So if not China, then where?

In my last post I offered a provocative stance on multinationals’ development of their Chinese presence. A legitimate question to ask, then, is where will we grow and prosper if not China? It turns out that lots of regions and nations are experiencing growth that makes them attractive to multi-nationals. Both from a markets and a workforce perspective, there are more than a few alternatives. For the purpose of this posting, I’ll skip the obvious and mention a couple of places that don’t figure nearly as prominently on corporations’ radar screens. 

Did you know that the most profitable airline in the world, the second largest mining company in the world, and the fastest growing diversified bank in the world, and second-lowest energy costs  are all located in the same country? If you guessed Brazil, give yourself an A in globalization 101. Brazilis nowhere near shaking its historic plagues of extreme poverty , access to quality education, and institutional kleptocracy, but its GDP per capita is at $8800 (compared to China’s $6800) and growing. Better yet, with a median age of just 28.7 (nearly 4 years younger than China’s and a full 10 year’s younger than the US), Brazil is one of the few countries without a significant workforce demographic problem as we enter the next decade. Did I mention that Brazilian engineers score better than Chinese or Indian engineers on independent tests? Also, let us not forget that Brazil, depending on the policy direction its government chooses to pursue, has the size, population, and natural resources to potentially become the world’s first environmental superpower. It is the world’s largest producer of clean air (something the rest of us are consuming rather rapidly and, so far, for “free”), and has the potential to substitute close to 90% of the world’s current oil consumption with bio-fuels. Sounds like a promising future to me—not to mention a wealth of business opportunities for multinationals. 

Now let’s take a look at South Africa. When I toured service centers processing financial transactions for US and European organizations, I thought the capabilities I saw were groundbreaking. The best outsourcing facility, process, and quality of output I have ever seen—this from a guy that has lived over 75 different BPO and ITO relationships. The story of South Africa is far from written, and its own challenges are daunting: an HIV/AIDS epidemic, civil security, poverty and mass immigration from its even poorer neighbors, but there is a lot to get excited about as well. Innovative, global businesses seem to thrive in South Africa and its entrepreneurial culture is taking hold like in no other young democracy. The black middle class has grown from effectively zero to over two million people in about fifteen years and GDP per capita is on the rise. South Africa enjoys undisputed political and economic leadership in its region; making it an attractive launching point for future African ventures should the region ever become attractive to multi-nationals. 

Of course, there are others: Chile offers the lowest energy costs of any country and has a lower risk profile than India or China, and its stability and tax code rank it as more business-friendly than Germany. Companies like P&G, IBM, and Intel have had significant success with global operations delivered from tiny Costa Rica, to the point it has become the most challenging country for hiring in the world, according to a recent Manpower study. Panama and Colombia’s economies are booming in part due to foreign enterprise investment. New York City parking tickets are processed in the Republic of Ghana. Singapore has very publicly and very successfully set its sights on becoming a global knowledge hub. WhenTCS became the first Indian services provider to establish a service center outside of India, its destination was Uruguay.  

The list of non-traditional destinations with something to offer goes on—truly global Next Generation Enterprises will diversify their risk across multiple geographies and nations based on market factors, competitiveness factors, and talent availability factors.

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