As the recession has dragged on, discussions about the UK economy have become more and more inward-looking. Whereas policy makers once embraced the opportunities presented by the global economy, talk today is peppered with concerns about the challenges facing nations around the world – and the threats these pose to domestic growth.
However, according to new research by Boston Consulting Group (BCG), western economies cannot afford to batten down the hatches. It claims that the west risks squandering up to $10 trillion a year if countries and companies fail to develop enduring commercial ties with the newly affluent consumers of China and India.
In a new book, which incorporates data from BCG’s global survey of 24,000 consumers, the consulting firm calculates that Chinese and Indian consumers are expected to spend $64 trillion on goods and services between 2010 and 2020, creating a new wave of growth in the global economy. “By 2020, these consumers will be spending a total of nearly $10 trillion annually, three times the amount they spent in 2010,” it says in The $10 Trillion Prize.
This idea of eastern promise is not a new one, of course, but the research should be a wake-up call for marketers who have neglected their global strategies of late. It implies that in a short space of time, there will be a huge shift in consumer power from west to east as the Chinese and Indian middle classes rapidly grow. In India, for example, the proportion of middle class people is expected to grow from 28 per cent in 2010 to 45 per cent in 2020.
Plenty of brands are already firmly ensconced in these economies: the book praises companies like Kraft, Yum! Brands, Pepsi, Gucci, LVMH, BMW and Pernod Ricard for their strategies in China and India. But these are all huge corporations with considerable marketing budgets to draw upon. Brands of all shapes and sizes must also wise up to consumer trends in the world’s emerging economies if they are to avoid being left behind.
That means getting to know the Chinese and Indian people, their particular needs and how and why these are changing. Indeed The $10 Trillion Prize could be seen as a successor to Jugaad Innovation, another business book from earlier this year that calls on western businesses to adopt the eastern values of speed, frugality and flexibility in order to meet new consumer needs.