quarter of U.S. imports of electronics and machinery from China occur within the same multinationals – essentially, U.S. companies “importing” from their own foreign affiliates or contractors. This kind of intra-firm trade isn’t easily undone by tariffs, because the underlying corporate network remains intact.

Behind the scenes, corporate financial reports were telling a consistent story: production may have been globalized, but profits were not. For S&P 500 multinationals, almost half of sales come from abroad, yet the bulk of profits are reported at home. In 2024, about 42% of these firms’ revenue was earned overseas, but only a fraction of their pre-tax profits – often well under 25% – was attributed to foreign operations. The reason? Routine manufacturing abroad yields slim margins, while the high-value work – design, branding, technology – is billed from the company’s headquarters or a favorable jurisdiction. An assembly worker in Guangdong or a plant in Gujarat adds plenty of value, but the financial value recorded in company accounts stays disproportionately in Silicon Valley or New York.

BRICS economies, especially China, became manufacturing powerhouses during this period.
China’s export-oriented factories boomed as Western firms offshored production, but much of this took the form of processing trade – importing parts, assembling goods, and re-exporting them. In the mid-2000s, over half of China’s exports were this kind of processing trade, orchestrated largely by foreign companies and joint ventures. That share has declined to around 20% in recent years as China develops its own brands, but foreign firms still exert huge control. By 2020, subsidiaries of foreign companies made up about 4.3% of China’s industrial output – a significant chunk in such a vast economy. In other words, a considerable slice of China’s manufacturing operates as an extension of multinational supply chains, with profits often accruing elsewhere.

Foxconn’s global reach: Foxconn, headquartered in Taiwan (its logo seen atop a building in New Taipei City), produces about 70% of Apple’s iPhones worldwide, making Apple its largest client (roughly 45% of Foxconn’s revenue). It assembles the majority of these devices in China and is now expanding in India as Apple diversifies manufacturing to mitigate tariff risks. Such contract manufacturers epitomize the BRICS role in global supply chains – they handle production, while Western firms typically reap the lion’s share of profits through control of design and intellectual property.

In sum, the initial aftermath of the trade war showed a geographical shuffle of factories without a corresponding shuffle of earnings. Countries like India and Vietnam gained new plants and jobs as companies sought tariff workarounds. China’s own manufacturers even began offshoring some assembly to neighbors in Asia to retain U.S. business. But the same corporations remained atop the pyramid – dictating terms, capturing profits via branding and tech, and paying themselves through internal transactions. In other words, the trade imbalance was re-routed rather than resolved.

Political Impact & Outlook: Policy Meets Corporate Power

Politically, the resilience of the U.S. trade deficit despite aggressive tariffs has been a sobering lesson. Trade wars were supposed to be winnable – at least that was the narrative in 2018. The idea was straightforward: make Chinese imports costlier and American factories would roar back to life. But six years on, policymakers face the reality that tariffs alone can’t override corporate strategies.

For U.S. leaders, this has meant rethinking industrial policy. Both the Trump and Biden administrations (and now other G7 governments) have doubled down on incentives for domestic production – from semiconductor fabs to electric vehicle plants. There’s a frenzy of new funding for infrastructure and “reshoring” initiatives. Yet, even lavish subsidies may falter if corporate incentives don’t line up. A financialized corporate sector simply hasn’t shown interest in pouring its ample cash into new factories at home when the returns are uncertain. Why invest in a marginally profitable plant, executives reason, when that capital could buy back shares and boost the stock price?

This conflict between national policy goals and corporate priorities is playing out worldwide.
In the United States, calls for reshoring bump against companies’ fiduciary focus on shareholder returns. Executives, whose pay is often tied to stock performance, prefer quick financial wins over long-term capacity building. As a result, Washington’s push to rebuild manufacturing runs into an uncomfortable truth: many firms would rather maximize global efficiency (and profit) than patriotically produce at home.

BRICS governments are watching and learning. China, for one, recognizes that being the “world’s factory” has limits if most profits accrue elsewhere. This has fueled policies like Made in China 2025 and massive investments in indigenous innovation. Beijing’s goal is to capture more value – to have Chinese firms own the patents, the brands, the core technologies – not just assemble gadgets for Apple or Nike. Politically, China’s leadership frames this as a matter of economic sovereignty. The trade war’s lesson for Beijing was that reliance on foreign MNCs and foreign technology is a strategic vulnerability. That’s partly why China has poured resources into cutting-edge fields (from AI to biotech) and is pushing its own firms (like Huawei and TikTok’s parent ByteDance) to become global leaders. If Chinese companies can become the ones extracting royalties and licensing fees – essentially reversing the current flow – the balance of power in global trade shifts in China’s favor.

Other BRICS nations have their own angles.
India is eagerly positioning itself as the next big manufacturing hub, with Prime Minister Narendra Modi urging global companies to “Make in India.” Politically, New Delhi sees an opening: if Western firms are uneasy about China’s risks – tariffs, geopolitics, rising costs – India presents a vast democratic market and workforce as an alternative. Recent developments underscore this strategy, from Apple and Foxconn expanding iPhone assembly in India to global automakers investing in Indian EV production. Yet India too has a strategic aim beyond just assembly jobs: it wants technology transfer and local value addition. Indian negotiators often attach conditions for local sourcing, skilling, and joint ventures, trying to ensure India isn’t just a low-cost workshop but gradually moves up the value chain.

Russia and Brazil, the other large BRICS economies, are less central to electronics supply chains but have been pursuing economic sovereignty in other ways. Russia, facing Western sanctions, has pivoted to tighter trade links with China and India, emphasizing self-reliance in critical industries (from food to software) and alternative payment systems outside the dollar. Brazil has long sought to develop more domestic industry around its commodity wealth – for example, fostering local processing of soy and iron ore, and recently partnering with China on technology and 5G projects to diversify away from purely Western suppliers. Both Russia and Brazil share an interest in the emerging BRICS conversations about de-dollarization and financial autonomy. They recognize that the same corporate mechanisms that shift profits out of manufacturing countries are enabled by a U.S.-led financial system. Thus, initiatives like the BRICS development bank or discussions of a common BRICS currency, while still nascent, reflect a political drive to reclaim some control over value that is otherwise siphoned off through global finance.

Global governance questions loom large. If national policies alone can’t rein in corporate profit shifting and offshoring, could international cooperation do better? This has led to efforts like the OECD’s proposed global minimum tax on multinational profits – an attempt to curb the race to the bottom where companies book profits in zero-tax havens. The G7 nations strongly back this plan, but so do many emerging economies who feel they lose tax revenue under the status quo. Implementing such measures is challenging, but if successful, it would chip away at one pillar of the corporate circuit: the tax arbitrage that makes parking profits offshore so attractive.

The political outlook, then, is twofold. On one hand, there’s a push for more assertive state intervention – tariffs targeted at key sectors, “buy national” public spending, strategic export controls, and big subsidies for domestic industries – all aimed at tying value creation to specific locations. On the other hand, there’s a growing recognition that without addressing corporate incentives (through tax policy, antitrust enforcement, or corporate governance reforms), these efforts might be undercut by boardroom decisions. The BRICS nations in particular often voice the need for a more multipolar economic order where rules aren’t just written by and for Western multinationals. They are advocating for development-centric trade rules – such as technology-sharing agreements, local content requirements, and financial regulations that allow emerging markets to retain capital – to counterbalance the entrenched advantages of incumbent global firms.

In summary, the political battle is shifting from nation-versus-nation to governments-versus-the-status-quo. The question is how to rewrite the rules of globalization so that making things and profiting from them happen in the same place more often. As BRICS countries gain clout on the world stage, their demands for a fairer distribution of value could drive meaningful changes to trade and investment regimes in the coming years.

Economic Outlook: Winners, Losers, and Corporate Strategies

Economically, the consequences of this offshoring–financialization nexus are profound and paradoxical.

Who have been the winners? On the surface, U.S.-based multinational corporations have reaped enormous gains. They enjoy lower production costs by manufacturing in BRICS and other emerging markets, and they’ve devised ways to channel a large share of the resulting value back to their coffers. It’s no coincidence that U.S. corporate profits hit record highs in recent years even as the country ran huge trade deficits – those profits were often earned on global supply chains. The trade deficit, in other words, is not so much a loss as it is the flip side of corporate gains: Americans buy imported goods, and U.S. firms (and their shareholders) capture profits from those goods.

Take the tech sector.
Giants like Apple and Microsoft have leveraged the global system masterfully. Apple contracts out nearly all its production – iPhones, iPads, Macs – to specialized manufacturers in China and other countries. Yet Apple captures an estimated 40% (or more) of the final sale price of an iPhone as gross profit – margins far higher than any supplier. Its secret? Apple retains control of the high-value pieces: product design, proprietary software, and especially the intellectual property (IP). When an iPhone is assembled in Shenzhen, Apple’s contract manufacturer (say, Foxconn) earns a relatively small fee for the labor and overhead. Apple then effectively sells the finished phone to its own distribution arm at a much higher price that includes the value of Apple’s brand and technology. Through this internal transfer pricing, the bulk of the profit is realized not in the factory in China but on Apple’s books in the United States (or sometimes an affiliate in Ireland for foreign sales). The upshot: the $1,000 iPhone contains perhaps a few dozen dollars of Chinese labor, a couple hundred dollars of parts (some of which come from Japan, Korea, etc.), and a large residual that Apple counts as earnings.

Microsoft employs a similar sleight-of-hand with software and cloud services. The company develops products in the U.S., but through cost-sharing arrangements, an Irish subsidiary obtains the rights to sell those products in markets outside the U.S. When a business in Brazil or South Africa pays for a Microsoft Office license or Azure cloud service, much of that revenue is booked as royalty or service income in Microsoft’s Ireland unit. The local subsidiary in the BRICS country might only get a small commission for facilitating the sale. Thus, while Microsoft’s software is used globally, a huge chunk of the profit is centralized and eventually funneled back to the U.S. as investment income or dividends. The U.S. consequently runs a large surplus in trade of intellectual property and digital services – a reflection of these internal transfers.

Pharmaceutical companies like Pfizer push this model to its limits. Pfizer might develop a new drug largely in American labs, but it often assigns the patent rights for markets outside the U.S. to an affiliate in a low-tax country (for instance, Pfizer has used subsidiaries in Ireland and elsewhere). When Pfizer’s manufacturing plants (or contract manufacturers) make the drug, they sell it at a low fixed cost to that patent-holding affiliate. The affiliate then sells the medicine to distributors in Europe, Asia, or Africa at a price that reflects the drug’s hefty R&D-driven value – many times the production cost. The result: the profit is realized in the low-tax affiliate holding the IP, not in the country of manufacture or even necessarily the country of sale. As with tech, the location where the pill is pressed or swallowed captures relatively little profit; it’s the legal ownership of the idea (the patent) that determines where the money lands.

Who are the losers or those at risk?
For one, manufacturing workers in advanced economies lost out significantly over the past few decades as jobs were offshored – that part is well known. But the trade war era reveals that simply raising tariffs doesn’t automatically bring those jobs back, because the corporate web is adept at readjusting. Another perhaps underappreciated loser is the broader economy that’s starved of productive investment. When corporations choose to use their profits for stock buybacks and dividends rather than building new facilities or funding R&D, long-term economic dynamism suffers. A telling statistic: in 2024, S&P 500 companies returned a record $1.6 trillion to shareholders (via dividends and stock buybacks), a 14% increase over the prior year. Nearly 60% of that was in the form of buybacks – essentially cash being used to repurchase shares rather than invest in new projects. This extraordinary shareholder payout (the highest ever) helped prop up stock prices and rewarded investors, but it also highlights a continuing investment gap. U.S. business investment as a share of GDP remains relatively subdued, and the country’s manufacturing capacity and productivity growth have seen only modest gains, even in boom times – trends that many economists link to the corporate preference for financial maneuvers over capital expansion.

Workers in many BRICS and developing countries can be both winners and losers in this equation.
On one hand, offshoring clearly created millions of jobs in places like China’s Pearl River Delta, India’s industrial hubs, and throughout Southeast Asia. These jobs have lifted incomes, reduced poverty, and spurred growth; they represent opportunity that didn’t exist before. On the other hand, because much of the value-added is captured by the foreign parent firms, there’s a ceiling on how much local wages and living standards can rise from these jobs alone. A factory worker assembling smartphones in India earns a multiple of what they might have made in agriculture, but still only a few hundred dollars a month – a small fraction of the value their labor contributes to a product that might sell for $1,000 abroad.

Furthermore, local supplier firms in BRICS countries often face a tough climb.
They may win business from multinationals, but often on tight terms. Many Chinese, Indian, or Brazilian manufacturers find themselves competing to provide low-margin components or assembly services, while importing high-value inputs (like specialized chips or software) from abroad. This dynamic can trap them in the lower rungs of the value chain. It’s exactly why BRICS policymakers stress moving up the value ladder: they want more homegrown firms to evolve into the next Samsung, Huawei, or Tata Consultancy – companies that own IP, brands, or platforms, and thus capture higher profits – rather than remaining mere suppliers to Western-led networks.

There are sectors that buck the trend.
Commodities and energy are areas where countries like Russia, Brazil, and South Africa have leverage – they export oil, gas, minerals, or agricultural goods at world-market prices, capturing significant value at the point of extraction. For example, Russia’s economic fortunes (and geopolitical clout) rise when energy prices are high, directly benefiting its state coffers and companies. However, commodities are volatile and often capital-intensive without being labor-intensive; they don’t generate as many jobs per dollar as manufacturing. Plus, even in commodities, Western multinationals and financial institutions often take a cut – through trading, shipping, and financing – meaning not all the profit stays with the producing nation.

Specific company moves highlight the new risks and opportunities emerging. Apple’s supply chain diversification to India is one opportunity – for India’s economy, that means tens of thousands of jobs and rapidly growing output. Already in early 2025, Apple’s India-based factories shipped roughly $2 billion worth of iPhones to the U.S. in a single month, showcasing the speed of this shift. Some analysts predict that within a few years, as much as a quarter of Apple’s phones could be made in India, fundamentally reshaping the electronics supply chain geography. Indian conglomerates like Tata are seizing the moment to expand electronics manufacturing at scale. However, India faces the risk of remaining just an assembler unless it cultivates its own brands and technologies to compete globally.

Chinese companies see opportunities too – in effect, becoming offshorers themselves. For instance, Chinese electronics manufacturers are investing in production in Vietnam and elsewhere in Southeast Asia, essentially copying the Western playbook of offshoring to reduce costs and sidestep tariffs. This shows that the model is not “U.S.-only”; any company from anywhere, once it grows big and transnational, can play the same game. If Alibaba or Tencent become as globally entrenched as Amazon or Google, they might also route profits through overseas affiliates or optimize their supply chains across borders to maximize efficiency and minimize tax, just as Western firms have done.

One positive aspect of this global integration is lower consumer prices and high corporate efficiency. Offshoring production has undeniably made many goods more affordable for consumers around the world – from apparel to electronics – and allowed companies to scale up quickly by tapping the best locations for each task (design here, manufacturing there, customer service elsewhere). But now nations are asking: are the gains from these efficiencies shared fairly? And is an economy healthy when its top companies prioritize short-term financial returns over long-term productive capacity?

Looking ahead, we might see some rebalancing.
If global tax reforms like a minimum global corporate tax take hold, the incentive for companies to stash profits in zero-tax island entities could diminish, potentially keeping more earnings in the countries where sales and production occur.
If investors and regulators push back on extreme buybacks – arguing that companies should reinvest more for the future – then more corporate cash may flow into building and innovation rather than just into the stock market.
And if BRICS countries continue to develop their own competitive multinationals, the current dynamic – where Western firms dominate the high-profit segments of global trade – could begin to shift. Already, firms like China’s Huawei (in telecom equipment) or India’s Infosys (in IT services) demonstrate that emerging markets can produce world-class, IP-driven companies that retain a larger share of profits locally.

However, these shifts will likely be gradual. In the near term, expect global supply chains to remain deeply entrenched. The trade conflict and the pandemic have prompted talk of “decoupling” or “friend-shoring” (shifting production to politically allied countries), but what we’re seeing so far is more diversification than true onshoring. Companies are spreading out their manufacturing – some in China, some in India, some in Mexico, Vietnam, or Eastern Europe – to hedge risks. They are still leveraging cost differences, specialized skills, and favorable regulations across countries. And the pattern of profits flowing back to headquarters via royalties, licensing fees, and transfer pricing is likely to continue until something fundamentally changes in how we govern global commerce.

Comparison – BRICS vs G7: Different Approaches to Imbalances

How do responses to these trade and corporate dynamics differ between the BRICS and the G7 nations? In broad strokes, G7 economies (like the U.S., Germany, Japan) have traditionally focused on macroeconomic angles and market-led adjustments, whereas BRICS economies emphasize reshaping the structure of trade and investment to favor their development goals.

For example, when confronted with trade imbalances, G7 policymakers often talk about currency values, interest rates, and savings rates. In the 2000s, a prevailing U.S. narrative was that China’s surplus was driven by an undervalued yuan and high Chinese savings – in other words, macroeconomic factors. The assumed solutions were currency appreciation (let the yuan strengthen) or changes in national saving and consumption patterns. G7-led forums also tend to push financial liberalization, operating under the theory that global imbalances will self-correct through market forces: capital flows, exchange rate adjustments, etc.

BRICS voices, by contrast, have highlighted how structural issues and historical inequities shape trade outcomes. They point out that for decades (or centuries), poorer countries have exported cheap raw materials and imported expensive finished goods – an imbalance rooted in the very structure of global trade. From a BRICS perspective, the remedy isn’t simply to let markets be, but to actively change what and how they trade: develop domestic industries, move from exporting commodities to exporting manufactured products, climb from basic assembly to higher-tech production. This is why industrial policy is not a taboo in BRICS circles; rather, it’s seen as essential for breaking out of the low-value trap. China’s ascent is often cited as evidence – it combined market reforms with heavy state-directed investment and technology programs to become a manufacturing powerhouse, rather than leaving its fate entirely to price signals.

When it comes to the corporate behavior undergirding these imbalances, G7 countries have started to acknowledge the downsides – like tax avoidance by multinationals, hollowed-out local industries, and stagnant wages – but their policy responses are cautious. In the U.S., there are debates about tightening rules on stock buybacks or enforcing antitrust more strictly to curb monopolistic giants, but decisive action is relatively recent and limited. In Europe, there’s talk of “strategic autonomy,” meaning Europe should secure its own supply chains for critical goods (such as by nurturing domestic chip production and reducing reliance on foreign technology). This concept mirrors in some ways what BRICS countries seek for themselves – autonomy and less dependence on foreign corporations – indicating a convergence in diagnosis, if not in rhetoric.

However, G7 governments are also constrained by powerful corporate interests and a general philosophical leaning (especially in past decades) toward free markets. They often stop short of heavy-handed interventions that could upset the status quo.
By contrast, BRICS countries sometimes band together to amplify their agenda for a fairer system. They argue for a more multipolar financial order to complement a multipolar trading system. We see this in initiatives like the BRICS New Development Bank, created as an alternative source of development financing to institutions like the World Bank, and in conversations about trading in local currencies to reduce reliance on the U.S. dollar. These financial moves relate to trade imbalances in that they aim to give emerging economies more control over their economic destiny and reduce the vulnerabilities that come from being junior partners in a dollar-centric, Western-led global economy.

A clear comparison emerged in the arena of international tax reform.
G7 nations spearheaded the push for a 15% global minimum corporate tax rate to ensure big tech and other multinationals pay a baseline level of tax no matter where they book profits.
BRICS responses were generally supportive – they too want to curb profit shifting, as it erodes their tax bases – but with caveats. Some BRICS countries have their own low-tax zones or incentives to attract investment and worry how the rules will be applied. Moreover, there’s an undercurrent of mistrust: BRICS nations want to ensure that new rules aren’t written solely by rich countries to their advantage. The G7’s priority is often reclaiming taxes that their companies avoid via havens; BRICS priorities include making sure taxes are fairly allocated to the countries where economic activity (sales, production) actually happens.

In trade negotiations, you see differing priorities as well. G7 countries often push for strong protections for intellectual property and free flow of digital services – reflecting their advantage in innovation and tech. BRICS countries, on the other hand, often argue for flexibility to use tariffs or subsidies to nurture nascent industries, and for the right to regulate digital platforms or data flows in the national interest. A vivid example: India has repeatedly insisted at the WTO on its right to protect small farmers and to use industrial subsidies, clashing with the free-trade ethos that the U.S. and Europe championed for years (even as the U.S. ironically deployed massive industrial subsidies under its recent policies).

Another area of contrast is sustainability and labor standards in trade agreements. Many G7-led trade deals now include clauses on environmental protection, carbon emissions, and labor rights, partly due to genuine values and partly to reassure domestic constituencies that trade won’t lead to a “race to the bottom.” BRICS countries are often wary of these provisions – not because they oppose sustainability or labor rights, but because they fear such rules could be used protectionistically. A BRICS exporter might worry that strict environmental standards are a pretext to limit their agricultural exports, for instance. The reality is a mix: these standards can improve global outcomes but can also raise costs for developing country producers and potentially be misused as trade barriers. So while a G7 consumer might be concerned about whether a product was made with fair labor and minimal pollution, a BRICS producer might be more immediately concerned with securing the order and climbing the value ladder, and feels that they’re being asked to “catch up” on standards that wealthy nations themselves only adopted after industrializing.

In summary, both blocs recognize the imbalances and distortions in the current system, but they view them through different lenses. The G7 lens has often been macroeconomic and rules-based, assuming that if everyone plays by liberal market rules, growth and adjustment will sort things out (with maybe a bit of help to those displaced). The BRICS lens is more structural and pragmatic, emphasizing that without active efforts to change one’s position in global production, imbalances will persist and development will be stunted. They share some common ground – for instance, both have an interest now in reining in the most egregious tax dodges by multinationals and in ensuring supply chain security for critical goods – but they diverge in approach. The push and pull between these perspectives will shape the evolution of global economic rules, whether through a reformed WTO, new trade pacts, or informal blocs like the BRICS coordinating stances in international forums.

Regional Spotlight: India’s Supply Chain Moment

Among the BRICS, India stands out as a pivotal player in the evolving supply chain landscape. Long seen as trailing China in manufacturing might, India is rapidly gaining traction as companies re-evaluate their China-centric production strategies. A confluence of geopolitics and cost dynamics is working in India’s favor.

Apple’s high-profile pivot is a case in point. In response to U.S.–China tensions and lessons from pandemic disruptions, Apple began producing select iPhone models in India in the late 2010s. Now it’s ramping up dramatically. By late 2024, some industry estimates suggested around 15% of Apple’s iPhones were already assembled in India. Apple’s suppliers have three massive iPhone plants up and running there and two more on the way. Some predict India could produce a quarter of all iPhones within a few years, marking a major shift in the electronics supply chain. Foxconn and Tata (one of Apple’s newer manufacturing partners) already operate huge facilities in Tamil Nadu, and Pegatron has set up in Karnataka. Essentially, the scale of operations that once existed only in China’s Guangdong or Henan provinces is now being replicated on Indian soil.

For India, this is more than a few factories – it’s an opportunity to embed itself in global electronics supply chains for the long term. Each large assembly plant brings with it a network of smaller suppliers for components, packaging, logistics, etc., potentially catalyzing an entire ecosystem. The Indian government has actively encouraged this with Production-Linked Incentives (PLI), which offer rebates and rewards to manufacturers that hit output targets in India. This strategy is bearing fruit: aside from Apple’s partners, companies like Samsung have expanded smartphone production in India (Samsung opened one of the world’s largest phone factories outside Delhi), and global chipmakers are eyeing India for setting up semiconductor assembly and testing units.

But India’s ambitions go further. Officials often speak of moving from “Make in India” to “Design in India.” The country’s strength in software and services – exemplified by its IT giants and startup scene – could complement its manufacturing push. We’re starting to see early signs of integration: for instance, Google partnered with India’s Reliance Jio to develop an affordable smartphone tailored for the Indian market, blending software innovation with localized manufacturing. Apple, beyond assembly, has started to hire more Indian engineers and designers, reportedly planning to open a development center in India to work on Apple Maps and other services. These steps indicate India doesn’t want to remain just a workshop; it wants a seat at the design table, where more value is captured.

However, challenges remain.
Infrastructure and logistics are the perennial hurdles cited by investors in India. While major improvements are underway (new highways, port upgrades, freight corridors), India’s infrastructure still lags behind the ultra-efficient logistics networks that China offers. Power outages, port congestion, and bureaucratic red tape can add costs. In fact, as Reuters reported, manufacturing an iPhone in India still costs about 5–10% more than in China on average, due in part to these frictions and the need to import certain components. Over time, as more suppliers localize in India and economies of scale kick in, that gap may shrink – but it underscores the work ahead.

Another factor is labor and skill. India has a vast, young labor force, and labor costs are competitive. But manufacturing at Apple’s quality standard requires training and consistent processes. Initial hiccups, like reports of defects or slower output in some Indian factories, have shown the learning curve. There’s also the matter of labor practices: India’s labor laws are different from China’s, and worker expectations differ too. There have been instances of worker protests over conditions at some supplier factories. To sustain momentum, India will need to ensure a stable labor environment, possibly by balancing productivity targets with better housing or amenities for migrant workers – lessons that China’s manufacturing hubs learned over time.

From a broader regional perspective, India’s rise doesn’t mean China’s decline so much as a diversification of Asia’s manufacturing landscape.

Southeast Asian countries like Vietnam and Indonesia are also booming as alternative production sites. Vietnam, in particular, has absorbed a lot of electronics manufacturing (including from some Chinese and Taiwanese firms redirecting production). But no single country can replicate China’s sheer scale overnight. What we’re likely to see is a more distributed network: China remains a key player (especially for complex components and its huge domestic market), India becomes a second pillar for mass assembly and a growing consumer market in its own right, and other countries fill niches in between.

For other BRICS nations, India’s trajectory offers insights.

Brazil, for example, has a large internal market and has long lured automakers and appliance manufacturers with local-content rules and tariffs on imports. If Brazil can simplify its tax and regulatory environment (often cited as burdensome) and invest in skills, it could potentially attract more high-tech manufacturing as companies look for geographic diversity beyond Asia.

South Africa, with Africa’s new free trade area in play, could position itself as a manufacturing and distribution gateway to a billion-person African market – though it faces tough competition from cheaper locales in Asia and needs to tackle energy and logistics bottlenecks.

Russia, under its current geopolitical situation, is more isolated from Western investment, but it’s turned to China and India to keep its tech and manufacturing sectors supplied and may seek deeper industrial partnerships within BRICS to circumvent sanctions.

In essence, India’s emergence in global manufacturing is a sign that the era of China as “factory to the world” is evolving into a more multi-node system. For companies, this means greater resilience and bargaining options; for countries, it means a chance to capture a bigger slice of the manufacturing pie. If India succeeds in not just assembling but innovating – in becoming a source of new designs, new technology, and homegrown multinationals – it could alter the balance of economic power in favor of the BRICS, making the global economy truly more multipolar.

What’s Next? Toward a New Global Balance

What does the future hold as BRICS countries and global corporations continue their tug-of-war over the locus of value? Based on current trends, we can anticipate a few key developments:

1. “Smart” protectionism and strategic decoupling: Countries have learned that blunt tools like across-the-board tariffs have limitations. Future protective measures will likely be more nuanced and targeted. Expect more export controls on critical technologies (as the U.S. has done with semiconductors to China) and localization requirements (like rules that certain sensitive goods must be produced domestically or within allied nations). The concept of economic security is blurring the line between economic and national security policy. The U.S. and EU are already restricting foreign access to strategic sectors like defense tech, batteries, and pharmaceuticals. BRICS nations will likewise refine their industrial policies: for example, India might require a certain percentage of electronics components to be made domestically to qualify for subsidies; China might double down on its drive for self-sufficiency in semiconductors and aircraft. This trend could lead to a more fragmented trade environment, but one arguably more resilient to political shocks.

2. Corporate adaptation and possible restructuring: Under pressure from these shifts, multinationals themselves may start to change their behavior – if not out of altruism, then out of necessity. Some Western firms are already realigning their supply chains into distinct regional hubs to navigate geopolitical fractures (a strategy sometimes called “China+1” or “two circuits” for China and the West). For instance, a company might develop separate supply chains: one centered on China (to serve China and Asia) and one centered on North America or India (to serve the West and India’s market) to mitigate the risk of being caught in superpower crossfire. This redundancy reduces efficiency but increases security. Additionally, if regulations tighten on things like profit shifting – say global tax rules get teeth – companies might opt to simplify by reporting more income where it is earned rather than chasing complex avoidance schemes. We might also see changes in corporate governance; perhaps investors will start valuing companies that show long-term investment in capacity and innovation (which could be encouraged by government incentives or even preferences in public procurement for companies that invest locally).

3. Rise of Global South multinationals: The next decade could witness a surge of major companies from the BRICS and other emerging markets becoming household names worldwide. We already see signs: China’s TikTok (ByteDance) is a global sensation, India’s Tata Group now owns iconic Western brands like Jaguar Land Rover, Brazilian aerospace company Embraer is a top regional jet maker, and South Africa’s Naspers was an early investor in Chinese tech and wields global influence. As these and other firms expand, they will join the competition in shaping global trade patterns. A more diverse set of multinationals might mean more distributed value capture – not all flowing to the U.S. and EU – but it could also mean new players using the same playbook. A Chinese tech giant or an Indian pharmaceutical firm could very well offshore production to even lower-cost countries as they grow, or use international subsidiaries to optimize taxes. The hope from a BRICS perspective is that having their own global champions will at least keep more profits in their home region (and perhaps instill pride and soft power), even if they behave similarly on the world stage.

4. Reformed global rules and institutions: With the growing recognition of these structural issues, there’s a chance (albeit an uphill one) for meaningful reforms in global economic governance. We could see movement on tax transparency and unitary taxation, where multinationals would be taxed based on where they actually conduct business rather than where they declare profits. If a coalition of large economies (potentially spanning G7 and BRICS members) agree, this could significantly reduce profit shifting. Trade rules might also adapt: future trade agreements could include provisions to prevent “social dumping” (companies hopping countries to exploit cheap labor or lax standards) – essentially global labor and environmental standards could inch upward to level the playing field, which BRICS might accept if they’re part of setting the standards. Institutions like the IMF and World Bank, historically dominated by the West, may continue to face challenges from BRICS who set up parallel structures and demand greater voice; over time this could democratize decision-making in those bodies or make the new BRICS institutions more prominent, or both.

5. Technology and sustainability as wildcards: Technological change could scramble the calculus in unexpected ways. For instance, if automation and robotics become cheap enough, the labor cost advantage of offshoring could diminish, leading companies to reshore some manufacturing to be closer to markets (though then the concern becomes jobs lost to robots everywhere). On the sustainability front, climate change and the push for green economies could rewire global trade: countries rich in critical minerals (like some BRICS and African countries) gain clout, and there may be a concerted effort to shorten supply chains to reduce carbon footprints. BRICS countries are already collaborating on things like renewable energy projects, which might allow them to leapfrog in green tech manufacturing (say, producing solar panels, batteries, etc., not just for export but to lead in adoption). If BRICS nations become hubs for affordable green technology, that could both give them a value-added industry and address global challenges.

Finally, we must consider the socio-political dimension.
Global imbalances and unequal gains fuel discontent. We’ve seen populist waves in several countries fed by the sense that globalization left too many people behind. If the corporate circuit of offshoring and financialization isn’t rebalanced, we could see more pushback against free trade, more calls for protectionism, and potentially more conflict. On the other hand, there’s an opportunity here: awareness of these issues is higher than ever, and there’s arguably a convergence in thinking among many nations – a realization that the old system had flaws. The conversation has shifted from whether to address these problems to how to address them.

In a world where BRICS nations are asserting themselves and G7 powers are rethinking long-held doctrines, the stage is set for a recalibration of global trade and investment norms. It won’t happen overnight, but step by step, policies and corporate practices are adjusting. The goal many share is a fairer system – one where making an item in a country brings more benefits to that country, and where the wealth generated by globalization is more equitably shared.

Whether that goal is fully attainable remains to be seen. But as this analysis has shown, any path forward must grapple with the reality that it’s not just countries trading with each other; it’s complex corporate networks operating across borders. The next chapter of globalization will be written by those who master – or reform – these networks, and the BRICS coalition is positioning itself to be a co-author of that narrative.