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Building a new, globalized world ‘“ BRIC(k) by BRIC(k)’¦

Thu, Dec 11, 2008

Offshoring

So, still need a bit more convincing about this whole globalization idea? Think perhaps it’s still one of those things that’s only happening ‘over there’? (wherever ‘there’ is)

Well, think again’¦

‘Globalization and the Internet are ushering in ‘seismic change’ to the competitive landscape’, says management guru Ram Charan.

In 2003, Goldman Sachs coined the term BRIC for the emerging economies in four countries – Brazil, Russia, India, & China. In their research paper ‘Dreaming with BRICs: The Path to 2050’, Goldman talks about the role of BRIC countries in global economy. ‘By 2050, the combined economies of the BRIC countries could be larger than that of the countries that make up today’s G6,’ says Nelson Cunningham, Managing Partner, Kissinger McLarty Associates. ‘This would create a new G6, comprising Japan, the US and the BRICs, and excluding the UK, Germany, France and Italy.’

According to BBC, the BRIC countries have a total of 2.7 billion people, roughly half the world’s population. Going global has become an economic necessity for all companies irrespective of their size, states InfoCore. It says BRIC nations hold immense opportunities primarily characterized by its growing middle class, which constitutes 50-60% of the total population.

BusinessWeek’s 24th July issue carries the cover story Emerging Giants, with the caption

‘The New Multinationals ‘“ they’re smart and hungry and they want your customers. Be afraid. Be very afraid.’
The story talks about the entry of new multinationals – Brazil, China, India, Russia, and even Egypt and South Africa – in the US market all set to shake up the industries from farm equipment to telecom services. The most striking feature of these multinationals is their survival and success in brutally competitive domestic markets before they looked at other markets of the world. The 100 emerging multinationals identified by Boston Consulting Group expected to transform the world markets, have a combined revenue of $715 billion, operating profits of $145 billion and ½ trillion dollars in assets.

In a recent survey by PricewaterhouseCoopers, of over 1400 CEOs worldwide on their views of the emerging economies, China led as the most likely place of business for 74% of the CEOs. India was the next location of choice, followed by Russia, and then Brazil.

Industry leadership of China & India
As per Pata, credit card usage in India is growing at 35% annually. Personal consumption in India accounts for 67% of GDP, compared to 42% for China. India’s middle class, the size of US population, is 300 million.

According to McKinsey, China dominates the consumer electronics industry, 10 years ahead of India. India is 10 or 15 years ahead of China in IT & business process outsourcing. The auto industry in the two countries is equally interesting ‘“ India has developed innovative automobiles with local engineering talent whereas China’s auto industry has been built by foreign direct investment.

So, given ALL this interesting data, what might you be doing NOW to prepare for this increasingly globalized, smaller and smaller world of ours?

Yes, it’s likely rising star companies from these ‘BRIC’ countries (and many other places) are coming to your shores – what can small business owners do about it? Well, if ‘beating’ them outright seems unlikely, how about ‘joining’ them? Perhaps it’s a perfect time to team up with a rising company from BRIC-land – reach out to a few, well-researched prospects and propose that your company serve as their ‘local knowledge guru’ for them and negotiate some kind of co-op deal that makes sense for both organizations.

Or, hey – how about turning the tables? Maybe it’s time for your company to explore venturing into these inviting, consumer-friendly BRIC countries and grabbing a little piece of their collective consumer pie? Not realistic for all companies in all industries, of course, but more possible than you might think for a whole bunch of you out there.

Whatever game plan your organization ultimately chooses, it’s time to think hard, and think fast. Because it’s also time to take the threats – as well as the opportunities – of globalization seriously!

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