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?"The answer, he said, lies in "eight basic metrics" that need to be considered in each market. They are: the banking system; the consumer market; cost efficiencies; infrastructure; the depth of intellectual talent; the emerging middle class; local politics and rules of law, and the supply chain.
When trying to choose between China or India, he said, companies need to decide what is more valuable: the intellectual capacity of the people or the cost of labor there.
"If you are seeking intellectual capital for an R&D facility, you might choose India," he said. "However, China has clear labor advantages for manufacturing facilities."
In either case, the banking system is a critical component, he said. "You need a legitimate banking system that ensures you can get your money out once you put it in. You don't want a Roach Motel banking system, where the money goes in, but can't get out."
In China, Mosler said, the banking system is controlled by the government and "remains problematic." India's banking is based on a British system and, therefore, is more similar to the U.S.
The infrastructure of a country must also be considered. "This is one of the significant advantages of China," Mosler said, noting that China is "the largest consumer of concrete and steel in the world…pouring billions into highways, water systems, skyscrapers, airports and the like."
China's "one-party political system" allows the leaders to make "sweeping economic and massive infrastructure changes without debate or delay," Mosler said. "Once the Chinese government decides, for instance, that it wants the Olympics, nothing — not lack of airports, roads, housing, water, nothing — gets in its way."
On the political front, however, laws are "far more advanced in India, so contracts there are in fact more transparent and secure," he added.
India also has a leg up in terms of educating its populace. Calling its intellectual talent "equal to that of any country in the world," Mosler said India is already graduating more engineers each year than the U.S. He said many companies were attracted to India by the low cost of labor, but stayed for its intellectual talent."You have a virtual cradle-to-grave investment in the Indian people, which makes investment in India an attractive long-term proposition," Mosler said.
@kering_official is spinning off its stake in puma in an effort to focus on its luxury brands, the brand operator announced yesterday. “We are proud to have supported the turnaround of Puma, which now has unrivaled capabilities to take full advantage of the specific dynamics of its global markets and is poised to achieve substantial growth,” said François-Henri Pinault, Kering’s chief executive officer and chairman. Artémis will become a “long-term strategic shareholder” of Puma with a 29 percent stake. #wwdnews #wwdfashion (📷: @jilliansollazzo)
The fashion world mourns for celebrated street style photographer, Nabile Quenum, who died at age 32 in Paris.
Quenum, creator of the fashion blog “J’ai Perdu Ma Veste,” was a fashion week fixture, and regularly shot for New York magazine’s The Cut, among other outlets, and brands such as Louis Vuitton, Moncler and Adidas. He was also actively involved in the #NoFreePhotos initiative, which kicked off in the fall. Read more about Quenum in @kbsmoke's story on WWD.com. #wwdnews
@verwanggang and @maisonladuree have teamed up on a dessert collab called Vera Wang Pour Ladurée. The collection, which launched this week, features a specialty macaroon, as well as a wedding cake inspired by one of the designer’s gowns. “I could not imagine a more delicate or sophisticated creation to grace any couple’s celebration,” said Wang. #wwdfashion
“I’m Russian and I love to use all these little tricks that I got from my grandma or my mom. We didn’t have a lot of money for creams or anything like that so we would use a garden as a beauty treatment regime. We’d put cucumber in the fridge and do a cucumber mask,” says model @irinashayk on one of her beauty hacks. WWD asked celebs what their go-to self-care rituals are. See what Naomie Harris, Freida Pinto and more said on WWD.com. #wwdeye #wwdbeauty (📷: @zefashioninsider)
Exclusive: @viktorandrolf are teaming up with @Zalando on a collection made from leftover clothing. The lineup, which lands at the retailer February 1, includes 17 pieces adorned with sliced up and repurposed overstock from the retailer’s private label collection. Pictured here is a look from the collection –– see more on WWD.com. #wwdfashion #wwdnews
@duewestnyc is the newest bar joining the collection of intimate neighborhood-focused spaces in the West Village. The cocktail menu, which includes bitters and syrups made in-house, offers a “Build Your Own Old-Fashioned” – like the one pictured here – where guests can choose from a list of spirits and unexpected sugars and bitters. #wwdeye
Spotted at last night’s National Board of Review gala in NYC: Angelina Jolie. Jolie – along with Meryl Streep, @lupitanyongo and more – continued the all-black dress code from Sunday’s Golden Globes. #wwdeye (📷: @lexieblacklock)