Quote from F. Kotler’s book “Chaotica”
A new chapter has opened in global economic history, one in which the United States, and to a lesser extent Europe, will no longer play the dominant roles they once did. The process of redistributing money and power worldwide, shifting away from the United States and Europe towards resource-rich countries and emerging industrial economies in Asia and other developing regions, has been well underway for many years. The financial crisis of 2008 only accelerated this process.
Newsweek journalist Fareed Zakaria eloquently discusses a new American problem:America is troubled by something deeper, a feeling that numerous and revolutionary forces are spreading across the world. In almost every industry, in every aspect of life, there is a sense that the past is unraveling. “The whirlwind is now king, having departed from Zeus,” wrote Aristophanes 2,400 years ago. And for the first time in living memory, the United States seems to no longer be in the lead. Americans see a new world emerging, but the fear is that it is being shaped in distant lands by other nations.
What Zakaria refers to as the “Rise of the Rest” reflects the turbulence and chaos caused by one of the strongest and most irresistible forces: the growing power of emerging markets, particularly the BRIC countries (Brazil, Russia, India, China) and the financially resource-rich nations of the Middle East. Zakaria goes on to write that the world is now entering the “third shift of great powers in modern history”:
The first was the strengthening of the Western world in the 15th and 16th centuries, which led to the emergence of the world we know today: a world of science and technology, trade and capitalism, industrial and agricultural revolutions. Western countries gained long-lasting political dominance. The next shift in power occurred in the closing years of the 19th century, when the United States rose to prominence. Through industrialization, the U.S. became the most powerful country in the world, stronger than any potential alliance of other nations. For the past twenty years, America’s superpower status has been unquestioned in virtually every sphere. This was something that had never happened before in history, at least not since the Roman Empire dominated the known world 2,000 years ago. During this “Pax Americana,” there was a sharp rise in the global economy. This economic growth was the catalyst for the third shift in great powers – the rise of third-world countries.
After the global financial upheavals that followed one after another in the world’s stock markets in October 2008, China initially felt relatively unscathed. However, over time, it became clear that China was deeply dependent on the markets of the United States and Europe, and its previously rapidly growing economy began to slow down quickly. Chinese government leaders were forced to implement their own $585 billion economic stimulus program. Then, a few weeks later, China proudly showcased its new economic power when leaders of the world’s twenty strongest countries gathered for an emergency meeting in Washington to discuss the transformation of global financial markets and to secure an agreement to provide funds for the International Monetary Fund’s (IMF) proposed emergency lending facility to assist troubled countries. Beijing’s delegates protested the idea that developing countries should also participate in funding the facility. Instead, China sought to provide assistance to developing countries in order to gain more influence in the IMF and other international organizations. Many analysts believe that the increased contributions to the fund are the price for China’s growing voice in the IMF. Chinese President Hu Jintao emphasized in an interview with state media at this summit: “Sustainable and sufficiently rapid growth in China is itself a significant contribution to international financial stability and global economic growth.”
China is currently the third largest economy in the world, with the largest foreign exchange reserves. China does not hide its plans regarding the global financial order, in which the United States and its currency will have significantly less power. With its $1.9 trillion in cash reserves, China, along with other members of the Asia-Europe Meeting (ASEM), planned to create an $80 billion fund by mid-2009 to assist Asian countries in its own backyard, according to an agreement on a liquidity problem work plan already approved at ASEM in May 2008. And with a large portion of the funds coming from China, it will have more opportunities to implement its policies.
The BRIC countries and the Middle East are now stabilizing the global economy, as the rise in consumption in these leading emerging markets continues to offset the downturn in the United States and Europe. During the turbulent months of 2008, when U.S. and European banks were engulfed in a tsunami of financial turmoil, several major financial institutions in Europe and the United States avoided bankruptcy thanks to investments from various Middle Eastern kingdoms and the Chinese government.
While the number of companies from emerging markets appearing on the Fortune 500 list of the world’s largest companies continues to grow, the United States managed to represent only 153 companies in 2008 and 162 in 2007 — the worst results in over a decade.
As Harold Sirkin writes in his book “Globality: Competing with Everyone from Everywhere for Everything”:Imagine 100 companies from former third-world countries with a combined revenue in the trillions of dollars, surpassing the total economic output of many nations, competing for a place in the sun alongside companies from the US and Europe. Now imagine several hundred such companies. Now envision thousands. You are looking at a future where European, Japanese, and American companies, just like those from other mature markets, will compete not only with each other but also with Chinese companies and highly competitive firms from all corners of the globe: Argentina, Brazil, Chile, Egypt, Hungary, India, Indonesia, Malaysia, Mexico, Poland, Russia, Thailand, Turkey, Vietnam, and places you haven’t even thought of.Текст для перевода: ..
Companies from all these countries will persistently carve their way into the Fortune 500 by executing lucrative mergers and acquisitions of Western companies, with Budweiser as a prime example. These companies have experienced global and local management and established world brands. Companies from emerging markets, such as Petrobras and InBev in Brazil, Gazprom and Severstal in Russia, Reliance and Tata in India, and Lenovo and Huawei in China, will increase turbulence and disruptions. These companies are growing at record rates. The pace at which they acquire Western companies will accelerate as the global recession deepens more in North America and Europe than in emerging economic systems. In fact, in 2008, the number of companies from emerging markets in the Fortune 500 list reached 62, primarily represented by companies from BRIC countries. In 2003, there were only 31 such companies. Based on current trends, the number of these companies in the Fortune 500 is expected to continue increasing, potentially reaching one-third within the next 10 years.
Companies from emerging markets will continue to capitalize in the chaos caused by the shifting balance of economic power and political authority in the world. These extremely ambitious and aggressive companies will do everything possible to bring their competitors from developed countries to their knees, as the highest profit margins can be found in developed markets. These globally growing upstarts from distant lands will do whatever it takes to create enough chaos to confuse their victim companies from the developed world, allowing for acquisitions that will reshape the competitive landscape.