The document discusses the shifting global economic landscape, with emerging economies like Brazil, Russia, India and China (BRIC) contributing increasingly to global output. It analyzes GDP and economic growth projections for BRIC nations and other emerging markets over the next 40-50 years. Publishers are finding opportunities in these growing markets through expanding operations, accessing new talent pools and responding to rising research and education levels.

1. The New Information Economy: The Changing Landscape Victor Camlek Director, Market Intelligence Thomson Scientific 26 February 2008

2. Shifting Economic Power “ The world is moving from an era of geographically concentrated economic power to one characterized by multiple centers of economic and business activity.” “ The contours of the global economy are changing. The collective economic dominance of the United States, Europe and Japan—the so-called triad economies—is giving way to a greater dispersal of global economic power as developing economies contribute an ever-increasing share of the world’s output, trade and investment.” Accenture, The Rise of the Multi-Polar World Source: Accenture, The Rise of the Multi-Polar World , 2007

3. Global Implications Key drivers of globalization: The increasing power of information and communications technologies Government policies to increase economic openness The increasing size and geographic reach of the multinational enterprise is leading to: A search for new markets Taking advantage of economies of scale New sources of capital and labor The presence of multinational companies in emerging markets These forces are raising the potential competitiveness of many nations Source: Accenture, The Rise of the Multi-Polar World , 2007

4. Definitions of Emerging Economies Emerging economies Countries that are starting to participate in the global market place by implementing reform programs and undergoing economic improvement The term “ emerging market ” was originally coined by the International Finance Committee (IFC) of the World Bank to describe a fairly narrow list of middle- to higher-income economies among the developing countries, with stock markets in which foreigners could buy securities The term’s meaning has since been expanded to include more or less all developing countries Developing countries are those with a Gross National Income (GNI) per capita of $9,265 or less. (The World Bank classifies economies as low-income (GNI $755 or less), middle-income (GNI $756–9,265) and high-income (GNI $9,266 or more).

5. Emerging Economies: One View of the Future Acronym created in 2001 by Jim O'Neill, head of global economic research at Goldman Sachs GS explored the concept in depth in a series of Global Economics Papers including the 2003 groundbreaking analysis, Dreaming with BRICs: The Path to 2050 Although it was less than 15% of the world economy, the BRIC nations have the potential of overtaking all the G6 countries with the exception of the US & Japan First Wave-BRIC Source : Goldman Sachs Brazil Russia India China

6. Emerging Economies: The BRIC Nations Brazil Russia India China Economy forecast to grow by annual average of 4.1% from 2008-12 Long-term forecast is much lower: 2.2% GDP Growth expected to average more than 5% per year 2008-2012, boosted by high oil prices Capacity constraints may slow the pace of institutional change Real ruble appreciation may lead to decelerating pace of economic expansion Real GDP growth forecasts anticipate decline from 11.4% in 2007 to 8.4% by 2012 Inflation rose to 7.1%, highest level in 11 years; may climb to 8% Source : Economist, Country Briefings Real GDP growth forecast to slow from an estimated 7.8% in fiscal 2007/08 to an annual average of 7.5% each fiscal year through 2013

7. BRIC: The Goldman Sachs 50-Year View Based on GDP growth , income per capita and currency movements “ The results are startling. If things go right, in less than 40 years, the BRICs economies together could be larger than the G6* in US dollar terms. By 2025 they could account for over half the size of the G6. Of the current G6, only the US and Japan may be among the six largest economies in US dollar terms in 2050.” “ The list of the world’s ten largest economies may look quite different in 2050. The largest economies in the world (by GDP) may no longer be the richest (by income per capita).” Further implications In US dollar terms, China’s GDP could overtake the US by 2039 By 2039, India’s economy could be larger than all but the US and China “ India has the potential to show the fastest growth over the next 50 years.” Source : Goldman Sachs , Dreaming With BRICs: The Path to 2050 , D. Wilson & R. Purushothaman, 1 st Oct. 2003, Global Economics Paper No: 99 *G6= France, Germany, Italy, Japan, UK, US

8. The Largest Economies in 2050? ( 2003 US$ in billions ) Source : Goldman Sachs, 2003 China US India Japan Brazil Russia UK Germany France Italy

9. Emerging Economies: On the Horizon South Korea Mexico Malaysia Poland Saudi Arabia Singapore Thailand Turkey Source : Accenture, Rise of the Emerging Market Multinational , 2008 The Next Wave Still to Come Identified through in-depth analysis by Accenture Emerging markets include all “newly industrialized Asian economies” and “other emerging market and developing countries,” as classified by the International Monetary Fund Czech Republic Egypt Hungary Indonesia South Africa Venezuela Vietnam

10. GDP Source : CIA World Fact Book 2007 (online) GDP = Gross Domestic Product or the value of all final goods and services produced within a nation in a given year

11. There are Multiple Ways to View GDP GDP PPP (Purchasing Power Parity) GDP at purchasing power parity exchange rates = sum value of all goods/services produced in a country valued at prices prevailing in the US Preferred by most economists when looking at per-capita welfare and comparing living conditions or use of resources across countries GDP Official Exchange Rate (OER) GDP at official exchange rates = the home-currency-denominated annual GDP figure divided by the bilateral average US exchange rate with that country in that year Nominal GDP GDP growth in normal prices (unadjusted for price changes); not adjusted for inflation Real GDP growth Adjusted for price changes Calculating real prices allows economists to determine if production increased or decreased, regardless of changes in the purchasing power of the economy Sources : CIA World Fact Book 2007 (online); D&B

12. Comparative Economic Indicators: The G6 + BRIC * GDP (purchasing power parity) ** At Official Exchange Rates See notes for definitions Source : CIA World Fact Book 2007 (online) 1.7% $1.86 trillion $1.8 trillion 58,147,733 Italy 4.1% $2.47 trillion $1.84 trillion 190,010,647 Brazil 1.5% $2.24 trillion $2.07 trillion 63,718,187 France 11.9% $1.25 trillion $2.08 trillion 141,377,752 Russia 2.4% $1.27 trillion $2.15 trillion 60,776,238 UK 2.0% $3.02 trillion $2.83 trillion 82,400,996 Germany 5.9% $894.1 billion $2.96 trillion 1,129,866,154 India 2.0% $5.10 trillion $4.31 trillion 127,443,494 Japan 6.2% $2.53 trillion $7.04 trillion 1,321,851,888 China 2.7% $13.75 trillion $13.86 trillion 301,139,947 US Inflation GDP** GDP PPP* Population

13. Real GDP Growth Source : D&B Country Profiles Growth Pct.

14. Nominal GDP Source : D&B Country Profiles US$ in Trillions Unadjusted for inflation

15. ADDITIONAL DRIVERS

16. Global R&D Spending by Region Asia 36.9% 40.8% 2006 2008E Europe 25.2% 23.9% Americas 35.7% 33.1% Europe Americas Asia Source: R&D Magazine , September 2007 RoW 2.1% RoW 2.2% “ R&D Magazine, forecasts that global R&D spending will reach $1,210bn in 2008, 7.6% higher than in 2007. Much of this growth continues to be fueled by a rapid expansion of R&D in China, whose spending is expected to grow by nearly 24% in 2008 to $216.8bn — about 18% of global spending, up from 14% just two years ago.”

17. Global R&D Spending by Country China 13.5% 17.9% 2006 2008E ROW 45.3% US 32.7% 33.1% RoW 3.7% US India 50.1% India 3.7% Source: R&D Magazine , September 2007 China Although the US still represents 1/3 of R&D spending, China continues to gain share

18. Source: National Science Foundation: Asia's Rising Science & Technology Strength: Comparative Indicators for Asia, the EU, and the US http://www.nsf.gov/statistics/nsf07319/figures/figure5.xls Overall, Asia produced almost as many S&E doctorates in 2003 as the US In 2001, China conferred more than 8,000 S&E doctorates, up from ~ 1,000 in 1989 The two Asian runners-up were Japan (7,400) and India (est.5,400) By 2003, China graduated 12,200 new S&E doctorates Doctoral Degrees Awarded in Asia

19. Source: National Science Foundation: Asia's Rising Science &Technology Strength: Comparative Indicators for Asia, the EU, and the US ; TSMI Estimates, ww.nsf.gov/statistics/nsf07319/figures/figure5.xls # Chinese Doctorates Expected to Grow Dramatically China is expected to continue its dramatic growth The US will level off

20. So What? Recent economic forecasts continue to indicate strong opportunities for both sales and operations in China and India Publishing industry seems to be following the trajectory set by the top emerging economies, especially China and India Publishers are finding potential new business opportunities Publishers are taking advantage of highly-educated and lower-cost workforces Appeal of offshoring should continue to rise Once highly focused on only IT-type positions Services dominated economy leads to increased opportunities to offshore professional jobs

21. CHINA & INDIA

22. China: Recent Economic Trends Economic growth is slowing Revised measurement of purchasing power parity has lowered China’s share of the global economy somewhat Estimated share of global economic output reduced to 9.7% from 14.8% However, China likely to continue to grow robustly despite weakened outlook for global economy Government has begun to address inflation problem (7.1% in Feb 2008, highest level in 11 years) Source : IMF, Gartner, Hype Cycle for Emerging Technologies in China , 2007 China's Inflation Hits 11-Year High , http://money.cnn.com, Feb 19, 2008

23. China Educational Reform China Reforms Its Educational System In 1998, China began an effort to consolidate institutions, increase funding, and reorganize its educational system, resulting in more efficient administration, reduction of competing programs, a more flexible curriculum, and rapid expansion of enrollment (Hsiung 2005). As a result of this effort, natural sciences (science, agriculture, and medicine) and engineering enrollment in Chinese universities grew from roughly 1.8 million students in 1995 to 5.8 million in 2003. More than half of all undergraduate students were enrolled in these fields in 2003. Despite reforms, several challenges remain, including increased class sizes, lack of autonomy from the government, and little academic freedom for faculty. Source : National Science Foundation, Science & Engineering Indicators 2006, Chapter 2

24. India: Recent Economic Trends Growth continues, fueled by IT, telecom, manufacturing, business processes (largely outsourcing of business functions) By 2025 the country could have more than 580M middle-class consumers Revised measurement of purchasing power parity has lowered India’s share of the global economy somewhat Estimated share of global economic output reduced to 4.3% from 6.3% Government working to control inflation and avoid an overheated economy (4.07% as of 2/2/2008) Rate cuts are likely in 2H2008 In spite of growth, economy hampered by: Limits on foreign direct investment Slow pace of economic reforms Social and cultural constraints Source : IMF; Economist, Backgrounder: India’s Economy , 31 Dec 2007; RTT News, 15 Feb 2008; Deutsche Bank, Global Economic Outlook , 14 Feb 2008

25. India Educational Reform India to Create 40 New Universities India's university system is the focus of a reform and development agenda To ensure that at least a fifth of the population age 18 to 24 go to college, up from ~ one tenth, the government will set up five new Indian Institutes of Science Education and Research, eight new Indian Institutes of Technology, seven new Indian Institutes of Management, and 20 new Indian Institutes of Information Technology Source : Indian PM Describes Plan to Create 40 New Universities, Chronicle.com, 17 Aug. 2007

26. PUBLISHER BUSINESS OPPORTUNITIES

27. Recent Publisher Momentum Towards Asia Pacific Growing economies Especially China and India Mature but attractive markets in Japan Economics Demographics Opportunities Highly skilled workforce India stands out for publishers offshoring Large pool of technical workers Favorable cost situation Increasing market for information services Growing offshoring environment Internet penetration will rise dramatically

28. Publishers Respond to Growth in Asia Pacific Source: Simba, Global STM Publishing 2007-2008 , Scientific & Technical Publishing, 2007 “ The demand for scientific and technical materials in any particular market is linked directly to the level of research and development spending. The commitment to R&D is long established in the U.S. and Europe. Now R&D spending is on the rise in places like China and India, so publishers have increased their presence in those markets.” – Simba

29. Publishing in Asia Pacific Growing from $110B (2003) to $144.3B (2013) Anticipated CAGR (2007-12) 3.3% Split by Publishing Media-space Newspapers (30.9%) Books (22.9%) Magazines (23.4%) Advertising (23.2%) Source : Datamonitor, Industry Profile, Publishing in Asia-Pacific , 2007 Market Share by AP Country S. Korea 14% Japan 50.4% China 20% Rest of AP 10.5% India 4.9% Growth in Publishing in Asia Pacific Together, Japan and China account for 70.4% of the AP market

30. Internet Market in Asia Pacific Source : Datamonitor, Industry Profile: Internet Access in India , 2007 Together, Japan and China account for almost 2/3 (66%) of the AP internet market Total AP revenue in 2007: $122.7B India 5.5% Japan 35.5% China 30.5% S. Korea 16.6% Rest of AP 12.4%

31. Publishing in China Estimated to be a $24.6B market (2007) Forecast to reach $34.6B (2012) CAGR 2007-2012 forecast to be 7.1% Book sales form the leading segment of China’s publishing market (38.1%) Magazines (24.8%); Advertising (18.9%); Newspapers (18.2%) follow STM Publishing and Science Press Average growth rate is 14.2%, faster than average growth rate of the total publication value of China Mathematics, physics, biology, medicine and environment >15% growth Input into scientific and technological innovation “enhanced” year-by-year Investment in higher ed will be increased Libraries increasing budgets for books, periodicals and related materials Major sci-tech publishers have been developing rapidly in the past 3 years (15-30% average YoY growth); forecast to be 10% 2006-2009 Sources : Datamonitor, 2007; China STM: China’s STM Publishing and Scientific Press , Xiang Anquan, Editor-in-Chief, Science Press

32. Internet Industry Growth in China Generated total revenues of $10.6B in 2006 (19.3% CAGR 2002-2006) Forecast to grow to $20.4B by yearend 2011 (14.1% CAGR 2006-2011) 130.4M users in 2006 (CAGR 21.9 % 2002-2006) forecast to be 229.7M by 2011 (12% CAGR 2006-2011) Source: Datamonitor, Industry Profile: Internet Access in China , 2007 Internet Access: Market Value Forecast 2006-2011 $USB Internet Access: Market Volume Forecast 2006-2011 Mn Users

33. Publishing In India Estimated revenue: $6.1B 15K publishers 80K books in 24 Indian languages and English Outsourcing of publishing activities has emerged as major area of interest Visible interest in eJournals and Open Access Source : Datamonitor, Media in India; Gobi International , 2007; Speech by Shri Keshav Desiraju, Jt. Sec’y, Ministry of Hum. Res. Dev., Gov’ t of India, Delivered at the Frankfurt Book Fair, 2006

34. Internet Industry Growth in India Generated total revenues of $1.9B in 2006 (33.3% CAGR 2002-2006) Forecast to grow to $5.7B by yearend 2011 (24.4% CAGR 2006-2011) 85.4M users in 2006 (CAGR 50.6% 2002-2006) forecast to be 274.6M by 2011 (26.3% CAGR 2006-2011) Source : Datamonitor, Industry Profile: Internet Access in India , 2007 Internet Access: Market Value Forecast 2006-2011 $USM Internet Access: Market Volume Forecast 2006-2011 Mn Users

35. Global Publisher Momentum Towards Asia Pacific Product development: Regional content Local language Dedicated interface/portal Publishing partnerships Local publishers Regional academic institutions/consortia/research institutes Regional sales/marketing/editorial/production facilities Thomson Scientific Elsevier Oxford Springer Wiley-Blackwell Wolters Kluwer Selected Publisher Initiatives Publishers with Regional Facilities

36. Spotlight on Global Publisher Activity STM publishing programs in Asia; Wiley India Private LTD. is the 4 th Wiley Partnership with Chinese Ministry of Information Industry (MII) to develop the Thomson Joint Laboratory for Intellectual Property Development, which enables Chinese citizens to access its patent databases through the MII Lab facility Strategic Partnership With Chinese Academy of Sciences to host Chinese Science Citation Database Innovation in China website Two editorial centers in India Thomson Scientific Launched Nature China and Nature India, websites to highlight region’s scientific research Launched NPG Nature Asia-Pacific to handle editorial, marketing, sales, print and web production for the Group in the region; develop the Nature brand in AP, developing society-owned publications; create a publishing service Nature Publishing Group (NPG) Springer in China—co-publishing initiative with Chinese institutions Springer Global expansion as part of strategy: Local content in select markets–India, China, Spain/LatAm, Brazil Wolters Kluwer Targeting growth in international markets (Europe, China, India, S. America) as “critically important to our future.” Science available in Chinese and Japanese translations AAAS Asia Pacific Interface LexisNexis China Joint venture with Infomedia Elsevier Collaboration with Chinese Chemical Society to build its presence in China; opened an office close to the Chinese Chemical Society’s Beijing office Royal Society of Chemistry Opened office in Beijing devoted to academic journals to continue to strengthen/ develop relationships with leading Chinese researchers/societies Oxford University Press Initiatives Focused on Asia Publisher

37. OFFSHORING

38. Key Definitions Outsourcing Utilizing another company to perform services that your own employees otherwise would perform Offshore Outsourcing Outsourcing to another company in a foreign country to perform services that your own employees otherwise would perform Offshoring Utilize a subsidiary of your own company to provide services that could be performed more locally

39. Offshoring in China and India: A Shifting Landscape India A CapGemini survey found that India will become a substantial manufacturing destination over the next three to five years China IDC forecasts that China will overtake India by 2011 due to massive investments (e.g. infrastructure, English language, internet connections & technical skills) Source : Marketing Charts, IDC: China to Overtake India in Offshore Delivery in 2011 ; CapGemini, Offshoring Evolution: Changing Trends in India and China Across Industries , 2007 China and India: largest market share in offshoring overall (manufacturing, customer service, IT, finance, R&D) China: preferred for manufacturing India: preferred for IT, finance, customer service activities

40. Offshoring: China Currently strongest in manufacturing, but R&D, customer service and IT forecast to grow significantly Outsourcing Activities in Three to Five Years Compared to Today Source : CapGemini, Offshoring Evolution: Changing Trends in India and China Across Industries , 2007

41. Offshoring Trends Among Publishers India Offshoring market estimated to be $440 M in 2006 Estimated to be $1.46 B by 2010 Growth per annum: 35% 100 vendors with around 26,000 employed in publishing-related roles in 2006 96% of vendors have Academic & STM publishing capabilities 57% of vendors have Educational Publishing capabilities 39% of vendors have Legal publishing capabilities Source : Offshoring in the Publishing Vertical : An update ©ValueNotes Database Pvt. Ltd “ While STM/Academic and educational publishing have been the front-runners in offshoring, the legal segment is catching up quickly.”

42. Types of Services Performed Editorial Operations (Data Services) Design Training IT The ValueNotes report based on primary research indicated that among STM/Academic, Educational and Legal Markets: Indexing is at a medium level of maturity Abstracting is at a low level of maturity Tagging and metadata are at a high level of maturity Source : Offshoring in the Publishing Vertical : An update ©ValueNotes Database Pvt. Ltd

43. Conclusion Significant growth and business opportunities prevail in Asia Pacific markets, led by emerging opportunities in China and India The availability of highly skilled, and lower cost labor in Asia Pacific, most notably in China and India, creates a significant economic incentive to off-shore professional jobs including business analysts, researchers and other positions including indexers/abstractors There is a huge potential market for information services in “emerging countries”, led by China and India, that is attractive to publishers, at the same time that information is under some duress in established markets Business risks need to be assessed Publishers will focus on: Revenue growth based on need for global content from China and India and other countries within Asia Pacific Improved competitive advantages from offshoring operational processes

44. Thank you for attending my presentation Victor Camlek Victor Camlek Director, Market Intelligence Thomson Scientific [email_address]