American companies should explore China and India when seeking a global platform from which to build their businesses.
In a presentation titled "The Changing Face of Global Real Estate: Knowing Where Your Business Needs to Be," Bruce E. Mosler, president and chief executive officer of Cushman & Wakefield Inc., said the immense labor forces and numbers of consumers in those countries are the overriding reasons they are worth the investment for firms seeking to expand in emerging markets.
"What they have in common is great human talent, an improving quality of life that is creating a huge and growing middle class and, as a result, the potential to become the biggest consumer markets in the world," he said.
When looking for space in the global real estate market, Mosler said companies must ask two questions: What is the cost of labor there, and does the market have a consumer base to either "accelerate your speed to market, or represent a new consumer base altogether?"
The population is 1.3 billion in China and more than 1 billion in India. As a result, "they hold the promise of becoming not only the leading producing countries of the 21st century, but among the largest consumer group, as well," Mosler said.
In both countries, he pointed out, there has been an "explosion of millionaires." He cited a recent report by Merrill Lynch and Capgemini that said China had a 12 percent jump year-over-year in the number of millionaires, pushing its total to 236,000. In India, there are 61,000 millionaires. The U.S. has more than 2 million people worth $1 million or more.
China and India also represent a growing percentage of the World Gross Domestic Product, Mosler said. In fact, Cushman & Wakefield economists predict that, by 2050, China, India and the U.S. together could represent as much as 70 percent of the total WGDP.
As a result, it's clear that China and India will emerge as "a powerhouse of middle- and upper-class consumer consumption over the next decade," he said.
Executives who are seeking to expand in these, or any overseas markets, must again ask a pair of questions, Mosler said. "First, have I examined all my global opportunities in terms of my business objectives, and second, have I made the right long-term decision, with particular regard to expenses, efficiencies, the depth and breadth of the local labor and, of course, the cost of real estate?"
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