TEN Digital Life
Netizens, E-Shoppers, and the New Internet Giants
ELEVEN Education
The Escalator to Higher-Paying Jobs
Part III THE LESSONS FOR BUSINESS LEADERS
TWELVE Paisa Vasool
How to Captivate the Newly Affluent in China and India
THIRTEEN The Boomerang Effect
The Global Impact of the Race for Resources
FOURTEEN Fast Forward
Doing Business and the Accelerator Mind-Set
FIFTEEN The BCG Playbook
Practical Strategies for Winning Over New Consumers in China and India
EPILOGUE A Letter to the Next Generation
Renewal and the American Dream
APPENDIX A Worlds of Difference
The Regions of China and India
APPENDIX B Risks and the Hit-the-Wall Scenario
How to Manage Volatility
Notes
Selected Bibliography
Acknowledgments
About the Authors
PREFACE
The rise of China and India, and the growing impact of these countries on the global economy, is a story that has been written about extensively. Historians, economists, and business professors, among others, have all sought to explain the extraordinary emergence of the world’s most populous nations in a library of books that have tumbled out of publishing houses over the past ten years.
So why publish yet another book on China and India?
The answer is this: no book has truly focused on the vital force that will transform these countries and their economies in the decade ahead—namely, the new consumers—or shown how companies can capitalize on the new opportunities. No one has written clearly about these consumers’ hopes, dreams, and ambitions. No one has closed the loop on income growth, education, jobs, and the net expansion of markets for food, apparel, housing, transportation, health care, education, and financial services. The complete picture—with all the detail of the rural and urban communities, the rich and the poor, and the burgeoning middle class—has yet to be drawn.
This book aims to fill the gap.
New Consumers, New Opportunities
Consumers in India and China are the new kings and queens of the global economy. They have fast-changing tastes and appetites, and they are transforming the world with their consumption. Consider the following facts, which provide a snapshot of what the opportunity is for the rest of this decade:
There will be nearly one billion middle-class consumers—some 320 million households—in China and India by 2020. They are demanding “more, better, now” for themselves and their children.
The number of billionaires is rising: in 2001, China had 1 billionaire and India had 4; today, there are 115 billionaires in China and 55 in India.
The two markets will give rise to some of the world’s most powerful companies. China already has three of the world’s top ten companies, ranked by market value: PetroChina, China’s ICBC bank, and China Mobile.
Some eighty-three million Chinese and fifty-four million Indians will become college graduates over the next ten years. Over the same period, the United States will see just thirty million new college graduates.
The rapid growth in both China and India has led to enormous growth in the consumption of the building blocks of households—from copper to corn to chicken to coal—plus almost every other ingredient important to better lives, particularly a diet higher in protein but also vertical dwellings with modern conveniences and vehicles of transportation of all kinds.
We estimate that the consumer markets of China and India will triple over the current decade and amount to $10 trillion annually by the year 2020. It is a once-in-a-lifetime prize. But how can it be won? That is the purpose of this book. The $10 Trillion Prize presents a manual for growth: the inside track to achieving success in China and India—and, as a consequence, the rest of the world—by captivating, and therefore winning, the hearts and minds of the new consumers.
After reading this book, leaders at companies with global ambitions will know how to segment, listen to, and engage the increasingly affluent consumers in China and India. It is easy to be swayed by the sheer number of consumers in the two countries and to think that success is just a matter of selling to a small fraction of them. But averages can be deceptive, and off-the-shelf statistics and generalized data can lead companies into making bad decisions and expensive mistakes.
We want readers to take the following steps in engaging the new markets in China and India:
Meet consumers “up close and personal”: understand how they make decisions about goods and how their hopes for the future translate into astounding market growth in food, health care, education, and transport.
Understand the size, shape, and timing of the opportunity. Segment the market according to income and geography—especially the urban and rural divide. See how the application of special “consumption curves” can predict the future.
Build the paisa vasool approach—the perfect mix of affordability, design, and features—into your global tool kit. Engineer every product and service with this approach. Make value for money the standard in Chinese, Indian, and Western markets.
Hear how market leaders are shaping their future with a ten-by-ten strategy: ten times as big in ten years.
Systematically understand risk and risk reduction in the world’s most challenging markets.
Use the book to create what we call the triple crown: a win in China, a win in India, and a win at home.
See how Chinese and Indian consumers will shape a new future for the world—and how they will do so with drama, emotion, conflict, and hard choices.
Understand the differences and similarities between China and India: one child versus five children; autocracy versus democracy; speed and authority versus choice; massive investment with few market safeguards versus returns guarded by capital markets; state capitalists versus private entrepreneurs.
Ask questions that will unlock spectacular growth and organizational resolve in China and India.
The Research: Client Work, Interviews, and Data
The $10 Trillion Prize is based on extensive on-the-ground experience, one-on-one interviews with hundreds of consumers, and access to business leaders and entrepreneurs in China and India.
Our company, The Boston Consulting Group (BCG), has a long history of advising clients and governments in these countries. In China, we began work in the 1980s, opened an office in Hong Kong in 1991, and were the first multinational consulting company to be authorized to conduct business in mainland China, establishing an office in Shanghai in 1993. Our office in Beijing opened in 2001. In India, we opened our Mumbai office in 1996, after nearly a decade of work in the country. The New Delhi office opened its doors in 2000. This year, we opened our third Indian office, in Chennai.
As an author team, we are veterans of these markets. Together, we have more than fifty years of on-the-ground experience in China and India, stretching back to the 1980s. We have advised major Chinese and Indian companies as well as multinationals seeking to enter these countries