BRIC Economies
The rise of BRIC economies has led to the
emergence of a new market to exploit for multinational corporations. The four
countries are characterized by a large population and a rising middle class
propelled by improving economic conditions. The product of choice I would offer
to these markets is Gatorade which is a sports themed energy drink. The choice
of Gatorade is because a major characteristic of a rising middle class is to
consume products that are conceivably different from everyday brands. The
everyday brands in mind in this case are Pepsi flavors and coca cola company
soda brands.
Brazil
Brazil is an economy in South
America. The economy has been on the rise for the last three decades and this
was only interrupted by the global recession back in 2009. Presently, the
economy boasts of a gross domestic product of $2.416 trillion. This has been
achieved with a growth rate that reached 2.9% in 2013. There have been a lot of
capital intensive investments in the industrial sector by the government as
well as by foreign investors. The high interests prevalent in the Brazilian
economy are an ideal incentive for foreign investors.
The economy is performing fairly
well with respect to imports and exports, the country performed well over the
last year with exports higher than imports. The exports stood at $18.71
trillion and the imports at $18.36 trillion. The economy had several industries
ranking in the top ten world percentile in terms of market share in the world
market. These included electrical machinery (18%), mineral fuels (14.4%),
nuclear reactors and parts (14.2%) and cars, buses and trucks (8.9%). The
economy is performing well but needs to have more exports. The negative aspects
that form the basic challenge are high interest rates and inflation which have
made local industries struggle in the face of foreign investment. The key to
improving exports and reducing imports lies in reducing interest rates for the
sake of domestic firms. This will improve production, reduce unemployment and
increase household incomes.
In relation to national debt, the
economy is still in a precarious situation with 59.2% of the GDP accounted for
by debt and external debt amounting to $475.9 billion. This does not bond well
for an economy on the rise. Positively though, the budget is on a surplus
meaning that efforts to cut down on the debt are working. The currency is
trading favorable when compared to the dollar with the average exchange rate
for 2013 being 2.153. The biggest corporations in the economy are Petrobras
(petroleum and energy), BR Distribuidora (fuel wholesaler), Telemar
(Communications), Telefonica (telecommunications) and Ambev (beer and soft
drinks). The government has worked tirelessly to reinvigorate relations with
its main partners with whom Brazil has strategic partnerships and these include
U.S., Japan and Western Europe. Transparency is on the rise in the economy with
the government having been a co-founder of the transparency organization Open Government Partnership. The
government also has a portal where the public is able to access information on
the utilization of public funds.
Russia
Russia as a nation is the former USSR or Soviet
Union. It is one of the largest nations in terms of land mass. In terms of
growth, the economy attained a GDP of $2.553 trillion in 2013 ranking just
ahead of the Brazilian economy (World Factbook, 2014). This was attained with a
growth rate of 1.3% over the year. The range of industries that contributed to
the phenomenal output in the economy varied in sector. The major industries
include extractive mining, machine building, defense, ship building, rail and
road transportation, agricultural machinery, power generators, scientific and
medical equipment and communication equipment.
The economy currently has a healthy balance of
payments with exports exceeding imports. The exports are mainly petroleum
products, metals, natural gas, chemicals, military products and wood. The
imports include machinery, pharmaceuticals, meat, optical and medical
equipment, vehicles and plastic. The extent of public debt stands at 7.9% of
GDP and an eternal debt value of $714.2 billion (World Factbook, 2014). The
Russian currency is trading favorably but is weaker than the Brazilian currency
trading at 31.82 to the dollar. The unemployment rate at the moment is bearable
although it could be improved. The major challenge with Russia is that its
exports do not quite match its potential due to the prevalence of the
‘communist’ image with few strategic trading partners. The nation has a
reputation for corruption ranking 127 out of 177 countries analyzed by
transparency international (Transparency International, 2014).
China
China is the most populous nation
and economy in the globe. This means that it is bound to have an economy to
reckon with. In the 1980’s the economy was mostly a closed economy but has
moved towards a market economy in recent times. The economy is spurred mostly
by a huge work force that works in the industrial sector as well as the
services sector. In terms of the GDP, the economy was ranked third with a value
of $13.39 trillion (World Factbook, 2014). The currency mode of determining the
GDP is not highly recommended in the case of china since the exchange is
determined by the government. The economy is on a phenomenal growth path having
achieved rates of 7.7% over the last fiscal year (World Factbook, 2014). Contribution
to the national output is mostly between the services sector and industrial
sector.
The balance of payments is healthy
for the economy with the exports ($2.21 trillion) exceeding imports ($1.95
trillion). The economy however has a considerably high level of external debt which
as of 2013 stood at $ 863.2 billion. The strength of the currency will help
going forward as the economy aims to reduce external debt. The currency traded
at 6.2 Renminbi Yuan to the dollar (World Factbook, 2014). Corruption is still
an issue in china with the transparency levels raising concerns with foreign
investors. The biggest corporations in china include Sinopec (Oil), China
National Petroleum (Oil), State Grid Corporation (utilities), Industrial and
commercial bank of China (banking) and China Mobile Limited (telecommunications).
This is the best performing BRIC country (O’Neill, 2011).
India
India is the second most populous
nation after China. In the past few decades, policies of liberalization have
opened up the economy. The growth unlike in many industrial economic
powerhouses has not been fuelled by the industrial sector but by the services
sector. Its main export is information technology related services. The economy
had an impressive GDP of $4.899 trillion making it the fourth ranked economy
globally. The services sector made a contribution of 56.9% to the total GDP.
The country is also witnessing a phenomenal growth rate having achieved 3.2%
growth rate in 2013. The main industries are textiles, food processing,
chemicals, transportation, software and pharmaceuticals (O’neill, 2011).
The economy at the moment has a
balance of payments that is skewed with the country import more than it
exports. The economy imported in excess of $100 billion more than it exported
in 2013. This may explain the huge external debt of $412 billion. The
unemployment levels are also high at 8.8%. The economy needs to cut down on
debt and increase employment levels to move forward. This will also help
strengthen the currency which currently trades at 58.68 units to the dollar. The
big five corporations in India include Indian Oil Corporation, Reliance
Industries, Bharat Petroleum, Hindustan Petroleum and State Bank of India. Corruption
is very prevalent in India. The levels of transparency are also low with the country
ranking 94th globally in the transparency index (Transparency
International, 2014).
The four BRIC countries have
economies that are performing well but each has its own unique challenges.
China and Russia have only recently begun to open up to the global market while
Brazil has high interests hindering internal growth and India is overly reliant
on the services sector. These are challenges that can be overcome with ideal
fiscal policies, greater transparency and increased export trade. At the moment,
China and Russia have the edge over Brazil and Russia but this may change as
they all have similar economic conditions. The marketing of Gatorade in these
markets will be focused on the middle class with whom a connection can be
created and the issue of price will not be an issue. Marketing in India and
China may have to be adapted to the markets as the markets have different
characteristics to Brazil and Russian markets.
References
O'Neill,
J. (2011). The growth map: Economic opportunity in the BRICs and beyond.
Sujatha,
B. (2006). BRIC economies: Opportunities and challenges (Brazil, Russia,
India and China). Hyderabad, India: ICFAI University Press.
The
World Factbook, (2014) Country Economic
data, Central Intelligence Agency, https://www.cia.gov/library/publications/the-world-factbook/geos/xx.html
Transparency
International (2014) Corruption by
country, http://www.transparency.org/country
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