The new April 2011 issue focuses on demographic changes and the shift in labor costs in China and other emerging markets. It also sheds light on opportunities in chemicals in BRIC countries and analyzes the second round of privatization of state enterprises in Russia. In an interview, Indian entrepreneur Rajan Bharti Mittal shares his views on the economic prospects and challenges of his home country in the near future.
HigH growt H
Markets
insight and perspective on today’s global economic hot spots April 2011
s erving up success
social restauranteur Jimmy Pham talks about his
recipe for transforming the lives of Hanoi street kids
through vocational training in gastronomy. Part of
our menu of stories about Vietnam.
Peak labor
Is China running out of workers?
Chemical change
The industry in emerging markets
o ff the cuff
Rajan Bharti Mittal talks India
3Con TEnTS
High Growth Markets_April 2011
n ew course: Indian India’s turn: Dear reader, youth studies for Rajan Bharti Mittal
the future. p.18 interviewed. p.46
A limitless pool of cheap labor – For a long
time, this feature has been a characteristic of emerging mar-
kets and helped to attract billions of dollars’ worth of invest-
ments from international companies. China in particular, as
the so-called workbench of the world, founded a fair share of
its economic success upon this principle. Millions of migrant
workers poured into China’s coastal provinces and were hired
in the factories of the Pearl River Delta and other hot spots.
The “Lewisian turning point” is what econo-
mists call the moment when the pool of surplus agricultural
labor runs dry, resulting in a significant increase in industrial
wages. Some high-growth markets, particularly China, will Phamished:
Hunger for a new soon be reaching this turning point. According to recent
life in Hanoi. p.44
statistics, salaries for migrant workers already climbed by
an average of 30–40 percent last year in China’s coastal
manufacturing powerhouses.
Push and pull factors – The shift in labor costs will
have a strong influence on the strategy of multinational com-
panies in China and other emerging markets today and in the
near future. Those who have grown used to paying the cheap
“China price” for consumer goods can try to shift their pro-
duction facilities into central regions of the country or migrate High growth: Are there
Chemical action: any more poor rural to other emerging markets such as Vietnam. But this “China BRIC producers are migrants for China‘s
bubbling up. p.26 cities to attract? p.12+1” strategy has its own pros and cons (see p.38).
The lures of growing consumer spend
in these markets could also offer an attractive alternative: Global briefs 21 I dentity crisis Empowering migrants Business insight Off the cuff
Move up the value chain with production, and cater not only with Indian ID
4 C hina’s film industry, Ecuador’s 26 C hemical reaction Emerging mar- 46 E ntrepreneur Rajan Bharti Mittal to the western industrial markets, but also to the emerging
rainforest, India’s panjandrums 23 G lobal opportunities Foreign ket producers are bubbling; western is bullish about Indiamiddle class in the BRICs. Higher wages could in turn lead to
postings enrich companies and help companies are seeking a response
higher disposable incomes. Subsequently, the shift in labor 6 G lobal view Rare earth elements them better serve their clients
costs could also serve as a door-opener for the rural popula- 34 State asset sell-off Risks and Backstories
8 P roblems with microfinance, new rewards of Russian privatizationtion, which has not yet benefited from the economic growth.
acronyms, Mongolian mining Opinion 48 T ravel advisory Bogotá for Already millions of new consumers in
beginners
Asia Pacific, Africa, and Latin Amer- 24 T he threat of upheaval Ways of World markets
ica are emerging and they could soon Growth focus managing political risk 49 Picture gallery Martin Roemers’
40 G ood morning Vietnam New Metropolis seriesbecome the next key characteristic of
12 C hina peaks Has the seemingly opportunities are dawning in China and other emerging markets. inexhaustible pool of rural labor finally Southeast Asia 50 C alendar Events in emerging
started to run out? More online markets
For PDFs of this magazine, plus 41 Troubled tiger Macroeconomic
16 H ealthcare opportunities in China back issues visit our website, where issues in Vietnam 51 K ey contacts at KPMG worldwideBrian M. Ambrose
you will also find more business
Chief Operating Officer 18 R ural resurgence Emerging insight on high growth markets. 44 Wok on the wild side Culinary skills
KPMG International economies go back to the roots www.hgm-magazine.com offer hope for Hanoi street kids
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zCon TEnTS
High Growth Markets_April 2011
n ew course: Indian India’s turn: Dear reader, youth studies for Rajan Bharti Mittal
the future. p.18 interviewed. p.46
A limitless pool of cheap labor – For a long
time, this feature has been a characteristic of emerging mar-
kets and helped to attract billions of dollars’ worth of invest-
ments from international companies. China in particular, as
the so-called workbench of the world, founded a fair share of
its economic success upon this principle. Millions of migrant
workers poured into China’s coastal provinces and were hired
in the factories of the Pearl River Delta and other hot spots.
The “Lewisian turning point” is what econo-
mists call the moment when the pool of surplus agricultural
labor runs dry, resulting in a significant increase in industrial
wages. Some high-growth markets, particularly China, will Phamished:
Hunger for a new soon be reaching this turning point. According to recent
life in Hanoi. p.44
statistics, salaries for migrant workers already climbed by
an average of 30–40 percent last year in China’s coastal
manufacturing powerhouses.
Push and pull factors – The shift in labor costs will
have a strong influence on the strategy of multinational com-
panies in China and other emerging markets today and in the
near future. Those who have grown used to paying the cheap
“China price” for consumer goods can try to shift their pro-
duction facilities into central regions of the country or migrate High growth: Are there
Chemical action: any more poor rural to other emerging markets such as Vietnam. But this “China BRIC producers are migrants for China‘s
bubbling up. p.26 cities to attract? p.12+1” strategy has its own pros and cons (see p.38).
The lures of growing consumer spend
in these markets could also offer an attractive alternative: Global briefs 21 I dentity crisis Empowering migrants Business insight Off the cuff
Move up the value chain with production, and cater not only with Indian ID
4 C hina’s film industry, Ecuador’s 26 C hemical reaction Emerging mar- 46 E ntrepreneur Rajan Bharti Mittal to the western industrial markets, but also to the emerging
rainforest, India’s panjandrums 23 G lobal opportunities Foreign ket producers are bubbling; western is bullish about Indiamiddle class in the BRICs. Higher wages could in turn lead to
postings enrich companies and help companies are seeking a response
higher disposable incomes. Subsequently, the shift in labor 6 G lobal view Rare earth elements them better serve their clients
costs could also serve as a door-opener for the rural popula- 34 State asset sell-off Risks