“All men are created equal… endowed by their Creator with certain inalienable Rights… including Life, Liberty and the pursuit of Happiness…”
These are the ideas behind the Declaration of Independence of the USA and the hope of development and prosperity. Since I have been living in India my view of the world has changed dramatically because I see a shift of the places where one can find possibilities as an ordinary person to hope for a better future, something that has historically been attributed to the American Dream, the immigrants, and natives that helped to build that country.
In modern times, emerging economies are playing a major role in balancing global output and consumption when strong economies are struggling with debt problems and stagnating growth. Every time you hear that the GDP is growing, it means nothing else than people buying more and more stuff, and this is precisely where opportunities rely on:
GDP = C + I + G + NX
- C= Consumption
- I = Investment
- G= Government spending
- NX = Net exports = export – import
One of the main examples I like to picture is the increasing GDP per capita of countries like India, where even a few more Rupees in their pockets represent a massive amount of disposable income for consumption, which is translated in sales increases of virtually anything you sell.
Let’s take a look at this beautiful chart that I took from We Are Social:
The first line means that people coming from rural areas will (theoretically) engage in productive activities, resulting in increasing disposable income, translated into consumption. The potential I talk about is also related to a study I read some days ago saying that a 10% increase in urban population represents a 30% increase of the total output for a given country.
In North America, Western Europe, and even Central and South America, the population living in rural areas is on average 20%. Just in India, the number of people living outside of the big cities and metro areas is around 70%.
That’s why it is interesting to analyze cases at the individual level, for example, the mobile penetration in Asia. How many more mobiles can you sell in the US or Europe?… perhaps those mature markets focus more on replacing cellphones, rather than buying a new one. Then of course the accessories, services, apps, mobile content, etc, but that’s is a consequent story.
Well, it happens that in emerging regions there’s still a huge market for acquiring a mobile as you can see in the chart. Just in India, there are around 850 million devices, with a population of 1,2 billion. This means that there is still a market for at least 350 million more cellphones… that’s the size of the whole population in the US. And that’s just one example in a million, you can translate the same into electronics, appliances, housing, lifestyle, etc… interesting, isn’t it?
It is nothing new, of course, that all of the most economically powerful nations in the world are doing business here since many years ago in strategic sectors like retail, telecom, infrastructure, etc. But I want to stress the fact that those opportunities are as well converted into low hanging fruits for entrepreneurs and small investors.
Translation?… I have been working with some small companies to launch digital ads to bring more customers, a friend of mine is thinking of opening a restaurant with a fraction (10 to 20%, bribes not included) of the investment that you would require in America or Europe.
Someone very close to me ended this week by a random coincidence in a models agency just for being white and another met some people to possibly do some translation services and language courses. The point is, you can make business literally out of thin air…
The difficult part is pondering the bipolarity of India for a long term settling decision because of the challenges that I have described earlier in posts like Poverty and Economic Development and Bittersweet Bangalore.
And trust me, although the economic temptations are huge, I can tell you that even after being in India for almost one year and thinking I am “adapted” to living here, the decision is still a very though one.
So I guess, at least in my case, only time will tell… and the clock is ticking fast…