10
Jan

Mammon’s new monarchs

Written on January 10, 2013 by Ángeles Figueroa-Alcorta in Asia, Culture & Society, Foreign Policy, Globalization & International Trade

The emerging-world consumer is king

Intelligence agencies seldom take a sunny view of the world. Yet the latest report from America’s National Intelligence Council (“Global Trends 2030: Alternative Worlds”) is rather cheerful. The council frets about threats ranging from cyber-sabotage to nuclear holocaust (in a brilliant piece of understatement it warns that “Russia could become a very troublesome country”). But it argues that the most important trend in the coming decades will be the growth of the global middle class.

Britain, where the industrial revolution began, took 150 years to double its income per head. America took 30. China and India have pulled off the same feat in a fraction of the time and on a larger scale. The result is an explosion in the number of people who can afford middle-class luxuries, such as a nice home and a good start for their children.

The council is not alone in thinking that, despite the threat of bubbles and hard landings, the new middle class is the future. The Boston Consulting Group (BCG) predicts that there will be nearly a billion middle-class Chinese and Indians—some 320m households—by 2020. McKinsey & Co, another consultancy, points out that consumption tends to follow an “S” curve. When people’s income hits a certain point, demand for consumer goods surges. It later levels off: a family’s first fridge is a colossal blessing, but two would make the kitchen seem crowded.

Western companies ask: how can we appeal to the new kings and queens of consumerism? And how can we compete with sharp-elbowed rivals from the emerging world? Dozens of books and articles have tried to grapple with these questions. Two stand out: “The $10 Trillion Prize” by Michael Silverstein and three colleagues at BCG and “What Chinese Want” by Tom Doctoroff, of J. Walter Thompson, a marketing company. Read more…

As published in www.economist.com on January 5, 2013.

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