BRICs is an economic term designating the four newly rising economies, Brazil, Russia, India and China. It first appeared in the report of Goldman Sachs, a stock company of the US.
These four countries have been watched by the world as newly rising economies since the end of the 1990's. Experts in economics view that the four countries will be developed into the greatest economies of the world by 2030. They say that India's economy could be larger than Japan's by 2032, and China larger than that of the US by 2041. BRICs’ economies taken together could be larger than the G6 (The U.S., Germany, Japan, France, The U.K., Italy) by 2039.
This prediction is based on the following facts. Fifty years ago, Japan and Germany were struggling to emerge from reconstruction and thirty years ago, Korea was emerging from its position as a low-income nation. Recently, over the last decade, China's importance has increased among the world.
The four countries of BRICs have huge territories, population and underground resources. Above all, they have affluent labor. The total population of those countries together is 2.7 billion, more than 40% of the world population. Then, let's look in detail at what possibilities those countries have by referring to the data of Goldman Sachs.
Over the next 50 years, Brazil's GDP growth rate will average 3.6%. The size of Brazil's economy will overtake Italy by 2025; France by 2031; UK and Germany by 2036.
Russia's population should shrink, but strong convergence rates would work to Russia's benefit and by 2050, the country's GDP per capita will be the highest in the group, compared to the G6. Russia's economy will overtake Italy in 2018; France in 2024; UK in 2027 and Germany in 2028.
While growth in the G6, Brazil, Russia and China is expected to slow significantly over the next 50 years, India's grow rate will remain above 5%. India's GDP will outstrip that of Japan by 2032. It has the potential to raise its US dollar income per capita in 2050 to 35 times the current levels.
China's GDP growth rate will fall to 5% in 2020 from 8.1%. By the mid-2040s, the growth rate will slow to around 3.5%. However, high investment rates, a large labor force and steady convergence will lead China to become the world's largest economy by 2041.
First of all, the Brazilian market is controlled by multinational companies and divided into a high-price market and a low-price market due to the weakness of the technological field and earning differentials. Active export items are Information Technology equipment, machines, electronics, car accessories, security equipment, and so on.
Russia is divided into two market areas. Western Russia is the center of production and consumption, approaching the phase of growth. On the other hand, far-eastern Russia is the center of resource development, but is weak in the manufacturing industry. Since Russian people value human relationships with business partners, it is advisable to have face-to-face deals.
The Indian market is composed of 4 areas, New Delhi, Mumbai, Calcutta and Chennai. In India, the imbalance of income is increasing and the preference for domestic brands is very high. Also, Indian people are very sensitive to prices. Therefore, it is important to use the strategies that differentiate the degrees of consumption and social classes to suit the tastes of the Indian people. For instance, a refrigerator which can be opened and closed with a lock.
Chinese market has various characteristics and active export items according to the regions. Eastern China is the greatest consumption market (22.4% of the whole market) that is very open. Since Shanghai is the center of merchandising, it is important to cooperate with multinational companies. Northern China is active in the fields of Information Technology, cultural contents and automobiles, so the strategies focused on up-to-date technologies and accessories are needed. Southern China is the greatest market for import and the center of physical distribution. Therefore, active export items are electronic computer accessories and consumption goods for TV home shopping.
Those points mentioned above will help Korea to be more prepared and flexible in the market of BRICs.
While BRICs is considered as the next super power of the world, some worry that it is a hasty projection. They assert that four countries of BRICs will develope into the countries that hold economic supremacy.
It is difficult to say exactly whether these countries will lead the world in a few decades, but it is inevitable for Korea to be prepared for the economic changes of the world.
By Kim So-young
International reporter
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