Archive for the 'Emerging Markets' Category

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The emerging economies have had a great decade. That was the easy part

Published on October 12, 2011 in Emerging Markets. 0 Comments Tags: , , , , .

The IMF’s latest forecast is that emerging economies will grow by more than 6% in 2011 and 2012. But growth in the rich world is likely to be below 2%.

Twenty of the 42 economies covered in the back pages of The Economist grew by 3% or more in the year to the latest quarter. Only two of these, Austria and Sweden, are from the traditional group of rich countries. The rest are developing economies, such as Brazil and Turkey, or newly rich ones, such as Taiwan and Hong Kong.

Yet the growth of emerging economies is unlikely to continue at the same rapid pace or without occasional downturns. As economies become richer, they can rely less and less on the brute force of capital spending, coupled with a steady flow of cheap rural migrants, to fuel their expansion. They have a greater need of a skilled workforce and a modern financial system that is attuned to where the best returns might be found.

The shift will not be easy. The coming decade is therefore likely to prove harder for the emerging markets. China and others are entering the tricky middle-income stage of development in which the big advances from absorbing rich-world technology start to run out [Read more].

Samsung: The next big bet

Published on October 9, 2011 in Emerging Markets and Global Strategy. 0 Comments Tags: , , , , , .

The world’s biggest information-technology firm is diving into green technology and the health business. It should take care; its rivals should take notice.

In 2000 Samsung started making batteries for digital gadgets. Ten years later it sold more of them than any other company in the world. In 2001 it threw resources into flat-panel televisions. Within four years it was the market leader. In 2002 the firm bet heavily on “flash” memory. The technology it delivered made the iPhone and iPad a reality, and made Samsung Apple’s biggest supplier—and now its biggest hardware competitor.

The handsome payoffs from these ballsy bets made the South Korean company a colossus; last year its sales passed $135 billion. Now it is embarking on a similarly audacious plan to move away from electronics into technologies where it barely has a presence today. It intends to spend $20 billion over ten years on solar panels, light-emitting diodes (LEDs) used for lighting, electric-vehicle batteries, medical devices and biotech drugs.

These businesses shift Samsung away from easily substitutable gadgets towards more essential industrial goods (see table)—or from “infotainment” to “lifecare”, as the company puts it. Just as electronics defined swathes of the 20th century, the company believes green technology and health care will be central to the 21st [Read more].

Can Asia surive a global economic slowdown?

Published on August 25, 2011 in Emerging Markets. 0 Comments Tags: , , , , , .

Asian markets have been gripped by fears of a slowdown in the global economy.

Weak economic data from the US coupled with the ongoing debt crisis in Europe has raised concerns that growth in the world’s two largest economic zones might slow.

Fears have been fanned further after Morgan Stanley downgraded projections for global growth and said the US and Europe were “dangerously close to recession”.

There are concerns that an uncertain economic outlook will hurt consumer demand in developed countries and affect growth in the export-dependent Asian economies.

Some of Asia’s biggest economies, such as China and Japan, rely heavily on demand from the US and Europe to boost economic growth [Source].

The New Web of World Trade

Published on August 24, 2011 in Emerging Markets. 0 Comments Tags: , .

The Gulf economies of the Middle East are forming partnerships with other emerging markets, redefining the ancient trade routes that once linked East and West.

The rise of emerging markets in the global economy has sparked a great deal of discussion, particularly in the wake of the worldwide financial crisis. The implications are often framed in terms of the potential impact on the economies of the U.S. and Europe — for instance, business leaders discuss whether emerging nations’ consumers might be interested in purchasing American products, or whether European telecom operators can counter stagnation in their own markets by investing in new mobile networks in Asia.

But a closer look reveals a separate trend that could shift the economic focus away from the West. Emerging markets are building deep, well-traveled networks among themselves in a way that harks back to the original “silk road,” the network of trade routes between East Asia, the Middle East, and southern Europe, some dating to prehistoric times and others to the reign of Alexander the Great. Most of these routes were central to world commerce until about 1400 AD, when European ships began to dominate international trade [Source].

Google takes on Asia: New strategies in Asia’s diverse market

Published on June 14, 2011 in Emerging Markets, Global Strategy and International Business. 0 Comments Tags: , , , , , , , .

Daniel Alegre, Google’s President for Japan and Asia-Pacific, insists that his company is “locally relevant”, as it tries to appeal to the different tastes and internet capabilities of the hugely diverse Asian region.

It signals a shift in the centre of gravity of cyberspace, as Asia becomes the biggest and fastest growing region for the internet.

“Here in Asia… we have very strong competitors. And we thrive on that competition, because it forces us to be better and it forces them to be better and in the end, the internet benefits,” Daniel Alegre says.

The confidence is understandable. Given its global dominance and the new users that the Android operating system is drawing in, Google is still well positioned to challenge the Asian incumbents [Source].

Nokia plunges into emerging markets with Series 40 platform

Published on May 30, 2011 in Emerging Markets. 0 Comments Tags: , .

Mobile technology is spreading like wildfire in developing markets, and application developers often find themselves scrambling to keep up.

In Asia, mobile subscribers are growing at by 20 percent every year, and will total more than 3 billion by the end of this year.

Cue Nokia’s Series 40 Web App platform, the company’s bid to nail down emerging markets early in the game, while extending news, entertainment and information services to millions of new mobile users. Series 40 phones may look outmoded in Silicon Valley, but given their adoption in developing markets throughout Asia and Africa, they just might be the world’s most relevant handheld device. Nokia certainly thinks so [Source].

These markets in Asia, in particular, have embraced the platform’s functionality. Developers across the continent are using Nokia’s web tools to build diverse apps for the masses. Highlighting these success stories, Nokia has created a web video series featuring developers talking about how the Series 40 platform has extended their reach.

Women are the Next Global Emerging Market

Published on April 11, 2011 in Emerging Markets. 0 Comments Tags: , .

Here’s what works (and what doesn’t) when selling to this large, but surprisingly often ignored group of consumers.

Women’s economic power is truly revolutionary, representing the largest market opportunity in the world. Just look at the numbers: Women control 65 percent of global spending and more than 80 percent of U.S. spending. By 2014, the World Bank predicts that the global income of women will grow by more than $5 trillion.

Globally, women consumers control $20 trillion in consumer spending. They make the final decision for buying 91 percent of home purchases, 65 percent of the new cars, 80 percent of health care choices, and 66 percent of computers.

Women around the globe have more control over their life choices and path than ever before. In emerging markets, women are entering the workforce at lightning speed [Source].

For Hedge Fund Investors, Brazil Is the Country of Now

Published on April 1, 2011 in Emerging Markets and International Finance. 0 Comments Tags: , , , .

Ten years ago, Goldman Sachs proclaimed that Brazil was among the new economic powerhouses. Now it is the next frontier for hedge funds. Looking to capitalise on the fast-growing region, global hedge fund managers have started to descend on Brazil. In all, hedge fund assets devoted to the region rose 75 percent, to $21.4 billion, in 2010, according to data from Hedge Fund Research.

The appeal is obvious. While many developed countries have sputtered amid weak economic growth, Brazil has continued to thrive, given its rich reserve of natural resources and growing middle class. Last year, the country’s gross domestic product increased 7.5 percent — helping catapult Brazil ahead of Britain and France to become the fifth-largest economy in the world.

“In the past five years, about 34 million Brazilians entered the middle class,” said Oscar Decotelli, a partner at Vision Brazil Investments, a $2 billion alternative investment firm based in São Paulo. “This for a population of 200 million is significant. Brazil is not just a commodity story, but a very strong domestic story.” [Source]

The World Economy Shifts Eastward

Published on March 24, 2011 in Emerging Markets. 0 Comments Tags: .


Danny Quah, Professor Quah, an economist at the London School of Economics, has calculated “the average location of economic activity across geographies on Earth” through the last few decades, and found that it has been moving further east. Download the paper here.

[I]n 1980 the global economy’s centre of gravity was mid-Atlantic. By 2008, from the continuing rise of China and the rest of East Asia, that centre of gravity had drifted to a location east of Helsinki and Bucharest. Extrapolating growth in almost 700 locations across Earth, this article projects the world’s economic centre of gravity to locate by 2050 literally between India and China. Observed from Earth’s surface, that economic centre of gravity will shift from its 1980 location 9,300 km or 1.5 times the radius of the planet [Source].

Why diversification is back in fashion

Published on March 4, 2011 in Emerging Markets. 0 Comments Tags: , , , .

Over the past decade the world’s corporate pecking order has been disturbed by the arrival of a new breed of multinationals from the emerging world. These companies have not only taken on Western incumbents, snapped up Western companies and launched exciting new products. They have challenged some of the West’s most cherished notions of how companies ought to organise themselves: focusing on their core activities and buying ever more services from the market [Source].

Many emerging-market multinationals are focused companies that are admired in the West: the likes of India’s Infosys Technologies (for IT services), Brazil’s Embraer (aircraft) and South Africa’s MTN (mobile phones). But others are highly diversified. In some ways these groups look like throwbacks to old-fashioned Western conglomerates such as ITT. But in other ways they are sui generis: much more diversified and readier to blur the line between public and private [Source].

A growing number of them are proving that they can compete in global markets as well as in sometimes rigged local ones. The Boston Consulting Group lists the rise of diversified global conglomerates as one of five trends that will shape the future of business.

In the long run most of these emerging conglomerates are likely to follow the same path as Western companies: focusing on their core activities and buying ever more services from the market. But Western companies also need to recognise that—for the time being at least—these diversified giants have plenty to offer [Source].