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9 Cards in this Set

  • Front
  • Back

Developing Countries

BRICS - thought to be leading economies in 2050 (Brazil, Russia, India, China, South Africa)




MINT - also identified as emerging economic giants (Mexico, Indonesia, Nigeria, Turkey)




N11 - next 11 largish economies (Bangladesh, Egypt, Indonesia, Iran, Mexico, Nigeria, Pakistan, the Philippines, South Korea, Turkey, Vietnam)




CIVETS - large and stable (Columbia, Indonesia, Vietnam, Egypt, Turkey, South Africa




Large number of countries which are growing - began to see trade in these developing economies outstripping trade in traditionally big economies - previously the West got more aggressive at taking raw materials from around the world but carried on producing/exporting - recent globalisation about more and more countries having access to manufacturing (low cost labour, availability of raw materials)




Emerging markets remain the world's growth engines - between 2010-2020 over 2/3 the anticipated growth in consumer spending ($11 trillion) will originate in emerging markets

Trade Tipping Point

In 2013 the GDP of emerging markets exceeded advanced markets for the first time (in Purchasing Power Parity terms)




2:1 rule - if world trade keeps growing, GDP keeps growing




The binary view of the world economy is outdated - not so clear cut between developed/undeveloped - Colombia/Poland have little/less in common with other so-called emerging countries e.g. Bangladesh/Kenya than they do with Germany/US




Companies need to move beyond old labels and find new ways to set market priorities




Rebalancing of economy with less trade & intratrade in Asia around silk road




Traditionally made in China and shipped to USA - 2 year cycle - needs to be shortened for companies e.g. Nike to be successful and meet a society of instant gratification e.g. Burberry now allowing you to buy from catwalk




Setting up supply lines a year ahead is wasteful - have to estimate what consumers will buy - Zara make more locally and respond faster - cost of manufacturing in China become more expensive so people re-thinking supply chains

World Economic Forum Predictions for the Modern World

All products will have become services - products and services becoming more and more intertwined




There is a global price on carbon - polluters will have to pay to emit carbon dioxide - although Trump changing American equation




US dominance is over - we have a handful of global powers e.g. India/China




The values that built the west will have been tested to breaking point - questioning of America's uncompromising pushing of values out to the world

10 Global Macro Trends for the Next 5 Years

An uncertain future - currency volatility (pound,euro,dollar,yen etc)




Emerging middle classes




Disaffected youth - terrorism/political problems stemming from a big group of under 30 with no jobs




Rich/poor divide




Climate challenge - only since 1970 US companies have begun to clean up after themselves




Ageing world - improvements in medicine & 1960s effective contraception = sex more recreational than procreational




Urban transition - we move into cities and birth rates decline - expensive and no need for large families to run farms




People on the move - internal migration in China/other parts - from south to north




A more connected world




China goes global - silk road plans that are moving very fast



PWC Megatrends

Implications can be very short-term, even if a mega-trend:




Demographic and social change




Shift in global economic power




Rapid urbanisation




Climate change and resource scarcity




Technological breakthrough

Customers

Urbanisation




Over 50% world's population live in cities - expected to reach 70% by 2050 - cities undergoing unprecedented change and urbanism is one of the most crucial issues of our time




Urbanisation written into current 5 year plan of China to help grow GDP - raise urbanisation from 50 to 60 as fast as possible - big implications for transport/climate/waste disposal etc.




Shifting Demographics




Number of working-age Chinese shrank by 3.45m last year - big turning point - workforce is declining




More older people in China than whole population of Japan - China has to get very rich very fast before it gets old - lacks saving to pay for medical/retirement issues - if you need cheap labour then Vietnam/Nigeria etc. more into focus - China now biggest user of robots in world - maintaining capacity through replacing labour with robotics




Reducing poverty




1 billion people have been taken out of poverty since 1990 - the great success of globalisation




More and more people going from poverty to middle-class - especially in Asia - by 2020 middle class in Asia will be 1.7 billion:




- much younger


- decide the value of our products


- decide whether everyone in the supply chain gets a fair living


- the price they pay decides whether the environmental issues can be managed


- opinions they hold about the planet will be more enduring than legislation


- they know how to be heard




Growth




India growing substantially, China plateauing, USA continuing to grow, places like Pakistan/Nigeria also growing quickly




Total population rising as we live longer

Emerging

Emerging brands from all over are catering to emerging middle classes from all over




Traditionally emerging companies exported to west - markets now saturated - Chinese/Brazilian brands selling to the middle classes in Turkey/India




Not just individual country culture - wanting to by-pass some elements of Western capitalism, banking and democratic 'arrogance'




Many newly empowered consumers see rampant materialism as unsatisfactory/selfish when society remains rife with insecurity/inequality




E.g. Amazonas Sandals - Brazilian flip flops in China




E.g. Lenovo - purely Asian smartphone strategy




E.g. BluePad - low cost Colombian tablet available throughout Latin America

Cultural Commerce

Asian consumers never had higher expectations - brands across Asia producing ever more best in class offerings - thirst for offerings tailored to their needs by regional brands who really understand them - set to grow spectacularly




Innovation in Asia, by Asia, set for rapid growth




E.g. LG - India's most trusted consumer durable brand - pursued a dedicated micro-localisation strategy since 2010 - better at identifying local needs than western brands




Eg. Tsingtao - 'made for Chengdu' adaptation - adapted its beer bottle for Chengdu consumers - larger allowing for beer to be poured into small cups and shared with food, mimicking the traditional way baijiu is communally drunk

Time Zone Trading

The end of automatically sourcing from Asia, or just for low cost




Total re-think of world trade/locations e.g. supply chain




E.g. Amazon investing in psychological analysis to anticipate demand - revolutionising distribution




E.g. Zara - majority made in Spain or just outside Spain - shorter lead time - flexibility based on demand