Thursday, February 24, 2011

Big Emerging Markets and Opportunities

Big emerging markets are normally considered to be the BRIC nations and sometimes BRICK standing for Brazil, Russia, India, China and South Korea. They represent the nations of the world with large populations, some of which are transitioning from closed economies to open market economies. As they emerge it is hoped that they will embrace economic reforms, transparency and efficiency in their capital markets. This draws foreign investment and that increases the speed of advancement which hopefully leads to significant growth in GDP and more major economic reforms. According to the United States department of Commerce website: ( Exhibit 6 Exports, Imports and Trade Balance by country and area, Not Seasonally adjusted 2009- this is the rank order of the United State’s first 17 trading partners:

1. China

2. Canada

3. Mexico

4. Japan

5. Germany

6. United Kingdom

7. South Korea

8. France

9. Taiwan

10. Ireland

11. Venezuella

12. Italy

13. Malaysia

14. Saudi Arabia

15. India

16. Brazil

17. Thailand

Of these nations some adjustments are necessary to determine the 3 biggest emerging nations. China is an obvious choice with the world’s largest population. It recently replaced Canada as the number one trading partner of the USA. Its GDP is $7.926 trillion, the world second largest but it rates 100th in per capita GDP at $5,970 which when normalized is $3,259. In addition there are still major problems in doing business with China. Its form of government and its monetary strategy are two examples. According to the World Bank however, China’s reforms and growth have lifted “several hundred million” people from absolute poverty since the late 1970s. This accounts for 70% of the world wide poverty reduction in the last 20 years- quite an accomplishment. Another promising statistic is that women and girls are 99% literate. This is a statistic that is unique among developing nations.

South Korea would be the second choice according to this list with a population of 50,062,000 (24th in the world) and a GDP of $1,344 Trillion (13th). The per capital income is $27,692 nominally adjusted to $19,136. This country is the 13th largest exporter in the world and is the third largest exporter to China and Japan. Although it has a smaller population base, I have chosen South Korea because of its location and trading relationship with China which gives it a marked advantage for the future in export income.

The final choice is among Venezuela, India and Brazil. All three countries are republics. India represents the world’s second largest population at 1,176,411,00 with a GDP of 3.298 trillion (4th largest in the world). Per capita that comes to $2,930 (130th) but normalized it is $1,017. Venezuela represents the world’s 40th largest population with an estimated 26,814,843 people. The GDP is 359.210 billion (31st) and per capita $12,806 normalized to $11,388 in PPP. Finally, Brazil is the world’s fifth largest population with an estimated 192,272,890 people. Their GDP is $1,612,539 Trillion (9th) with a per capital income of $10,455 adjusted to $7,737.

Although Brazil currently represents a far greater per capita buying power, I will choose India as my third major emerging market because of its huge internal potential market and the strong annual growth of GDP.

With its huge population and need to feed its population India needs potash as a form of fertilizer for its fields and crops. Unlike many of the emerging nations, India has no natural reserves of potash and has significant problems with producing sufficient food to feed its population. Potash does not represent any sort of cultural taboo as it is not animal based and enhances life. As a commodity item, it is not the most amenable to branding but excellent results in marketing with an educational component to standardize farming practices could make a big difference while making a sound profit. Hershey, the chocolate company has made great strides in Vietnam by introducing chocolate as a cash crop and educating the farmers in best practices. A similar model, at an earlier stage of development would work well for potash sales in India. According to the World Bank statistics, starting a business can be accomplished in 30 days. The issue of infrastructure must be considered a problem in the delivery of potash to rural locations but it can be delivered by the ubiquitous ox cart and the price of potash would make it available to the farmers that own them.

The South Koreans are high of the collective and social connection aspect described by Hofstede’s cultural dimensions (Catorea, p106). They are also more advanced in the use of social networking than many North Americans are. There is a real need to adapt to their improved marketing methods and models of doing business so that Facebook can make the leap from the number 4 provider. I learned a lot from the following PowerPoint presentation: Korea has a huge youth population that has embraced the social networking idea.
For China I have chosen to market a waterless compostable toilet. The state of infrastructure in China leads me to believe that this is a great idea. In North America we are faced with replacing outdated sewage systems which contribute to pollution of our land and waterways. Neither the North American model nor the current Chinese model for handling human sewage is sustainable. China has few roads, let alone sewage systems and electrical power is not always available in rural areas either. China is embarking on collective transportation such as bullet trains rather than facilitating the individualistic modes of transportation. The toilets are manufactured by Envirolet and were recognized as one of the products that just might save the world by Business Week magazine. “….statistics of sanitation. Some 2.6 billion people do not have sanitation, which is just stunning, and gets no political attention … Four in ten people are without proper sanitation. I couldn't believe people have absolutely no sanitation. For them, sanitation is the nearest bush or roadside” (George, 2009). This state of affairs leads to the death of millions of children and the transmission of disease that has huge societal costs.

In Chinese society human feces are often used as fertilizer and there are many health risks associated with this practice. These units provide a healthier way to first world sanitization with the added bonus of useable healthier composted fertilizer. “The readers of the “British Medical Journal,” who are qualified medical professionals, voted the toilet as the biggest medical advance of the last 200 years, over penicillin and the Pill”. With no electrical or water hook up required this can bring a higher standard of health and living to rural populations. If entire cities could be built in rural areas without the need for sewers, a huge burden would be lifted from government resources. The toilets weigh approximately 105 lbs and they come in a single box. According to the World Bank chart included in Appendix one only 69% of urban dwellers have improved sanitation facilities. This leaves a huge market throughout China.


There are huge opportunities in the Big Emerging Markets for those who are willing to understand the cultures, the statistics and the business models that are adaptable to those societies. It would be important for anyone seeking to do business in one of these nations to form partnerships with trustworthy nationals to facilitate acceptance and proper marketing techniques. The recommendations in this paper are based on the level of development of each society, the perceived needs and an understanding of the Department of Commerce and World Bank statistics.

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