Catarina's World

Everything and everyone is a product. A country, a city, a company, a product, a service a person – yes you and me included. And how the market perceives the product determines its value. It’s sounds cynic, I know. But if you want a high value and be sought for on the market you have to create a brand that is in demand and sells.

Want to be assiciated with Chanel or Wall-Mart? Depends on which market you are aiming for.

And then when the product is a success all of a sudden the brand matures, growth slows and it comes under pressure from competitors. This is the time to start innovating and spending again if you want to defend your market position. If not ,don’t complain if nobody wants to hire you, go on holiday to your country, do business with your company or buy the wonderful product or service you are selling.

You may object that some brands, like Cornflakes, or Chanel for that matter, have been around for a long time. But what we buy today is very different from the same product 50 years ago, not least when it comes to packaging and design. If your personal brand is out of date you will have to make an investment to innovate yourself. Maybe learn a new skill, have a make-over or simply learn how to better promote yourself? How you want to be perceived depends on what market you are aiming for.

When it comes to countries, Europe and the US have matured and competitors are moving in. But the West seem to take their current status for granted and the only thing they are doing to defend their market position is protectionism, unfortunately. And they really have to do much more if they want to keep their position in this globalised world. What happened to innovation and making their markets more attractive to investors not to mention more business friendly?

Nowadays it’s irrevocably one global market. And Sweden, to my great surprise, hasn’t wholeheartedly joined. Sweden as a product has matured badly and needs to innovate to get back the position it had on the market in the 60′s and 70′s. Join the global market wholeheartedly, reduce corporate taxation drastically and realize that there is a reason that Sweden’s unemployment is more than twice as high as it’s neighbours Denmark and Norway would make a good start. But there doesn’t seem to be any political will to do so.

More and more Swedish companies are using IT consultants in India. Naturally the Swedes, not least the trade unions, don’t like that. They conveniently forget that the main objective of a company is to make money. And using Indian IT consultants is far cheaper than using their Swedish counterparts. On top if it India, unlike Sweden, has four universities that when it comes to IT are on par with MIT. Unless taxation in Sweden, i.e. the politicians, change we will see more and more Swedish companies outsourcing IT to India.

Obviously this is not only happening in Sweden but in the West as a whole and there is no stopping it. Look at all the out-sourced call centres, for instance. Since it is an issue that is not going away I’m surprised that not more is being done in the West to adapt to the global market. It surprises me that we are not facing up to the issue.

Globalisation is irrevocably the governing principle of commerce. That does not mean it is popular everywhere. The US will continue to lose relative power because of globalisation. It’s ironic that thanks to its generosity in exporting the secrets of success, China and other emerging giants are catching up. Public support for protectionism has hence surged in the United States. But there is only so much current protectionism can achieve. Look at the way China is surging, despite Western protectionism.

Developing nations are not going to cede power to the US and Europe out of gratefulness. So it’s time for the West to face up to reality – their brand is loosing out. It’s time to innovate and make it profitable for businesses again to stop them moving to other parts of the world.

(Photo Handosh Flickr)

For decades governments that dared to challenge the IMF model swiftly found themselves out of favor in Washington and other Western capitals.

Capital inflows are not always beneficial for a country, the IMF concludes.

But the financial crisis that started in 2008 prompted a new debate over free market policies and IMF ideology. So now after sixty years of zealously insisting on free market economic policies, the International Monetary Fund has traded its dogmatism for pragmatism, it seems.

It has acknowledged that in some instances, developing countries might actually benefit from controlling how much foreign capital enters their economies — and how it’s used. After examining the experience of governments that have regulated capital flows, the IMF concluded that such policies helped reduce “financial fragility.

There is no surefire one-size-fits-all way to deal with the impact of potentially destabilizing
short-term capital inflows. While controls can be helpful to individual countries under certain conditions, their widespread use could have deleterious effects on the efficient allocation of investment across countries, and harm prospects for global recovery and growth.

Glad to note that the IMF have adopted a flexible approach. Have heard governments all over the world complain about how inflexible they were. So that’s obviously something good that came out of the global crisis. We need to make plans but always have to be flexible about how to reach our goals. Do you think the new flexibility will have a positive impact on global recovery and growth? Or do you believe all countries should stick to free market policies no matter what?

Photo: Flickr – businesspictures

Middle class spending is crucial for economic growth. So now, with Western middle classes in debt and distress, many economists look to the new emerging-market middle class as the foundation for a new era of global prosperity.

Middle class spending power per capita in the Gulf is, for some reason, often overlooked by Western companies.

Last year 70 million people in developing countries joined the middle class, with incomes between $6,000 and$30,000. It is estimated that within 20 years they will surpass their Western pears when it comes to global spending power. The focus is mainly on Asia and it is estimated that in about a decade they will pick up the slack left by overspent America. Emergency market spending is in fact already bolstering the balance sheets of many Western firms.

Needless to say the worlds is focusing on China and India due to its huge populations as well as rapidly rising economies and middle classes. Correct if you look at the amount of people. But by looking at the issue that way we overlook a very potent and prosperous group of people.

When it comes to per capita spending I’m certain that the middle classes in Saudi Arabia and the other Gulf countries not only earn more but also spend far more than their Asian counterparts. It’s not for nothing many middle class Indians chose to work in the Gulf, despite the fact that they are paid less than the locals. Salaries are higher and you pay no income tax in the Gulf.

Shopping is a top leisure activity and when the weekend starts the malls are filled with people who literally shop until they drop. A woman who works in a Chanel shop in the area told me an average customer spends an absolute fortune every time they come to the shop. And the same goes for more expensive items like cars, jewellery and electronics. Considering the importance the Chinese put on saving money, I would be very surprised if middle class people in China, with the exception of some mega rich, spend that much.

The world, certainly multinationals, are already managing the economic spending shift to Asia very well. But quite a few Western companies are forgetting about Saudi Arabia and the Gulf, which in my opinion could prove costly especially for companies selling expensive consumer goods.

A large amount of Asian and Middle Eastern households have incomes today that position them just below the global middle class threshold and so increasingly large numbers of them are expected to become middle class in the next ten years.

Emerging-market leaders know that the Western system created the worldwide boom of the last quarter century that ended when Lehman Brothers collapsed 18 months ago. Now the boom has moved to emerging markets, and their leaders will increasingly choose to alter Western models to suit their countries. Consequently the fact that all eyes are on Asia and the Gulf forgotten could turn out to be a fatal mistake. The new emerging middle classes are supporters of globalization but highly nationalistic. And there is a vast difference between nationalism in China and, say, Kuwait.

Back to emerging middle classes in general, we can conclude that the Chinese bought more cars than Americans last year, and that India has as many Internet users as the U.S. Also it is estimated that by 2030, more than nine out of every 10 mobile phones will be owned by people in the developing world. Coca-Cola actually forecasts a doubling of worldwide revenues to $200 billion over the next decade, thanks to another 1 billion people expected to join the middle class by 2020. So Western companies who haven’t yet focused on developing countries middle classes should jump on the band waggon swiftly and not overlook the Gulf.

(photo: flickr – Lars Plougmann)