“I know you got your own town …I know you got your own ways. I know you got your own life … I’m just sayin’ … come on down to my place.” — “In My City” by Priyanka Chopra
A fascinating graph came across my desk recently, one that depicted a circle surrounding about 25 countries between eastern Russia and Japan. The circle included China, India, Indonesia, Pakistan, Bangladesh, southeastern Russia, Japan, Philippines, Vietnam and Thailand, among others.
The circle actually encapsulated a very small portion of the world’s physical geographic area. And much of the region circled was water.
The caption below the graph, though, was staggering. It stated that inside this small circle live more than half of the world’s seven billion people. In other words, more people live inside the circle than outside it.
Indonesia, with more than 230 million people, is the world’s fourth most populous nation, behind China, with 1.3 billion, and India, with 1.2 billion. All three of these countries were within the circle on the graph. The largest nation outside the circle? The U.S., with a population of 315 million. Not mentioned in the caption is the fact that many of these countries are also some of the world’s fastest growing nations.
Companies that produce, market and sell products globally must consider distribution centers not only in New York and London, but in cities like Delhi, Mumbai and Kolkata, India; in Dhaka, Bangladesh; and in Karachi, Pakistan, all of which are among the world’s 10 largest cities. What do these folks, all concentrated into this region, really want? Many want to dress, drive, eat, communicate and consume like their Western counterparts whom they admire on television and the internet.
Companies that sell to emerging market nations which are friendly to the West and to Western culture enjoy another competitive, economic advantage.
When purchasing securities, American investors should consider their time horizon, their long range financial goals and their risk tolerance, among other things. But they should also consider whether the companies they invest in are participants in the global marketplace. American manufacturers no longer enjoy the luxury of marketing only to U.S. consumers, where aging demographics mean that many are downsizing and shedding possessions.
Car companies must have marketing strategies that put drivers behind the wheel in Delhi and cell phone manufacturers must create a buzz in Kolkata surrounding the new apps on their devices. A telecommunications company that markets only to middle America, or a company that makes and distributes computers, but not in global markets, is missing out on the vast majority of the world’s potential consumers. Look for those companies which recognize the vast purchasing power that is becoming more and more dictated by demographics.
Margaret R. McDowell, ChFC, AIF, a syndicated economic columnist, chartered financial consultant and accredited investment fiduciary, is the founder of Arbor Wealth Management, LLC, (850-608-6121 — www.arborwealth.net), a fee-only registered investment advisory firm located near Sandestin.