Welcome to class of Emerging Markets by Dr. Satyendra Singh University of Winnipeg Canada

1. Welcome to class of Emerging MarketsbyDr. Satyendra SinghUniversity of WinnipegCanada

2. Characteristics of EM • GNI per capita per year < $10,000 • High birth rate • Undeveloped infra structure • Several languages/dialects • Close family ties • Less women in workforce • Cultural issues • Half the world’s population accounts for 25 percent of the EM today • By 2010  50% of EM.

3. Common Traits of Big EM • Physically large • Significant populations • Represent markets for a wide range of products • Strong rate/potential of/for growth • Undertaken programs of economic reform • Major political importance within their regions • Regional economic drivers • Engender neighbouring markets as they grow

5. Eastern European EM

6. Asian EM

7. Four-Tigers of Asia • South Korea, Taiwan, Hong Kong, Singapore • Improved living standards by deregulating their domestic economies and opening up to global markets • Industrialization as assemblers of products for companies from the U.S., Japan, and other developed countries. • They are now major world competitors in their own right

8. Brazil • World’s sixth-largest weapons exporter • Steel and agricultural  compete Canada • Embraer (Brazilian aircraft manufacturer)  competes with Canada’s Bombardier. • Ships cars, trucks, and buses to EM annually • Volkswagen produced 3 million VW Beetles. • Auto makers are investing more than $2.8 billion aimed at the 200 million people in the Mercosur market (Argentina, Brazil, Paraguay, Uruguay, Venezuela – Common market)  Bolivia is invited to join.

9. India… • Improving the investment climate • Reforming agriculture, food processing, and small-scale industry • Eliminating red tape • Instituting better corporate governance

10. India… • Privatizing state-owned companies as opposed to merely selling shares in them. • Strategic investors can have 51% mgmt control • Deregulating telecom sector’s • Demolishing monopolies of state-owned companies.

11. India – Steps Taken • Maintaining the momentum in reform of the petroleum sector. • Planning the opening of domestic long-distance phone services, housing, and real estate and retail-trading sectors to foreign direct investment

12. China… • China’s dual economic system • socialism and capitalism economic boom • GNP 10% since 1970 • This growth is possible for the next 10-15 years • If so, China’s GNP = USA GNP by 2015 • This growth depends on China’s ability to • deregulate industry • import modern technology • privatize overstaffed • inefficient state-owned enterprises, and • continue to attract foreign investment • Current financial crisis

13. China… • Because of China’s size, diversity, and political organization, it is a group of six regions vs single country. • There is no one-growth strategy for China. Each region is at a different stage economically and has its own link to other regions as well as links to other parts of the world • Each has its own investment patterns, is taxed differently, and has substantial autonomy in how it is governed • While each region is separate enough to be considered individually, each is linked at the top to the central government in Beijing

14. China--Issue • Reduce its formidable barriers to imported goods • Reform of legal system

15. Research shows that • If Per capita income/ year > $5000 • people become more brand conscious • forego many local brands to seek out foreign brands they recognize • At $10,000 • they join those with higher incomes elsewhere who are exposed to the same global information sources. They join the “$10,000 Club” of consumers with homogeneous demands who share a common knowledge of products and brands. • Then, they become global consumers