The emergence of the global middle class
By Steve Guglielmo and Herb Meyer
In order to manage effectively, you must know what trends are happening, how they will impact the economy and what opportunities they may generate. Presenter Herb Meyer, former Special Assistant to the Director of Central Intelligence and Vice Chairman of the CIA’s National Intelligence Council, will discuss key trends in politics, economics and culture on Monday, April 20th from 1:45 p.m. – 3:00 p.m. at MHEDA’s 2015 Annual Convention at the JW Marriott San Antonio Hill Country Resort & Spa in San Antonio, Texas. The MHEDA Journal had the opportunity to sit down with Herb and discuss his upcoming presentation.
TMJ: Could you give us an overview of some of the things that you will discussing at Convention?
Meyer: The title of the talk is “What in the World is Going On,” and it’s a global intelligence briefing. I’m going to give people a glimpse of what the world is going to look like in the next 10, 20, 30 years. At the moment, things are incredibly tumultuous, from the economy to the Ebola Virus to ISIS. What we’re going to discuss is what lies on the other side of the turbulence. The most important point I want to make is that the world is emerging from poverty at a rate we’ve never seen in history. It’s the biggest under reported news story in the world. Each year, between 50 million to 100 million human beings emerge from poverty. If this trend continues, within many of our lifetimes, the world will cross a line that has never been crossed before. For the first time in history, the overwhelming majority of the world’s population will not be poor. And as the world emerges from poverty, the customer base for every product and service grows at a rate of 50- to 100 million new customers per year. We’re seeing the emergence of a global middle class that needs every product and service these companies can provide.
TMJ: How are so many people now emerging from poverty?
Meyer: We figured it out. Some things you need to be a genius to figure out. Jonas Salk and the polio vaccine for instance. In this case you just need common sense. It’s the free market. Property rights, the rule of law, stable financial systems, reasonable regulation and taxation. Put that in place, your population comes out of poverty. It’s not complicated. Today, all over the world, governments are putting in place these free market mechanisms. Seven of the 10 fastest growing economies are in Sub-Saharan Africa.
TMJ: With the emergence of a more global economy, are the needs or desires of this potential customer base different?
Meyer: That’s one of the things I’ll talk about during my presentation is what people emerging from poverty will want. I’ll give you an example. I’m in the publishing business and if you want to buy one of my books, I’ll cut down a tree to make the book for you, ship it to you and burn fuel. Or, you can download the e-book. It’s the same content but there is no environmental damage and it comes at a fraction of the cost. Clever, inexpensive and green are the three words you’ll keep hearing. We have to create products that are clever, inexpensive and green.
TMJ: How can companies reconcile the demand in emerging economies with those of “established” economies?
Meyer: Many people don’t realize that America is the world’s leading exporter. It’s because we’re selling products and services to a customer base that has never been there before. A trend in our part of the world, what we call the modern world of Western Europe, Japan, the United States, etc. is that we’re aging very quickly. Populations are getting old. And old people don’t spend money the way young people spend money and that’s one of the reasons we can’t get the economy going. So on one hand you have to create products and services for an affluent aging population and on the other hand you have to create products that are clever and inexpensive and green for this gigantic new population. So you sometimes you find yourself with different products here and there. And that’s fine! You just have to be aware of who your customers are and what they need.
TMJ: What are the biggest mistakes you see companies making?
Meyer: The biggest mistake I see is companies are not aware that there is now a global middle class. The other thing is recognizing demographic trends. They’re slow to recognize that their customer base is getting older. And older people just buy things differently and use different products and services. One of the things you find in the intelligence business is that you have to know what you’re looking for to find it. So once I’ve explained what the demographics are and where we’re going and what it means, attendees will see something they wouldn’t have otherwise seen.
TMJ: How long has this been happening?
Meyer: You know what’s amazing? You go to some country you’ve never heard of before. You get to your hotel, go up to your room, push back the curtains and look outside. There’s traffic on the streets, a shopping complex on one side and a movie theater on the other. That happened in the last 30 years. The number of factories being built around the world is staggering in order to provide amenities that we take for granted. People halfway around the world in countries we can’t even find on the map are doing the same things we are on a Saturday night. They drive home from work, pick their kids up from daycare, stop at the supermarket, then flip on the TV while they eat their KFC for dinner. It’s happening everywhere. And to make that happen, you can see the products and services that you’ll need and what that means for an industry like this.
Make sure to register for the 2015 MHEDA Convention from April 18-22 in San Antonio, Texas, to see Herb Meyer speak in person. For more information, visit mheda.org.