Trend watching—the growing power of emerging markets
"Now that virtually the entire world has joined the consumer arena, prepare for an avalanche of new brands, entrepreneurs and innovations from ‘emerging’ markets that will have global potential and appeal. From aggressive Chinese brands to Turkish creatives to Brazilian apparel, we're seeing a sharp increase in world-class companies that can and will compete for consumers’ Dollars, Reais, Euros, Pounds, Rupees, Rands, or Liras.
Sure, the expansion of global markets creates new opportunities for existing well-known brands, but the real story of the rise of these new powerhouses is the new brands that are making waves, both within their domestic markets, but increasingly outside these, competing and even beating the established, entrenched incumbents at their own game. One thing's for certain – the range of brands that consumers covet will be even more diverse in twenty, ten or even five years.
• Both consumers and brands in emerging markets are rapidly getting wealthier, more sophisticated, more mobile, and more educated. Side effect: an abundance of confidence, enthusiasm, creativity, and entrepreneurialism.
• Many emerging markets (minus China) have younger populations, and will not be confronted with ageing populations for a long time to come, meaning an endless source of young entrepreneurs as well.
• Brands from emerging markets are well positioned to cater to other booming emerging markets, while they may be perceived around the world as less arrogant, too. On top of that, they are less hindered by too many legacy systems and thinking.
• Emerging markets will soon boast the biggest markets for everything, from cars and beers, to detergents and mobile internet: not a bad environment for innovation to take root
Some obligatory numbers and stats
• Developing economies "have accounted for nearly 70 percent of world growth over the past five years". (Source: Carnegie, 2010.)
• The GDP of Emerging and Developing Economies accounted for 20% of world GDP in 2000, 34% in 2010, and an estimated 39% by 2015. (Source: IMF, 2010.)
• The global emerging middle class now stands at two billion people who spend USD 6.9 trillion a year, a figure which is expected to rise to USD 20 trillion - twice current US consumption - by 2020. (Source: McKinsey, July 2010.)
• Developing countries will account for two thirds of world trade in 2050. (Source: Carnegie, 2010.)
• The GDP of emerging markets will grow to be about 1.3 times the size of advanced economies in 2050. China will be approximately twice the size of the United States in purchasing power parity (PPP) terms. (Source: Carnegie, 2010.)
• India now has more rich households than poor, with 46.7 million high income households as compared to 41 million in the low income category. 62 per cent of Indian households belong to the middle class (Source: National Council of Applied Economic Research, August 2010.)
• 700 million people will start using the Internet in Asia in the next 5 years (Source: McKinsey; September 2010)"