Global Emerging Markets

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Global Emerging Markets

For any company that wants any viability in the future, reaching the critical 18-49 demographic is essential and currently a global shift is occurring in messaging and marketing towards this demographic. Businesses have long been based on targeting baby boomers and suburbs; however 2008 has dramatically altered that calculus. As I am detailing in my forthcoming book Own Your Destiny A Modern Guide to Starting Enterprise in the 21st Century, a humongous shift has occurred based on financial reality, technology capability, and emerging demographics. From the palm of one’s hand, with a smartphone, one can video chat with people around the globe, for example.


Currently, the era of Reagan is considered the gold standard, yet during Reagan’s presidency, there wasn’t a dominant Brazil. South Korea didn’t host the Olympics until 1988 and it was 1987 that Reagan made the “Tear Down This Wall” speech in Berlin Germany. Also, during Reagan’s time, it was Japan not China that was dominant and Africa did not have more than twice the residents of America (315 million) with a cell phone (740 million) and also 330 million of 1 billion people spending between $2-$20 a day. Also during this time, 38% of the American population were not minorities. Over 85% of the population growth from 2000-2010 per the last census report was from minorities, with a trend towards a majority by 2040 and a majority of children born in America are currently born to minority families. T


Today’s reality is emerging markets domestically match with emerging markets globally with products that can sell domestically and can sell to markets globally. In addition, entrepreneurs locally can buy and sell goods globally with the advent of technology and global shipping logistics. For example, South Korea with whom President Obama signed a free trade agreement in 2011, has a population of 50 million with unemployment at 3% and median income at $30,000. South Korea is also ranked #1 in the world in education. In comparison, Black median income is $32,000 and Latino median income is $38,000. South Korea is home to Hyundai, KIA, Samsung and LG. Samsung is also a major supplier for the Apple iPhone. Brazil has a larger economy by GDP than Britain and is approaching France, probably overtaking France this year to become a top 5 economy in terms of GDP. Germany is the #1 country in the EU and is #4 globally in terms of GDP. China has an economy growing at 7.4% per their latest report and has already surpassed Japan to become the #2 economy globally right behind the USA in terms of GDP. China actually has a trade deficit with Brazil based on raw materials and recently created a $20 billion fund to invest and get preferential treatment in regards to minerals and exploration in Africa.


This is obviously not the world of Reagan because the untold secret ignored is the depth to which Reagan won. Reagan succeeded in promoting capitalism globally and as such we now compete on a global stage where countries like Brazil and Germany, without dominant militaries, are emerging in areas of clean energy technology with strong gains in the fields of renewable and bio fuels, for example. Countries have adapted capitalism to their own paradigm and now integrated its execution to their national interests.


An important factor in the global emerging markets is the fundamental cultural shift and the deep affinity for urban culture as the new popular culture globally. Culture impacts commerce, for if you cannot culturally relate you cannot market and communicate. Hip Hop culture is the popular culture of the 18-49 demographic set with icons like Jay-Z and Lebron James reverberating across the globe. This new dynamic brought about the shift in politics that powered an Illinois Senator, Barack Obama to a historic presidency in 2008. Actual friend with Jay-Z, his historic win represented a change and the current election is testing the measure of that seismic shift and what direction the country will move in relation to minorities domestically and emerging countries globally.


For America to thrive in this new capitalistic environment human development and economic participation are paramount yet the issues of the critical investment necessary are the hotbed items of the current debate. According to a report by MasterCard 40% of Americans 25-34 do not have a bank account and estimates have pegged the unbanked population in America at over 60 million per the FDIC. Without engaging new generations of Americans and also if their earning potential is dramatically lower than their baby boomer predecessors, promises made to baby boomers cannot simply be kept because funding for Medicare, Medicaid, and Social Security come from payroll taxes of FICA up to the first $106,000 earned by every individual. Baby boomers who total over 79 million with over 76% being white according to William Frey as cited in a Washington Post editorial June 8th 2012. The median age of white Americans is 41 years old contrasted with a dynamic growing Hispanic population with a median age of 27 years old and a steady growing black population with a median age of 32 years old, and slightly over 31 for Asian Americans.


As boomers get older and suburbs shrink due to the housing crisis, the foundation of the consumer based businesses have been built on, has forever changed. The changes in the emerging demographics and purchasing power along with access to capital and available credit have fundamentally changed an economy which is 70% built on consumer activity. Hispanic median income is $38,000, compared to White median income of $51,000 which contrasts with Asian American median income of $65,000. The Asian American population approximately 18 million of the over 120 million Americans who are minorities are rapidly growing and the education outcomes directly relate to economic outcomes in a stark manner.


This is the new environment companies must exist in and is the reality facing the domestic auto companies as they seek to carve a position at the top of the heap. In the past 3 years, auto sales have grown from 10.4 million in 2009 to approximately 14.5 million this year and over 40% growth with tangible benefits in fuel efficiency, in car technology, and a noticeable difference in marketing where hip-hop icon Eminem had a decided impact on sales of Chrysler with his Superbowl ad, Hyundai’s and Kia’s use of hip-hop music, and in Kia’s case basketball superstar, Blake Griffin, has markedly boosted sales to record levels. Detroit is back but in reality it has now become a symbol of the future where Silicon Valley meets American industrial might as full integration of smartphone features can be found in entry-level models like GM’s Chevy Spark. Cars have more technology and features in sizes for all tastes with great fuel efficiency as full size cars are getting upward of 47 MPG with slight electrification. It is a great testament to two programs managed by the Obama administration, the Department of Energy Advanced Technology Vehicles Manufacturing Loan Program created in 2008 with a fund of $25 billion authorized under section 136 of the Energy Independence and Security Act of 2007, to reduce dependence on foreign oil. The Bush administration initially signed the program into law. The Bush administration also provided the initial capital from the TARP program to tide GM and Chrysler till the restructuring that would occur later under President Obama. An ironic footnote to the auto story is that former George W. Bush Treasury Secretary from 2000-2006, John Snow, left the administration to become Chairman of Cerberus Capital Management and take control of 51% of GMAC and 80% of Chrysler LLC. GMAC was the financially arm of GM and impacted consumer loans and dealer financing. In June 2009, President Obama provided a $5.9 billion loan through the DOE program to Ford for fuel-efficiency vehicles and billions more to GM and Chrysler from TARP funds post their bankruptcy with Cerberus forgoing their interest. The money has been well spent and now GM is #1 globally in sales and Chrysler turned its first profit since 2005 in 2011. Ford has been soaring and all other manufacturers have been successful, in addition. As global markets emerge, auto manufacturers have to adapt their product offering to individual markets which increases product and development costs. Chrysler now part of Fiat is able to take advantage of economies of scale and in fact some manufacturing that was previously done in Italy is now moving to America. Some of the market differences are like Brazil where GM cars run on B-20 fuel.


In this special I will introduce daily interviews I have conducted over the past year and also provide the historical importance of these great companies created by forgotten American icons who built the industrial Midwest and powered a century of American dominance.

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