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Around the World in 18 Minutes

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At this year's 50th Annual SAMA Conference, Blue Canyon Partners Principal David Hartman delivered an intriguing look towards where growth was coming from around the world. Questions addressed included, "Where is growth coming from and what should today’s business leaders expect?" "What will the impact of a continuing search for global growth among customer organizations be on strategic account management?"

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Around the World in 18 Minutes

  1. 1. © 2014 Blue Canyon Partners, Inc. Around the World in 18 Minutes SAMA 50th Annual Conference May 22, 2014
  2. 2. © 2014 Blue Canyon Partners, Inc. Around the world in 18 minutes David G. Hartman, Principal, Blue Canyon Partners
  3. 3. © 2014 Blue Canyon Partners, Inc. Around the World (of Market Growth)  Developing Asia - 60% of all the market growth in the world, nearly 40% in China  Japan and Europe have been in decline  The US has done better, and population growth points to a more dynamic future  Regions not shown account for about 30% of global growth, 3x as high as in the 90’s and higher even than during the oil crises of the 70’s Sources: 2012, World Bank, WDI, Blue Canyon analysis Percentage of 5-Year Global GDP Growth Accounted for by Selected Regions Population Growth Last 10 Years S Asia 15% Rest of E Asia 12% North America 9% China 5% Europe 4% Japan 0% Russia -1%
  4. 4. © 2014 Blue Canyon Partners, Inc. Around the World (of Market Growth) As recently as 2002, North America and Europe accounted for 70% of global market growth Sources: 2002 World Bank, WDI, Blue Canyon analysis Percentage of 5-Year Global GDP Growth Accounted for by Selected Regions
  5. 5. © 2014 Blue Canyon Partners, Inc.  In the five years to 1992, Asian developing countries accounted for less of global market growth than Japan alone  Other Markets were very small Around the World (of Market Growth) Sources: 1992, World Bank, WDI, Blue Canyon analysis Percentage of 5-Year Global GDP Growth Accounted for by Selected Regions
  6. 6. © 2014 Blue Canyon Partners, Inc. Around the New Frontier  Other than Argentina and Vietnam, the Frontier Markets are outside Asia and Latin America  With global growth faltering over the past 5 years, Middle East and Africa are home to some substantial growth  Population trends also provide a basis for continued long-term growth in those regions….or continued poverty Percentage of 5-Year Global GDP Growth Accounted for by Selected Regions Sources: 2002 and 2012, World Bank, WDI, Blue Canyon analysis 2012 2002 Population Growth Last 10 Years Sub-Saharan Africa 30% Middle East 22% Latin America 13% Developing Europe & Central Asia 6%
  7. 7. © 2014 Blue Canyon Partners, Inc. But Don’t Forget the New Frontier in China  Interior regions have per capital incomes a fraction of the most developed provinces along the coast  Wage increases faced by foreign and Chinese manufacturers are far less burdensome in the poorer regions where new development is taking place  Beijing, Shanghai, and Guangdong have fallen to the bottom  Companies looking for new “frontier markets” should look at the low- income regions of China as well as outside Sources: China National Bureau of Statistics, Blue Canyon analysis
  8. 8. © 2014 Blue Canyon Partners, Inc. What Else Is New in Frontier Markets? Chinese Companies as Strategic Accounts and as Competitors Where China has Been and Where China is Headed as a Global Competitor 1. Command and control to largely market-driven 2. Now a “must-win” market, needing partners to support them 3. Formidable competitors
  9. 9. © 2014 Blue Canyon Partners, Inc. Succeeding with Strategic Accounts in Frontier Markets Lesson What it Means Lack of a sophisticated B2B distribution infrastructure (e.g., factory automation) Logistics may be handled by Channel Partners, but solutions will be delivered by the Supplier, directly to Strategic Accounts. Importance of after-sale service (e.g., home renovation tools and equipment) Strategic Account buyers will need more hand-holding than is typical in mature markets. In some cases, entire new roles will need to be taken on by the Supplier. Importance of initial sales, versus the aftermarket (e.g., automobile parts) When markets are new, there may be a very small aftermarket because original products are too new to need parts and service. Focusing on original sales may be the only way to establish Strategic Account relationships.
  10. 10. © 2014 Blue Canyon Partners, Inc. David G. Hartman dgh@bluecanyonpartners.com @bluecanyonptrs

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