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There has been a lot of talk recently about the emergence of the new emerging middle class consumer, their substantial and increasing buying power and the explosion in the number of new internet and mobile phone subscribers from each of the four BRIC countries (Brazil, Russia, India and China). Amongst the constant stream of mind boggling statistics, numbers and charts, here a few highlights worth dwelling on:
• There are more cars sold in China today than in America. Experts predict that there will be 50 million cars sold every year in China by 2030!!
• In India, over 240 million people will enter the workforce in the next 20 years, and over 24 million people will become "affluent" (ie those earning more than 1 million rupees per annum, the top 2% of the Indian population)
• Russia now leads the whole of Europe in the sale of key consumables e.g. pharmaceuticals, mobile phones, broadband and even beer (catching up with Vodka as the beverage of choice amongst Russians!). Retail sales in Moscow now exceed Paris and London, and by 2025 the consumer market in Russia, which is now approx. 142 million, is expected to be larger than Germany’s, one of Europe’s largest markets.
• In Brazil, 32 million people have moved into the "middle" and "high" income bracket in the last 5 years, a figure that is expected to double in the next 5 years
• The BPO (Business Process Outsourcing) industry in India will triple in size from US$500 billion today to US$1.5 trillion in 2020.
• China and India together already have 500 million Internet users, and a further 700 million more will be added by 2015, generating revenue of more than $80 billion in Internet commerce.
An army of 2 billion consumers have now emerged from the BRIC (and other emerging) countries, are currently spending US$6.9 trillion per annum and, according to McKinsey, this figure will rise to US$20 trillion in the next decade, a figure which represents about double the current consumption of the USA!
The good news for new market entrants is that all players in the BRIC countries (big and small) are having to develop an entirely new approach to serving the new emerging consumer, which levels the playing field and creates new opportunities for smart, innovative, savvy and brave new entrants who are willing to jump in and swim with the bigger fish! It means that the major brands of yesterday may!
So what does this all mean for Asian companies? Is this an opportunity or a threat? Do you have a chance to compete with major brands from the US and Europe? And do you have the appetite for this? Here are some of my thoughts:
• All companies (big and small) need to develop a strategy to engage with all of these new emerging countries - you can't sit back and allow this once-in-a-generation opportunity pass by without at least giving some thought as to how it could affect your business!
• Opportunities exist across the board for all companies, particularly in some of the more progressive and innovative industries (e.g. technology, design, high value manufacturing, cleantech, environmental protection etc.) and also some of the more traditional areas (eg education, tourism, finance and professional services). To remain relevant, you have to start participating now.
• Do your research. How could your business or ideas thrive in a thriving country like Brazil whose economy is dominated by agriculture, resources and renewable energy, a population of over 200 million, low levels of debt, rising incomes, a fast growing consumer class and soon to be the host of both the FIFA World Cup 2014 and the Rio Olympics in 2016? Is there something that you do, or offer, or sell which would appeal to a small segment of Brazil’s emerging middle class consumer? If so, start now to immerse yourself in the opportunity.
You must start familiarising yourself with all of these countries now. Read a book, take a holiday, search the internet, join a delegation and saturate yourself in everything you can find about these new economic power-houses! Imagine living in the United States in the 1930s and witnessing all of the technological and economic advances that took place over the next 50 years. You now have the chance to do that all over again in China, India, Russia or Brazil. Get started now!
View David Thomas' full bio here
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