“The
biggest trend in the world today is what I call the ‘re-rise of Asia’,"
said Dominic Barton, the Global Managing Director of Mckinsey &Co in his
Asia Scotland Institute Address.
The two emerging
giants China and India which were the dominant economic powers 2000 years ago
are catching up, what they lost before few centuries.
He shared few
more interesting statistics supporting the theory on re-rise of Asia.
·
There will be an estimated 2.2 billion
new middle-class consumers in Asia by 2030
·
By 2025, almost half of the world’s
billion-dollar-plus companies will be headquartered in emerging markets, many
of them in Asia
·
12% of global goods, trade from China
in 2012, vs 2% in 1990
·
Growth in knowledge-intensive goods
trade 1.3x as fast as in labor-intensive goods
·
Emerging-market consumers will spend
$30 trillion annually, up from $12 trillion today causing enormous spike in new
hubs for consumer demand and global production
The critical factors which will impact strategies
of Business Heads across the world in the coming decade are
·
Rising
Emerging Markets
·
Massive
Urbanization across Asian Countries
·
Explosion
in middle class, predominantly in Asia
But then adaptability to Technology will be
vital for the businesses to make the best out of the given situation. Global
economies will have huge impact on account of disruptive technologies which
will play a significant role on the growth.
The innovations in disruptive technologies can
happen at rapid pace and following are to be keenly watched which can transform
the way mankind will live in the future:
·
Mobile
Internet
·
Robotics
·
3D
Printing
·
Cloud
Technology
·
Knowledge
Automation
·
Renewable
Energy
·
Energy
Storage
The change in the market and technology
dynamics, will throw open huge opportunities on the one side and challenges on
the other side. Businesses and enterprises across the world have to become more
sensitive towards the change that is taking place around them.
The pace and magnitude with which the change
is occurring on both market and technology will leave many to succumb if they
are not agile and adaptive to the conditions.
Challenges: Natural Resources Constraint
Prima facie we see a huge risk building up on
account of the potential surge in consumer demand in the coming decade which
can create crisis on the following
Water Shortage
– The gap can be as much as 40% by 2030
Energy Shortage - Expected gap to be around 30% by 2030
Food Crisis
- The prices can go up as much as 40%
Feeding the world with water and food will be
a great challenge .This is a certain risk. While governments across the globe
will work on mitigating the risk, it will be too much to ask for from the
State, if the society and people does not respond with responsibility.
Energy is the source point for the supply of
Water and Food. Growing energy gap is a serious concern and sourcing renewable
energy will have to become a viable solution for the gap in the supply of
fossil fuels. Nations has to accelerate on their efforts to increase the source
of green energy to meet the growing demand.
The society should also play a vital role in
terms of becoming more responsive on optimizing the resources. Training the people
on conserving the natural capital will be a key social responsibility initiative
which can help the cause for the future generation.
Challenges:
Human Resource Constraint
The other risk is about the ageing population and
talent shortage. The growing medical technology will make more people to live
and as such the population of > 65 age will double and > 85 age will quadruple
by 2025. This will have an impact on productivity.
We also see increasing risk of shortage of
skilled labor at global level. The imbalance in work force will create talent
shortage. Skill based work will become expensive as there is bound to be a huge
shortage of skilled work force at global level. Skilled work force will carry
equal or higher premium to that of the knowledge work force in the coming
decades.
Every Challenge has to be looked upon as opportunity
to become successful. The challenges that we will have on account of Natural and
Human Resources constraint can become an opportunity and enterprises across the
world will take this to their advantage.
Energy, Water and Food which are critical and
also potential supply crisis can be a major trigger for global unrest. UN in
their recent IPCC report has warned of serious implications across nations on
account of climate risk.
We need to accelerate our thought process to
convert this adversity into opportunity. We need to use technology to preserve
water though recycling and reuse. Ozone or any other similar technology should
be used mandatorily to recycle water or else we are certain to get into larger
crisis.
Businesses have to invest into technology to
make recycling affordable at consumer level and make this reach to middleclass
across the world within their means. Similarly countries like India and China
have to invest heavily on renewable energy and a revolution similar to mobile phone
Technology, in Power Generation can be a huge business prospect.
Both energy and water can be a game changer
for consumer economies.
Food security will be another major threat.
The food consumption is expected to multiply with the surge in the middle class
as well as the economic empowerment of people at the bottom of the pyramid in
both India and China.
The estimates are that, the intake of calorie
based food will double in next 10 years and the prices of meat, milk and cereals
will all go up by more than 40% on account of surge in demand.
Technology up gradation on farming and output
increase per hectare from the field has to go up sustainably from country like
India which is below the average compared to some of the smaller countries. While
China and South Africa have moved far ahead in their agriculture productivity,
India lags way behind which is a major concern.
Corporate world has to look at this as an
opportunity and more investment has to happen in farming. The food inflation is
already on the higher side in India on account of supply side pressures and
growing middle class and demographic profile will add to the risk.
Innovative solutions are required to address
the food crisis. Farming should become part of the academic curriculum. Children
should learn farming and every house and apartments have to compulsorily grow
vegetables. Rooftop and home gardens has to supplement the farm activities to
reduce the pressure on the supply side.
Investors should come forward to invest into Home
Farm Leasing activities, and this can become a good money spinner. We see home
gardening as a good value proposition in countries like India since it can
address the supply constraints to some extend and also bring some control on
prices.
Path breaking innovations in technology has
narrowed down the revolution cycle and growth in digital age will exceed that
of the Industrial revolution.
The re-rise of Asia has been fuelled by the growth
of two major giants India and China on the back of their strategic positioning
on their strengths. While China becomes a specialist in the global flow of
goods and financials, India become significant on Service flows. Both moved onto high growth trajectory and in
a span of two decades they have shifted the centre of gravity of the global
economy back to Asia.
India and China will be looked upon as a huge
opportunity by the business world as we see economic growth to spurt by the
huge consumption demand. Organizations adapting to changing dynamics of
technology driven growth will make their way into the next generation.
As the West is going through the Sun Set
clause, the World will be looking at the rising Sun in the East and China and
India will be the lead managers in the global economic growth.
We have already seen China and India taking
only a tenth of the time, to double
their Per capita GDP compared to US and UK. This was possible on account of the
huge population, consumption and rising income levels, than in any other
country in the world.
There is eminent risk on account of the
emerging economies growth rate and the stress will be there on both Natural
Capital and Human Capital. However this risk can become a huge opportunity, if Governments
and Businesses can invest their resources on Innovation and Technology to make
the World achieve Sustained Happiness.
T Margabandhu
M/s Marggo India
