Tag Archives: emerging markets

02.07.2013 | Do Brazilians or Russians Work Shorter Hours?

Brazil or Russia?

Who tends to work shorter hours?
Who takes longer lunch hours?
Who watches more TV?
Who is more likely to sleep 8 hours or more each night?

Brazil was the correct answer to every question.

My source of data was a Jana emerging markets survey. Gathering information during 2011 and 2012 from 11,687 respondents, their goal was to demonstrate how different cultures define “The Good Life.”

For me, though, the information illustrated just how much developing economies differ. Far from “one-size-fits-all,” the world economy has cultures that work harder and those that lunch more. In some places, 4 hours are an average night of sleep while elsewhere 8 are more typical. Also, where you vacation and how often you watch TV vary. It all depends on what you call home.

I wonder how much the information in Jana’s infographics (below) correspond to these World Bank growth projections for the developing world. Compared to the higher income nations, you can see that emerging markets could be fueling the world economy during the next several years. But might our specific data provide clues about which nations will lead?

Sources and Resources: I suggest looking at more of the Jana infographics here and here. For a more academic perspective, the World Bank report has the details and was the source of my growth table.

Posted by: adminEcon
Tags: Brazil, businesses, consumers, developing nations, emerging markets, India, Jana, lunch hour, night's sleep, Philippines, Russia, TV watching, vacation trips, work hours
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11.16.2012 | Pooches and Prosperity

Chloe and Gus, my daughter’s miniature Pomeranians, consume organic dog food and use wee-wee pads, they visit the vet, the groomer, and enjoy their treats and toys. Because of Chloe and Gus, my cats, and the dogs in 1 out of every 4 households in the US, we have a growing pet industry.

I started listing the discretionary spending that supports Chloe and Gus after reading about the Euromonitor Dog Index for 53 countries. Here are some facts that connect pooch spending to prosperity:

Averaging one dog in every 4 households, the US has the world’s largest pooch population. But Norway does the most per capita pup spending at $639 while Switzerland and Australia ranked 2 and 3.

In the developing world, Brazil, with a more affluent urban population, has the most small dogs per capita. But the biggest proportional increase in dog ownership was led by India, and then the Philippines, Venezuela, Russia, and Argentina. Still though, while dog ownership in India rose 58% during the past 5 years, they have only 4 dogs per thousand people. By contrast, dog ownership in the Middle-East is much less popular. In Saudi Arabia and Egypt, with only 2 dogs for every thousand people, dog ownership is rare and typically relates to big dogs and security.

Finally, the financial woes in the euro-zone appear to have affected dog ownership. France, with a sagging economy and Greece, on the brink of economic cataclysm, have fewer dogs than 5 years ago.

Our bottom line: Chloe and Gus are much more than family dogs. Dog ownership can be an indicator of a country’s economic growth and decline.

Sources and Resources: My facts on dogs are primarily from the Atlantic article and from a marketplace.org report. You might also enjoy this Bloomberg article on a NJ legislative proposal for mandating doggy seat belts and Governor Christie’s response. Finally, these econlife links look at aspirational purchases in the developing world.

This chart is from the Atlantic article cited above.

Please note that this post’s conclusion was edited after it appeared.

Posted by: adminEcon
Tags: Brazil, developed nations, developing nations, Dog population, dogs per household, economic growth, emerging markets, euro zone, Euromonitor, France, Greece, large dogs, pet food industry, pomeranians, small dogs, urbanization
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11.08.2012 | Beer Economics

In China, 1/2 liter of beer costs 9 minutes of work.

To calculate how many minutes of work it takes to buy beer in 150 countries, Swiss bank UBS researchers divided the median wage in that country by the price of 1/2 liter from a retailer. Their results? Beer drinking is most costly for workers in India (55 min.), Philippines (48 min.), Colombia (47 min.) and Nigeria (29 min.). At the other end of the list is the US (5 min.), Czech Republic (7 min.), Germany (8 min.), the Netherlands (9 min), and China (9 min.)

The UBS report reminded me that national beer consumption relates to affluence. According to the American Association of Wine Economists (yes, really) the connection between beer and per capita income is an upside down “U.” As individual incomes increase up to $22,000, so too does beer consumption. Then though, when wine and spirits become affordable, people move from beer to pricier liquor. Currently, nations with emerging markets represent two-thirds of the world’s beer consumption. (The ascent of China’s beer drinking curve in the graph below is striking.)

So, when anyone mentions beer, we can think about of purchasing power, economic growth and demand from the developing world.

A Final Fact: Beer has also been in the news as a source of government revenue. President Hollande just said France’s beer tax will rise by 160% to fund programs for young people and the elderly. Meanwhile, 2 years ago, after Russia spiked its beer tax by 200%, beer purchases declined.

Sources and Resources: This BBC article on the impact of the impending French beer tax was a good read as was the Economist’s details on the UBS beer cost study. More academic, the AAWE paper was the source of my beer drinking information about developing nations. Please note that all information from UBS and The Economist is current while data and the graph from the AAWE is from 2010 and before.

World Beer Consumption, 1961-2007

Posted by: adminEcon
Tags: American Association of Wine Economists, beer consumption, beer taxes, China, developing nations, economic growth, emerging markets, France, India, per capita income, purchasing power, Russia, The Economist, UBS, US
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10.07.2012 | India’s Car Horns

Standing near a busy intersection in Calcutta, you would hear a horn honk every 3 seconds. Or, as one Audi India executive explained, “With the amount of honking in Mumbai, we do on a daily basis what an average German does on an annual basis.”

As a result, Audi equips the cars it sells in India with louder and more resilient horns than those destined for Europe. And, to be sure that their horns measure up, they even test them with 2 weeks of steady honking. (A European horn would not survive the ordeal.)

In addition, because Audi India’s high-end clientele tend to have drivers, they need to make their back seats more appealing. As a result, the rear of the car provides more comfort, more entertainment, and more control.

Where does this take us?

To multinational assimilation in a foreign market and our conclusion to a post on Chinese Oreos:

“Being a trading nation is about more than shipping products abroad. At first it was the 18th century New England merchants who facilitated trade from home. During the 19th century, businesses like I. M. Singer & Co. (sewing machines) secured foreign patents, sold exclusive selling rights to representatives abroad and established foreign manufacturing facilities. Then, the next step was the foreign subsidiary through which the multinational firm increasingly took on the identity of its home away from home.”

Sources and Resources: Thanks to marginalrevolution.com for introducing me to Audi-India’s horns and to the Detroit News and the Globe and Mail for more detail. And finally, you might want to compare our recent post on Nissan eyeing the low-end of emerging markets like India’s with Audi’s high-end strategy.

Posted by: adminEcon
Tags: Audi, Calcutta traffic, car horns, Chinese Oreos, competition, emerging markets, global trade, high end autos, India, Mumbai traffic, product assimilation
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08.01.2012 | Coach and the Chinese Consumer

Reporting their 4th quarter earnings yesterday, Coach, the handbag and accessories retailer, disappointed investors when they said that US department store and factory outlet sales had slowed. They did report, though, that sales of their handbags and accessories were up by 60% in China.

Like 2 halves of a whole picture, Coach’s marketing plan for China and the description of the new Chinese consumer ideally fit together. Coach is targeting a Chinese urban consumer who is increasingly affluent and aspirational–precisely what a McKinsey Report on the 2020 Chinese consumer projects.

Here are some of McKinsey’s numbers:

Chinese Urban Households: Disposable Income/Proportion of Urban Population

Household Type: Annual disposable income	2010 (total of 226 million households)	2020* (total of 328 million households)
Affluent (More than $34,000)	2%	6%
Mainstream ($16,000 to $34,000)	6%	51%
Value ($6,000 to $16,000)	82%	36%
Poor (Less than $6000)	10%	7%

*estimated

Coach says that it will have 125 locations in China by the end of FY2013, that sales in China will be up by 33% to $400 million, and that “tier 2 and tier 3″ cities were exceeding their expectations. Meanwhile, McKinsey says that Chinese consumers will be more affluent, more urban, more mobile, more educated, aspirational and older at each stage of life.

With US economic growth “muted” and China’s annual growth rate predicted to be close to 8%, doesn’t it make sense that US multinationals ranging from Starbucks, the Gap and J. Crew to Coach all have China as a part of their competitive strategy?

To compare an analysis of the Chinese consumer and Coach’s business plans, you can read McKinsey’s “Meet the 2020 Chinese Consumer” here and read the transcript of the Coach 4Q 2012 investor call here. Also, this article from Reuters on the Chinese consumer was enlightening.

Posted by: adminEcon
Tags: "Meet the 2020 Chinese Consumer", BRICs, Chinese consumers, Coach handbags and accessories, Dunkin' Donuts, economic growth, emerging markets, GDP, globalization, McKinsey report, multinationals, Starbucks, the Gap, US recession
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