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India and China, with their large populations and steady rates of growth, have long been seen as the solution to help the markets and thereby the world tide over the continuing economic crisis plaguing the West. The Trillion Dollar Prize is a book that focuses especially on the rise of the new markets and new consumers in these two countries. It is directed at the business community seeking new markets and new avenues of profit. It is designed to provide a comprehensive understanding of Indian and Chinese consumers, their spending patterns, the rural-urban difference on both sides, their aspirations and increasing spending power, so that firms can tap the potential of the two markets. As the editors say, “The book is intended to serve not only as a manifesto, setting out the once-in-a-lifetime opportunity in China and India, but also as a manual providing a practical how-to guide to winning in these two countries and the rest of the world”.
The book does a credible job of studying the patterns of consumption, the rise of the middle class and the new rich in these countries by segregating consumers not only by income but by region, the urban-rural divide and by gender. The authors have provided illuminating data, with special focus on changing patterns of consumption and rising standards of living. According to their very positive projections, annual per capita income till 2020 will increase on average from about $4,400 to $12,300 in China and from $1,500 to $4,400 in India. China’s upper class will grow from 109 million to 202 million households, while India’s will rise from 9 million to 32 million households, and its middle class will jump from 63 million to 117 million. It is this tripling of incomes in the two most populous countries and, consequently, their increasing purchasing power, that will drive global growth and patterns of consumer spending. Coupled with statistics are personal stories of the new consumers in each country, who a decade ago would never have dreamt of the life-styles they now lead. Most importantly, it shows that each segment is hopeful about the future, justifying economic reform. The future trend in both countries is that of a growing middle class and decreasing levels of poverty. Of course, China is ahead of India in almost every aspect—from infrastructure, education and health to consumption of resources and commodities. The difference exists, perhaps, due to the twenty-year gap between 1978, when China kickstarted its economic reforms, and 1991, when India started its own reform programme.
While the rich are driving the growth of high-end luxury goods, adding to the coffers of Gucci and bmw, the book has a strategy for penetrating each segment and spends considerable attention on how companies can reach out to the lower and middle classes and the rural segment through what the authors call the ‘Paisa Vasool’ or money-worth strategy of wooing the price-sensitive Chinese and Indian consumer. Here, they advocate clever marketing and making affordable sizes, like Coca Cola has done in China or Godrej in India. The book also rightly points out how, despite organised retail growing in urban centres, the local informal markets and the small mom-and-pop stores still retain a large share of the market in rural areas and therefore must be integrated into the retail strategies of big multinationals.
Overall, the book paints an optimistic scenario for the continuing growth in India and China. It does mention in passing that Asia rising could turn into Asia uprising if governments fail to meet the aspirations of a new generation, exposed through the internet and television to the many possibilities available for enrichment and consumption. It also cautions on the negatives of increasing consumption in China and India. The chief being rising prices of food and other commodities, especially energy, leading to the constant fear of inflationary pressures that can stymie growth policies. The authors could have devoted some space to these and other internal political and economic contradictions. Both nations have major domestic political concerns and both states, whether India, with its populist and often opportunistic democratic politics, or China, with its one-party state, face popular protests on issues of land, pollution and, above all, corruption. Ad-hoc state policies and crony capitalism can vitiate investment atmosphere and internal instability can derail the positive future market scenario so gustily painted by the authors.
(The author teaches at the Department of East Asian Studies, Delhi University)