Emerging markets are not Emerging

Thursday, January 23, 2014 Francisco Carneiro 0 Comments

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The beguiling idea of "convergence" still lives. But it shouldn't. The basic notion of convergence is that incomes in poor nations will rapidly catch up—or converge—with those in rich nations.

http://online.wsj.com/news/articles/SB10001424052702303465004579323153272581642?mg=reno64-wsj&url=http%3A%2F%2Fonline.wsj.com%2Farticle%2FSB10001424052702303465004579323153272581642.html

Millions of small Chinese factories are falling prey to a slowing economy. The latest evidence: the flash Markit/HSBC Purchasing Manager’s Index, which is more weighted toward smaller, private companies than the government’s own index, dropped to 49.6 in January—below the critical 50 mark that divides contraction from expansion.

http://qz.com/169844/chinas-manufacturing-output-is-shrinking-and-its-hitting-the-little-guys-first/

Well you already know why i think the center (US &Germany) is doing much better that Emerging Markets. http://thoughtmeme.blogspot.pt/2014/01/if-you-can-buy-anything-anywhere-why.html

What can Emerging Markets do to prosper in this world where the economies of scale & brand favor the big and the best in each industry.

One thing is to invest in the big and the best. If they are going to kill us let make some money on it.

But the best strategy is to build some brands & to focus on one or two things they do very well.

To me Samsung is a outlier and they will not be able to keep up with Apple & other high tech american companies. To me Samsung is a short because i think it's much easier to invent/discover the next thing if you are in Sillicon Valley near Colleges & other companies that do what you do.

What EM can & should do is to invest in marketing. They need to build Global brands. In what you might ask? well brazilian beer company AmBev bought Interbrew (Stella & Beck's), and in 2008 Anheuser-Busch (Budweiser) , Grupo Modelo (Corona) and yesterday South Korea Oriental Brewery.

Of Course there are not many good managements like Jorge Paulo Lehmann/ CarlosBrito but i think EM must think global, build national champions that should buy other competitors. In 2008 many EM companies had market caps that could support overseas expansion.