Keeping Track of Emerging Markets

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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.

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

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.

Rob Spiegel
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Re: Different economic models
Rob Spiegel   9/4/2012 11:47:38 AM
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.

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Different economic models
naperlou   9/4/2012 9:12:18 AM
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.

Beth Stackpole
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Global marketplace
Beth Stackpole   9/4/2012 7:10:32 AM
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.

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