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Sunday
Dec092007

Asian necessity: Mother of global invention

During my last trip to China, my hosts treated me with an elaborate dinner. Following the umpteenth course, one Beijing policymaker proposed, "Chinese society is based on food, but American society is based on sex." My rather tart reply: "Oh, yeah? Then how come Americans are so overweight, and there's a billion Chinese?"

After convulsing with laughter, my host declared that a strategist like myself would be better off working for the Chinese: "Compared to America, we face many more strategic puzzles." He was right, and lying therein was an inescapable challenge for American businesses: Access Asia's emerging markets or risk missing out on their coming wave of innovation.

I spent last week in Beijing for the same reasons a lot of foreign firms are jumping into bed with Chinese businesses: I want to access the sheer brain power being applied to the mountain of problems - both good and bad - that China must surmount in coming years to maintain its fantastic growth rate, not merely to find out what China learns but what China teaches.

Ten trillion dollars will be spent inside emerging markets in infrastructure development between now and 2030 in energy ($6 trillion) and water ($4 trillion) alone. Most will happen inside China and India at a pace not witnessed on this planet since America surged westward following our Civil War.

The doom-and-gloomers counter: "But their environments can't withstand all that development! They'll run out of water! All those cars will demand too much oil! All that coal-fired pollution will blot out the sun! And what about all the CO2 they'll emit? We'd need several Earths for all that growth!"

These well-intentioned voices would be right, if these emerging economies showed absolutely no imagination in their developmental trajectories. But I'm betting the Asians, along with South Americans and ambitious players elsewhere, will be smarter than that. These rising economies cannot mirror what we did; they'll have to zig where we zagged. And how they'll zig will be important, not just for the "advanced" West but for all those emerging markets to come in places like Africa.

By adding 3 billion new capitalists over the past quarter-century, we've sent globalization on the path to becoming truly global - ready or not. For example, a billion new consumers will join the global marketplace in the next decade, meaning people with disposable income who - strangely enough - want all the same things that we took for granted so long ago.

You might think Osama bin Laden has a big say on this, but he doesn't. In the grand scheme of things, his radical Salafi jihadists will be lost in the noise. Don't confuse the friction with the force. Ditto for anybody else putatively set to trigger World War III.

Global revolution is coming, all right, but it'll be those 1 billion new consumers driving that train, not the pious ascetics arguing for a return to some imaginary past-religious or environmental.

So here's my advice to anyone who suspects his or her industry or field will be impacted by this necessity-is-the-mother-of-invention explosion of creativity I see coming down the tracks over the next decades: Get yourself - on some level - to these emerging markets, especially China and India.

You and/or your company need to participate in that stunning infrastructural build-out and everything that's associated with it, not just in the accompanying research and development but in the mergers-and-acquisitions "roll-up season" in which tomorrow's corporate behemoths will be created as East meets West meets South meets North. Most of the resulting mergers will feature an Asian name, either fore or aft. So, if you think DaimlerChrysler was shocking, better fasten your seat belt.

By jumping in, not only will you get smarter, you'll learn how to sell to what Michigan economist C.K. Prahalad calls the bottom of the pyramid, or the working poor who will present the opportunity for highest corporate returns in coming decades.

You'll learn how to sell to people who don't have a lot of money but do have a lot of expectations, or basically the market Wal-Mart's mastered back here in the States and aims to conquer globally.

I know, I know. It's fantastic to think our global economy's future growth is dependent on a lot of poor people becoming both innovative and greedy at the same time, but, hey! That's how these United States were built.

So sit on the sidelines at your own risk.

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