welcome to class of emerging markets by dr. satyendra singh university of winnipeg canada

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