Welcome to class of Emerging Markets
byDr. Satyendra Singh
University of WinnipegCanada
Characteristics of EM• GNI per capita per year < $10,000• High birth rate• Undeveloped infra structure• Several languages/dialects• Close family ties• Less women in workforce• Cultural issues• 2/3rd of the world is either developing country
or emerging markets.
Common Traits of Big EM
• Physically large• Significant populations• Represent markets for a wide range of products• Strong rate/potential of/for growth• Undertaken programs of economic reform• Major political importance within their regions• Regional economic drivers• Engender neighbouring markets as they grow
Eastern European EM
Asian EM
Four-Tigers of Asia• South Korea, Taiwan, Hong Kong, SingaporeSouth Korea, Taiwan, Hong Kong, Singapore
• ↑ QOL deregulating their domestic economies and opening up to global markets
• Industrialization by assembling products from the U.S., Japan, and other developed countries. Learning is important
• They are now major world competitors.
Brazil• Japan one of the largest trading partner• World’s sixth-largest weapons exporter• Steel and agricultural compete Canada• Embraer (Brazilian aircraft manufacturer)
competes with Canada’s Bombardier. • Ships cars, trucks, and buses to EM annually• Volkswagen produced 3 million VW Beetles.• Auto makers invested $3b in Mercosur
– 200m population– Argentina, Brazil, Paraguay, Uruguay, Venezuela– 5 full member, 5 associate, 2 observer (NZ/Mexico)– Common market
India…
• Improving the investment climate
• Reforming agriculture, food processing, and small-scale industry
• Eliminating red tape
• Instituting better corporate governance
India…
• Privatizing state-owned companies as opposed to merely selling shares in them.
• Strategic investors can have 51% mgmt control
• Deregulating telecom sector’s
• Demolishing monopolies of state-owned companies.
India
• Maintaining the momentum to reform the – petroleum sector– long-distance phone services– housing– real estate– retail sectors to foreign direct investment
China…• China’s dual economic system
– socialism and capitalism economic boom
• GNP 8-10% since 1970– This growth is possible for the next 10-15 years– If so, China’s GNP > USA
• This growth depends on China’s ability to– deregulate industry– import modern technology– privatize overstaffed– inefficient state-owned enterprises, and– continue to attract foreign investment
China…• It has 6 regions size, diversity, and political
organization different (6 regions vs single country).
• There is no one-growth strategy for China, each region:– is at a different stage economically– its own link to other regions and world– has its own investment patterns– is taxed differently– has substantial autonomy in how it is governed
• While each region is separate enough to be considered individually, each is linked at the top to the central government in Beijing
China’s 6 regions
China--Issue
• Corruption
• Human rights issues (working conditions…)
• Foreign exchange rate (controversial)
• Reform of legal system
Research shows that
• If per capita income/year > $5,000– people become more brand conscious– forego local brands; seek foreign brands
• At $10,000– they join the same income group elsewhere who
are exposed to the same global information sources.
– they join the “$10,000 Club” of consumers with homogeneous demands who share a common knowledge of products and brands.
• If >$10,000, they become global consumers