By 2030, this world will be a vastly different
place. What we currently think of as an
“emerging” market will by then (or even
earlier) be considered developed—and
thriving. The bulk of consumers—and consumer spending—will have shifted from
North America and Europe to Asia, Africa,
and South and Latin America. The change
will be so dramatic that it will affect virtually
every business, in every part of the world.
Purchasing power shifts to billions
of new consumers
Without an emerging-markets strategy,
Canadian companies risk missing out on
what will likely be one of the most transformative consumer shifts in recent history. By
2030, the middle class in China will be
roughly four times the size of America’s
middle class, reaching 1.4 billion consumers,
compared to only 365 million in the US and
414 million in the EU. India, it is estimated,
will reach 1.07 billion middle-class consumers
in less than 20 years.
By 2015, US and Western European consumer spending combined will account for
only 26% of world GDP, down from 38.5% in
1
2002. Compare this with the BRIC3 countries’
combined consumer spending: After averaging
4.4% from 1995 to 2005, it accounted for
8.1% of world GDP in 2010, and is projected
to reach 12% by 2015.
These shifting tides mark a turning point.
The US used to make up as much as 85% of
Canada’s trade; that number has been steadily
decreasing over the last decade and now lies
at less than 75%—with the difference moving
to emerging markets. Canadian companies
and our government have realized that they
must diversify their trading partners and “go
where the growth is.” These markets will
only continue to grow as their middle-class
consumer populations expand their need
for everything from food and consumer
products to natural resources.
With a combined population of more than
2.5 billion people, two of the world’s fastestgrowing economies, China and India, are
increasingly looking outside their borders to
fulfil their consumption needs. In fact, demand
in developing countries serves as Canada’s
main driver for growth as these nations seek
out a secure, steady, and reliable flow of raw
materials.
Canada expands trade with
emerging markets
Given these opportunities, it should come as
no surprise that the Canadian government
has been actively seeking to expand trade
agreements with many emerging economies
over the last five years, including China, India,
Panama, Peru, Brazil, and Colombia.
On November 12, 2010, Canada and India
announced the launch of negotiations toward
a Comprehensive Economic Partnership
Agreement (CEPA). The eighth round of
negotiations toward a CEPA was held in
Ottawa in June 2013.
In September 2012, the Canadian government signed the Canada-China Foreign
Investment Promotion and Protection Agreement to enhance trade and investment between the two countries.
In 2012, Canada also joined the Trans-Pacific
Partnership, which will link us to a market
of 658 million people worth $20 trillion annually in countries including Chile, Peru,
Australia, Malaysia, New Zealand, Singapore,
and Vietnam.
Emerging markets are defined in this article as countries/regions with social or business activity in the process of rapid growth and
industrialization; in particular, China, India, and Latin America.
2
The 27th Quarterly C-Suite Survey: Cash Reserves, Debt, Interest Rates and CEO Compensation was conducted on behalf of KPMG by the
Gandalf Group on June 18, 2012. (www.kpmg.com/Ca/en/topics/C-Suite/Documents/The-27th-Quarterly-C-Suite-Survey.pdf).
3
Brazil, Russia, India, and China.
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CPABC in Focus • Feb/Mar 2014
13