Latin America profiting from China's economic growth

"América Latina está demostrando una impresionante resistencia"

A provisional forecast by the World Bank of a 5% growth in 2010 for the region has been increased to 6% based upon increased activity in Brasil, Peru, Chile and Colombia - Brazil is leading the pack with 7% growth. Venezuela is the only country showing a contracting economy, despite high oil prices.

The majority of this growth is credited to China's enormous demand/need for raw materials. However, this huge growth could lead to overheating and inflation, while attention is drawn to the lack of investment in research and development, with the exception of Brasil, all Latin American countries currently invest less than 1% of GDP. Furthermore, with the exception ofMexico, Uruguay, Argentina and Chile, the regional governments do not have innovation as a national priority.

Shock, Horror! China experiences reduction in trade surplus

Yes, it really can happen. Imports have risen, coupled with a slight decrease in exports. Is this significant or just good timing? US congressional hearings take place next week on the topic of a possible undervalued yuan - how coincidental then that we see a reduction in exports......

http://news.yahoo.com/s/nm/20100910/bs_nm/us_chinas_trade

Growing reliance on BRIC economies: UK & China

Old Europe needs to get on board the BRIC express if it expects to remain competitive over the coming years. Growing GDP's, growth in household income, growing middle class - a capitalists dream. So, is the UK, for example, ahead of the pack? Not really...

We hear it time and time again - "1.3 billion people - we need to do more business with China"!

While such a vast amount of potential consumers may exist in China, according to the BBC, http://www.bbc.co.uk/news/business-11152503, the UK still exports more to Ireland than it does to any of the BRIC economies.

This will certainly need to change over the coming years, and not only with China, but with the other BRIC countries.

Nissan to introduce new passenger car brand in China

Continuing the trend of major global brands launching a 'local' China-only brand (ie. Hermes, GM, et al), Nissan has announced that it plans to introduce a new passenger-car brand in the Chinese market with its local partner, Dongfeng, to help meet demand for cheaper models.


http://www.bloomberg.com/news/2010-09-08/nissan-to-create-new-passenger-car-brand-with-chinese-partner-dongfeng.html


“What Nissan is aiming for is to come up with a smaller and cheaper model without sacrificing their brand image,” said Koji Endo, an auto analyst at Advanced Research Japan in Tokyo. Demand for lower priced cars will grow faster than for more expensive models, he said."


Nissan follows in the foot steps of Honda, who was the first Japanese car maker to introduce a China only brand, Li Nian.


This news comes in the wake of the news that China is set to have 200 million vehicles on its roads by 2020. Did someone mention sustainability and protecting the environment?

Lipton Tea's innovative approach to brand development in China

A number of brands have been in the spotlight recently concerning their approach to engaging the Chinese consumer market. One brand which has is enjoying success in China is Lipton Tea, a Unilever brand.

The link below shows the company's innovative way of educating its brand managers across the region, courtesy of DDB Shanghai (Creative agency):

http://www.youtube.com/watch?v=VMw5wjNXtNQ&feature=player_embedded

Ambitious Zuma wants SA to be part of BRIC elite

South Africa winning the contest of hosting the FIFA 2010 World Cup was an amazing achievement for the country and its economic development. However, looking to have South Africa considered in the same context as the BRIC countries, as the article discusses,  is perhaps a step too far for the President.

http://news.yahoo.com/s/ap/20100826/ap_on_bi_ge/as_china_south_africa_zuma

An interesting note from the article:

"Some analysts expect the combined economies of Brazil, Russia, India and China to be larger than the Group of Seven developed economies that includes the U.S. within 25 years if not sooner, making them the dominant global force in everything from trade to finance." 

Lower-tiered cities driving growth in Chinese retail

While many retailers, especially luxury retailers, have focused on Tier 1 and 2 cities in China, such as Beijing and Shanghai, a recent study by Synovate shows that the purchasing power in the smaller and lower tiered cities is growing:


http://blogs.wsj.com/chinarealtime/2010/09/06/in-china-even-small-cities-spend-big/


“Tier 1 earnings are high but then so is the cost of living,” said Steve Garton, Synovate’s executive director. “Lower-tiered cities have a higher purchasing power.” 


The Chinese market is proving to be a gold mine for Luxury retailers, as the report suggests that Louis Vuitton has 17  "thriving" stores in tier 2 cities.


It will be interesting to see the growth in retail as the infrastructure in more cities is developed. A recent report by L2 Think Tank, suggests that the growth in retail e-commerce in China could result in some brands skipping building out physical stores, to focusing more on building out its online presence. 


Which platform will produce greater results?

Indian & Chinese prime picking for British Airways?

As BA/Iberia go on the hunt for airlines to acquire/merge with, it is highly speculated that many of the 'potential' airlines are from India and China. This would hint towards BA's plan for greater service within these markets, where air travel has increased dramatically - a result of economic growth.

http://www.bbc.co.uk/news/business-11196410

With such an established global brand, it will be interesting to see what the result of a acquisition or merger would look like in these markets. With recent reports showing western brands creating localised offerings (Hermes, GM, etc in China), would British Airways follow suit?

P&G to beef up sales in developing countries

An interesting article from last month in Brandchannel, discussing P&G's new focus on developing its business and product portfolio in developing markets, such as Brazil:

In Brazil, for example, a country in which people "take more showers, use more hair conditioner and brush their teeth more often" than consumers in other countries, P&G's products are a natural fit — yet the company has badly lagged behind competitors Colgate and Unilever. P&G's strategy there is to introduce new products in several categories simultaneously, leveraging its promotional dollars by doing joint marketing campaigns. It's a different way of doing business for P&G — usually, it markets each brand separately."


http://www.brandchannel.com/home/post/2010/08/19/Procter-Gamble-Sets-Global-Strategy.aspx#continue


Although somewhat late in their recognition to focus on developing markets such as Brazil, P&G won't be the only one allocating greater resources to the BRIC's. I am curious to see the innovation which originates in these markets where consumer demands for new products will no doubt increase in correlation to their growing disposable income.

Petrobras to sell up to $64.5 billion of new stock

In order to fund the development of recently found oil reserves off the coast of Rio de Janeiro, Petrobras is to raise an estimated $64.5 billion USD through the sale of new stock, in one of the world's largest IPO's.

http://www.bbc.co.uk/news/business-11184839