The new BRIC consumer – are you ready to reach them?

There has been a lot of talk recently about the emergence of the new emerging middle class consumer, their substantial and increasing buying power and the explosion in the number of new internet and mobile phone subscribers from each of the four BRIC countries (Brazil, Russia, India and China). McKinsey have published a number of very interesting articles on this subject, and there is plenty of chatter on the internet and in the mainstream media about this new army of cashed up, aspirational shoppers.

Amongst the constant stream of mind boggling statistics, numbers and charts, here a few highlights worth dwelling on:

• There are more cars sold in China today than in America. Experts predict that there will be 50 million cars sold every year in China by 2030!!
• In India, over 240 million people will enter the workforce in the next 20 years, and over 24 million people (a number greater than the total population of Australia) will become “affluent” (ie those earning more than 1 million rupees per annum, the top 2% of the Indian population)
• Retail sales in Moscow now exceed Paris and London
• In Brazil, 32 million people have moved into the “middle” and “high” income bracket in the last 5 years, a figure that is expected to double in the next 5 years
• China and India together already have 500 million Internet users, and a further 700 million more will be added by 2015, generating revenues of more than $80 billion in Internet commerce.

An army of 2 billion middle class consumers have now emerged from the BRIC (and other emerging) countries, are currently spending US$6.9 trillion per annum and, according to McKinsey, this figure will rise to US$20 trillion in the next decade, a figure which represents about double the current consumption of the USA!

One particularly interesting development is the explosion in the number of mobile phone subscribers (which is a lower cost and therefore more accessible item, and is expected to rise to roughly 140 phones per 100 people even in very low per capita GDP countries) which is causing market players in media, telecommunications, consumer products and financial services to completely re-think their traditional business models. For example, mobile banking holds much greater potential than internet banking, with a high likelihood that it will leapfrog online financial activity in emerging markets. And value-add services, ranging from personalised weather reports to product and price information on-demand, are rapidly changing the way in which consumers source, compare, assess, reject and buy many different products via their mobile phones.

The good news for new market entrants is that all players in the BRIC countries (big and small) are having to develop an entirely new approach to serving the new emerging consumer, which levels the playing field and creates new opportunities for smart, innovative, savvy and brave new entrants who are willing to jump in and swim with the bigger fish! It means that the major brands of yesterday may not be the successful brands of tomorrow. Nobody is safe!

So what does this all mean for us in Australia? Is this an opportunity or a threat? Do we have a chance to compete with major brands from the US and Europe? And do we have the appetite for this?

Here are some of my thoughts:

• All Australian companies (big and small) need to develop a strategy to engage with these new emerging countries – you can’t sit back and allow this once-in-a-generation opportunity pass by without at least giving some thought as to how it could affect your business – as an opportunity or a threat (don’t forget that Chinese and Indian companies also have a vision to go global – and Australia is a country that interests them greatly!)
• Opportunities exist across the board for Australian companies, particularly in some of our more progressive and innovative industries (e.g. technology, design, high value manufacturing, cleantech, environmental protection etc.) and also some of our more traditional areas (eg education, tourism, finance and professional services). To remain relevant, we have to start participating now.
• Do your research. How could your business or ideas thrive in an emerging country like China (a country on our doorstep with whom we have enjoyed close ties and strong relationships for over 35 years) whose economy has grown by over 8.5% per annum for the last 30 years and, by the year 2025 or earlier, will overtake the US to become the largest economy in the world? Is there something that you do, or offer, or sell which would appeal to a small segment of a country with over 1.3 billion people? If so, start now to immerse yourself in the opportunity. Don’t let the grass grow under you!

You must start familiarising yourself with all of these countries now. Read a book, take a holiday, search the internet, join a delegation and saturate yourself in everything you can find about these new economic power-houses! Imagine living in the United States in the 1930s and witnessing all of the technological and economic advances that took place over the next 50 years. You now have the chance to do that all over again in China, India, Russia or Brazil. Get started now!