A tectonic shift in the global markets
To say that the world economy has gone through tectonic shifts in the past decade is an understatement. The onset of the global financial crisis in 2008 and its resulting impact to the world economies, especially those of the developed world, needs no introduction. In the wake of the initial impact of the financial crisis and the subsequent recessions and ongoing sovereign budget and debt crises, businesses all over the world with an established client base in the OECD countries – ground zero of the financial crisis – are forced to re-evaluate their business models.
Below the apparent triggers of the financial crisis resulting in this “New Normal” uncertain business environment, however, a less publicized shift driven by demographics and the re-distribution of global economic activities is taking place, which will fundamentally alter the supply and demand dynamics in the world economies.
In developed countries a combination of debt overhang (both at the government and household levels), high energy costs and constrained resource supplies would virtually guarantee sub-par economic performance in years to come. Relatively speaking, emerging countries such as the BRIC (Brazil, Russia, India and China) countries, some of which are resource rich and most of which less burdened by heavy debt loads, will be a lot more resilient and enjoy much better economic performances.
Demographically, the greying of the population in developed countries will dictate that the demand dynamics will shift as the baby boomers slowly but steadily march towards retirement. Businesses which have their business models based upon younger consumers increasingly will need to look towards the developing countries where the demographics are more favourable and the population is becoming more affluent.
By the numbers
Chinese overseas travelers
- Total spend in 2012: US 100 billion
- Total oversea trips in 2012: 83 million
Internet users by language:
- English – 27%
- Chinese – 24%
- Spanish – 8%
- Japanese – 5%
- Portguese – 4%
Internet users by country (users, % pentration)
- China – 538 million, 40%
- USA – 245 million, 78%
- India – 137 million, 11%
- Japan – 101 million, 80%
- Brazil – 88 million, 46%
The rise of the middle class consumers in the BRIC and other emerging economies presents the opportunity of a generation for businesses all over the world.
Multilingual, multi-cultural markets – opportunities & challenges
The emergence of the BRIC economies and consumers has been nothing short of breathtaking in the past decade. A few statistics as highlighted below drive home the fundamental shifts taking place in the world economy.
- China is now the world’s second largest economy.
- China is now the number one importing country of Bordeaux wine.
- Russia has overtaken Saudi Arabia as the largest oil exporting country.
In short, the emergence of the BRIC middle class as a consumer segment represents what many executives of global Fortune 500 companies described as “the opportunity of a generation”. Therefore, it is a strategic imperative of the decision makers of any forward looking business to understand this underlying paradigm shift and position his/her company accordingly.
Along with the opportunities from these emerging markets, however, there is also a unique set of challenges which need to be overcome:
- Language - The use of English is neither dominant nor is there a high level of general proficiency in English among the population in these countries. This means, more than ever, that information needs to be provided to them in their native languages. If you want to attract these very affluent consumers your business must reach out to them in their own language.
- Communications – Product and service offerings need to be customized to better suit local tastes. More importantly, marketing messages need to be culturally relevant to be effective.
- Channels –Facebook, Twitter and Youtube are by far the dominant social media platforms in the world BUT they are not accessible in some countries (e.g. China), and there are other country specific social portals (e.g. Sina in China) which are thriving and are more effective channels for social media marketing.
- Operations – maintaining a presence in these markets requires dedicated resources, in-house or outsourced. Except for Fortune 500 companies which have in-house staff and can afford to establish in-country presence, companies with a smaller budget need to work with outsourced service providers and often have to deal with language and cultural barriers and differences in business practices and time zones.
Chichaku can provide your company or destination with solutions to all these challenges. We can change these challenges into huge opportunities for you.