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Keeping Track of Emerging Markets

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Beth Stackpole
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Global marketplace
Beth Stackpole   9/4/2012 7:10:32 AM
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No doubt the world has been transformed into a global marketplace and seeding technology in far away places is not just smart business, but likely essential today as you never know what country is going to be the next India or China. That said, I hope the NIs, Duponts, and others of the world continue to put the practice to work in our own country. While the U.S. is obviously not viewed as an "emerging market," there are huge pockets of folks who haven't been exposed to technology that could certainly benefit and potentially serve as future revenue generators if they had the change at success. That means not just providing the software tools to universities, but to K-12 schools, urban social programs, rural communities, etc. In many ways, they can be as shut off from technology as emerging countries.

mrdon
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Gold
Re: Global marketplace
mrdon   9/4/2012 4:45:55 PM
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Beth,

You are so right in your comments about the US and the educational initiatives needed to help our K-12 schools become more affluent in technology. While working at Chrysler several years ago, I ran an outreach program to help inner city kids become exposed to careers in Automotive Engineering. The program was called "Wonders of Automotive Engineering' with the hands-on exploration in Electrical-Electronics, CAD, Software and Mechanical Engineering disciplines. I created labs for the Elecrical-Electronics engineering sessions using the original LEGO Mindstorms RCX programmable brick and Radio Shack Electronics Lab kits. I also had the support of Chrysler Engineers and CAD Designers to teach classes in their chosen career fields. The program ran on six Saturdays and the results were overwhelming. These kids pursued engineering careers after graduating from high school with passion and dedication. The tools and technical resources used to illustrate engineering opportunities to these students are paying off because they are now in positions to buy technological tools for their company design projects. Thus, they have become future revenue generators.

Ann R. Thryft
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Re: Global marketplace
Ann R. Thryft   9/5/2012 12:12:45 PM
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Interesting that to so many commenters "emerging markets" is now a geographic term. It usually refers to countries with a rising middle class. But back in the day of early, "emerging" mobile computing/communication devices it usually meant various segments of the (mostly) US population who hadn't been exposed to the technology--at that time, mostly everyone. As Beth and mrdon point out, these segments still exist.

Charles Murray
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Re: Global marketplace
Charles Murray   9/5/2012 6:02:13 PM
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Well said, MrDon. I thought the same thing as I read this piece. The U.S. is far from being one big, monolithic country. There are pockets -- possibly whole states in the U.S. -- that could use an outreach program that empowers engineers and students.

Beth Stackpole
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Re: Global marketplace
Beth Stackpole   9/6/2012 7:06:07 AM
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@Mrdon: Wow, those programs sound really impressive. Coming from the Boston area which is so heavily entrenched in great universities and colleges, I know that programs like this are very prominent in higher education. Unfortunately, I haven't seen as much inflitration in the public K-12 schools. I like your example where the auto makers help develop and seed engineering and STEM-oriented programs in schools that not only promote the disciplines, but benefit those companies and industries by giving kids early exposure to possible career opportunities. Perhaps every industry should follow suit. In the Boston area, then, we should be seeing similar programs from the biomedical and pharmaceutical giants and from the technology industry. (I'm sure there are such programs, but let's see more of them.) Same goes in California, which might have a lot of alternative energy companies or areas where steel or manufacturing is big. Is should be the responsibility of every big company and industry.

mrdon
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Re: Global marketplace
mrdon   9/6/2012 4:07:56 PM
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Hi Beth,

Yes, this educational model has been very effective in exposing kids to engineering and science careers. The hands-on approach really helps them to see the  excitement and creativity these careers bring to companies and corporations solving real world problems. Students who obtain the entrepreneurial bug help fuel new industries and businesses that influence emerging markets. it's truly a win-win scenario for all involved in the economic creation process!

naperlou
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Different economic models
naperlou   9/4/2012 9:12:18 AM
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Rich, the technology companies based in the US have been major exporters for many years.  Even in the early 1990s companies like Oracle and IBM had at least half of their sales overseas.  The percentage is higher now.  This is generally a good thing.  I once did a project for a small manufacturer of Point of Sale (POS) systems in the US.  It was a very small company (less that 25 people).  They had just started expanding their exports and were internationalizing their firmware. 

What is interesting, though, is that the three countries that have the highest volume of exports, Germany, China and the US, have very different economic profiles.  In Germany, exports account for about a third of economic output.  These are high value products.  Consumption at home is also high and broadly spread.  In China, exports account of probably 20% of GDP.  These are mostly low value products.  Even products like the iPhone and others use components from many other countries with just the final assembly done in China.  At one time I saw a detailed analysis of a BlackBerry phone.  In the end, the assembly work done in China accounted for just 5% of the cost of the phone.  In the US, even with exports on a par with the other two, our exports are less than 10% of our GDP.  Most consumption is at home. 

As Beth says in her comment, it is a global marketplace.  I talked to a VP at a large technology company that had moved a good bit of its engineering to lower cost areas.  Over a fairly short period of time (the last decade) the differential in costs narrowed.  It went from 8x to 3x.  Considering the prodcutivity differences and management costs for distant groups, they have since brought most of that engineering back to the US.  So, as you mention in your article, there are ebbs and flows.  The original impetus for opening up our economy was to help less developed countries grow so that they could become markets for more advanced goods from the US.  There have been lots of bumps in the road to this goal, but I think we are getting there.  That is also good for stability.  So, it is right and good that our companies cement their influence in other countries.  That allows them to expand and hepls the US economy in the long run.

Rob Spiegel
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Re: Different economic models
Rob Spiegel   9/4/2012 11:47:38 AM
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Another way to track developments in emerging markets is to follow the large electronics distributors as they extend their warehouses across the globe. Avnet and Arrow have been pushing into Latin America, Eastern Europe, and the Mideast. Also, huge portions of both China and India are still emerging markets.

JimT@Future-Product-Innovations
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Re: Different economic models
JimT@Future-Product-Innovations   9/5/2012 1:00:39 PM
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Hey naperlou- your discussion of % of GNP as exports got me thinking, and I google'd the worldbank.org site.  The entire global economy is captured on this one page (% of GNP as export)  and the numbers you posted were pretty much right-on. 

http://data.worldbank.org/indicator/NE.EXP.GNFS.ZS

Interesting to see the pacific-rim countries are pretty consistently lopsided toward exports.  USA, take note.

Rob Spiegel
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Re: Different economic models
Rob Spiegel   9/5/2012 5:04:00 PM
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That's a fascinating chart, Jim. One of my favorite little stats is the one showing that the percentage of exports as a portion of GDP in Luxembourg is 165. That's quite impressive.

JimT@Future-Product-Innovations
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Re: Different economic models
JimT@Future-Product-Innovations   9/6/2012 12:39:01 PM
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Right, and further; Luxembourg has the historical highs running 165% -175% across the board.  But the champion was Singapore, running consistently above the 200% mark since the oldest 2007 data. Both very small countries, relatively speaking.  But I'm not really clear how they can document exporting 2x what they actually produce.  I think there's some "data-smithing" happening there I don't fully comprehend.

Rob Spiegel
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Re: Different economic models
Rob Spiegel   9/6/2012 2:29:17 PM
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Yes, it seems an extreme percentage, Jim. But who knows, maybe these countries have been able to seal in markets that buy large from a small country. This must do a lot for the country's economy and overall standard of living.

NadineJ
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Platinum
old thinking must stop
NadineJ   9/4/2012 5:41:44 PM
Discussions about emerging markets are almost always framed in old thinking- "how can the US and Europe sell more stuff to everyone else".  The biggest, and best IMHO, surprise for most with the emergence of the BRICS was that the model was flipped.  Brazil, Russia, India and China are developing designers and manufacturers with a local perspective.  These designs are booming within each market and being exported to the US and Europe for purchase.

The newest, quietest economically stable area is Eastern Europe.  Unlike Western Europe, they didn't start the century with billions of euros of debt.  They didn't have to climb out of a hole.  If grassroots politics is allowed to thrive, many countries in Africa, still rich in natural resources, could rise as future superpowers near the end of the century.

bobjengr
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Emerging Markets
bobjengr   9/5/2012 5:46:46 PM
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Excellent Post Richard.  OK, I suppose one is never too old to show his ignorance.  That's were I am right now.  I think anyone who can "divine" the next important market might be labeled a hero, certainly in line for a company bonus.   Can you define what matrices are used to determine an emerging market?  Exports, number of patents, number of university graduates, power stations, airline flights into and out of country, GDP, home-building,etc.  You get the picture.   While an employee at GE, Latin American Pole, we tried to predict what country would be the best recipient for our products.  We were pretty much right with Brazil but definitely missed the boat with Colombia.  Considerable resources were spent on marketing and sales only to lose the battle to MABE Mexico on developing outlets in Colombia.  Any discussion would be greatly appreciated. 

warren@fourward.com
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Emerging Markets
warren@fourward.com   9/5/2012 6:51:01 PM
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It won't be long before the U.S. becomes an emerging market the way our politicians have decimated the economy and the U.S. dollar.  We need a strong economy and have a strong dollar if we are to survive the world recession for three reasons.  1.  obviously a strong economy means massive US employment  2.  a strong dollar means we are not borrowing and printing our way to prosperity, which just doesn't work  3.  we need to show the rest of the world how to be successful.  We cannot discount how important our example is to the rest of the world. 

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