India’s trade with Latin America was $11 billion last year. So, a long way to go. For historical context, China’s trade with LatAm was about $13 billion in 2000.
Indian companies’ success in the United States – especially in IT software and services, pharmaceuticals, engineering products puts them in a good position to gain a foothold in similar sectors in Latin America. Success case studies from the U.S. need to be played up during sales efforts in Latin America. And of course, the cultural fit with India and Latin America is quite good.
Also, Indian companies strength in the services sector is worthy of emulation by many LatAm countries, with small populations, who cannot be globally competitive in manufacturing.
The Associated Press:
China’s trade with Latin America was $102 billion last year, but already in the first nine months of this year it reached $111 billion, Chile’s ambassador to Beijing, Fernando Reyes, told The Associated Press. That compares with U.S.-Latin American trade of $560 billion last year.
“The United States maintains deep cultural and economic ties in Latin America ,” said Washington-based Nicholas Consonery of the Eurasia Group.
Technorati Tags: trade
As many have observed, the global order that is emerging has a distinct Asian tilt because of the rise of China and India as geopolitical forces. The two countries’ growing power may stimulate an “Eastphalian” order that challenges the Western-led approaches that dominated the Age of Imperialism, the Cold War and the post-Cold War period.
The term “Eastphalian” plays off the description of the international system as “Westphalian,” a moniker traced back to the Peace of Westphalia in 1648 that established the modern state system. Through Western imperialism, populations in the Americas, Africa and Asia were incorporated into the Westphalian system, a brutal process that labeled non-European societies as “uncivilized” as long as they had societies that did not resemble what prevailed in Europe and North America.
The idea of “Eastphalia” communicates that conditions have emerged in which Asian countries have a say in world affairs not dictated by, or subordinated to, Western ideas and interests.
In the post-Cold War period, from Asia has come emphasis on the principles of sovereignty and non-intervention in the domestic affairs of states. These principles oppose broad notions of the right to use force in self-defense, favor pluralism in political and economic regimes and reject the homogenizing zeal of democracy promotion; prioritizing civil and political rights.
Technorati Tags: geopolitics
Brand Equity-Specials-The Economic Times
A new global middle class is rising up from poverty in emerging economies around the world, providing competition for labour and resources, but
also enormous promise for multinationals that tailor products and services to the burgeoning ranks of first-time consumers, according to Wharton faculty and analysts.
Coca-Cola’s newly appointed chief executive Muhtar Kent sees this market as critical to his company’s future, and describes the scale of the opportunity as equivalent to adding a city the size of New York to the world every three months. The World Bank estimates that the global middle class is likely to grow from 430 million in 2000 to 1.15 billion in 2030. The bank defines the middle class as earners making between $10 and $20 a day — adjusted for local prices — which is roughly the range of average incomes between Brazil ($10) and Italy ($20).
The McKinsey Global Institute, the consulting firm’s independent economic research arm, projects India’s middle class will grow from 50 million to 583 million people in the next two decades.
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World Bank – Office of the Chief Economist –
According to the study Latin America and the Caribbean’s Response to the Growth of China and India: Overview of Research Findings and Policy Implications, concerns that both countries are displacing the LAC region in world markets for goods, services, foreign direct investment, and innovation are misleading.
Guillermo Perry, Chief Economist for the World Bank Latin American and the Caribbean region and one of the authors of the study, says despite the concern about the possible effects of the growth of these Asian economies on the LAC region’s manufacturing and services sectors, there is substantial evidence of positive aggregate effects associated with China and India’s presence in world exports, financial flows, and innovation.
China and India’s growth is creating new production possibilities for LAC economies, in particular for sectors that rely on natural resources and scientific knowledge.On the other hand, the study also indicates that some industries, firms and sub-regions are being negatively affected, specially industrial and electrical machinery, electronics, transport equipment, and textiles.
In sum, China and India’s growth has not been a zero-sum game for LAC, but the potential benefits are not being fully realized.
According to the authors, it is crucial that LAC countries take full advantage of the growing presence of China and India in world markets by adopting offensive strategies that facilitate both, the participation of LAC firms in global production networks and their commercial presence in the two Asian economies’ markets.
For governments, the study recommends avoiding protectionist temptations and focusing on facilitating the adjustment in affected sectors, as well as the emerging structural shift towards more natural-resource and scientific-knowledge-intensive sectors by adopting adequate education, innovation, natural resource management, and rural development policies.
Economy-News-The Economic Times
Take oilseeds. This year China expects to harvest 56 million tonnes oilseeds, a jump of 3 mt over last year. Soyabeans are China’s largest oilseed crop, and production has risen 25% in last five years. But consumption of soya as food has jumped 43%. Last year, China’s soya harvest slumped to the lowest in seven years. That’s why a 18-mt crop this year would be a welcome relief.
Since local vegetable oil production of less than 10 mt is not enough to meet Chinese demand of 23 mt, every year China also imports 2 mt palm oil from Malaysia and Indonesia, and is the single biggest buyer of soyabeans from US and Brazil.
This year, with rebound in its own production, China will not be in a hurry to import either beans or vegetable oil. That should cool down the international oilseed and edible oil market. There is currently so much edible oil in the Chinese pipeline that local brands chopped MRP by 10% last month.
The upside is that with vegetable oil affordable again, and the economy growing at 8%, Chinese families may start buying more. That could trigger higher imports again, putting pressure on the international market.
For Indian oilseeds industry, China’s temporary retreat from the world market couldn’t be worse timed. With a large soya crop of our own this year, the general bearish trend could settle down for the entire season if global palm and oilmeal markets remain lacklustre. Palm oil prices have fallen 47% from their March peak of 4,486 ringgit.
Indian companies, setting up large plants in an asset creation overdrive funded by extraordinary profits last year, would thus have to depend even more on savvy trading in a volatile market to keep bottomlines above water. Market players say even the usual 2% profit margin looks iffy.
Any short-term falls in oil prices will be merely blips in a long, relentless upward trend.
Finance Week UK
“China today consumes as much crude oil per person as the US did in 1905, before mass production of the Model-C Ford and long before the advent of the jet engine,” points out Robin Batchelor, manager of BlackRock’s BGF World Energy fund. “If China and India were to increase their consumption per person to current US levels, these two countries alone would require 160 million barrels per day, more than twice the world’s supply of oil today.”
While, in theory, higher prices should dampen demand especially in emerging markets, this has so far failed to be the case. Russia’s demand remains healthy and car registrations are up around 60% year-on-year and show no sign of waning. On top of that Investec says 85% of global demand growth for oil over the next two years is from countries that are subsidising prices which includes the emerging giants of China, India and the Middle East. “China’s net subsidies are around $45bn a year (a figure which we believe is affordable). However, the two countries where we would question the sustainability of the subsidies on a long-term basis are Indonesia and India, although we would not expect India to reduce subsidies ahead of the election this year,” it adds.