The so-called BRIC economies have seen hype over the past years but that does now seem to be waning. In this euronews special programme from the Davos Economic Forum we are putting the BRICs under the spotlight. Looking at how robust they are, the effects of the slowdown, and who might just be slipping into their place.
The car test
The automotive industry is seen as a key indicator of the health of the global economy. Basically when things look up people buy cars. To discuss this and more euronews met up with Carlos Ghosn, a superstar of the car industry and CEO and chairman of the Renault Nissan Alliance.
euronews:“Carlos Ghosn, your empire stretches the globe; where are you seeing the biggest growth areas in the car market as we enter 2014?”
Carlos Ghosn:“Without any doubt China.”
euronews: “ You are entering China in 2016. Do you regret coming in a bit late?”
Carlos Ghosn: “ Well I am already in China and entering China; as you know Nissan is already the largest Japanese car maker in China with about seven percent market share and Renault has announced it is entering China, so we are very familiar with the market and we are very optimistic about the prospect of the market.
“In the case of Renault the plant will start producing in 2016 so this is where the real operation is and we think Renault has the potential to reach at least 3.5 percent of market share in China as a first step. Why 3.5 percent? – because this is the market share we have globally overall for Renault.”
euronews: “Are you concerned about the slow down in China though?”
Carlos Ghosn: “No, not so much. I don’t see it in 2014 by the way. I think for the last 10 years every year people showed some concern about maybe China is going to slow down next year; it never happened. I think the potential for the Chinese market is still so big in front of us. More than 90 percent of the people who bought a car in 2013 were first time buyers which means China is being fed, the market is being fed, by a lot of people who are buying cars for the first time.”
euronews: “ Do you think China is in a class of its own because we talk of BRIC economies, but China seems to have been moved away from that now.”
Carlos Ghosn: “China is maintaining a much higher growth of the BRICs, much higher because obviously it is the highest growth rate and I think in terms of investments in infrastructure, investments in education – which are the underlying forces of economic growth – they are doing a superb job. I think what Russia, Brazil and India are trying to do is to beef up their investments in infrastructures and education in order to catch up to the growth level they need or that they have the potential to have.”
euronews: “We hear of MINTs – Mexico, Indonesia, Nigeria,Turkey what is Renault Nissan doing there?”
Carlos Ghosn: “It’s coming. You know in Mexico Nissan is the number one car maker. Renault is selling, Renault is very big in Turkey this is one of our biggest markets. We have common investments in India with the Chennai plant with 400,000 cars a year and we are also very interested in Africa.
“So what I want to tell you is there is no country which has been neglected by us. We consider that a lot of countries – and particularly now with the focus in Africa – are new frontiers for the car industry.”
euronews: “Briefly then what about Europe?”
Carlos Ghosn: “Well Europe is coming back after five years of decline where the European market slid more than 25 percent. For the first time we have a positive forecast for Europe for 2014. It is not very big, a 1.0 percent increase after a 25 percent decline, but you know it is good to see an inflection in the European market. I think Europe will be on a slow growth mode for the car industry thanks to resuming consumer confidence. So I am cautiously optimistic about the prospect of the European market but nothing is going to be quick nothing is going to be significant for two or three years to come.”
euronews: “And finally have you got any predictions for 2014 what should we be looking out for?”
Carlos Ghosn: “I think it is going to be a year of recovery; that is how I would qualify it. Recovery in Europe, recovery in Japan, recovery in some of the emerging markets which didn’t have a great year in 2013 – like Brazil Russia and India where the car market was down. Recovery in the United States where the car market continued to recover to reach the level before 2013 that is how I would qualify it.”
Leading in the economic world
Carlos Ghosn is globally admired for his leadership skills and the World Economic Forum is keen to engender a discussion on the issue. So we spoke to some of the movers and shakers in Davos to find out what they think are the essentials for leadership in the future.
In the post-crisis global business world, it is clear that corporations have to adapt and innovate to stay on top. Of course, the people heading these firms are in the driving seat. What do WEF delegates think it takes to be a leader in 2014?
“Ability to collaborate – because things are changing so quickly,” said one.
“The big picture; it’s important people look in their own back yard, but also look over the fence,” added another.
“Cultural agility, because in the world of tomorrow it will be very important to deal with a lot of cultures and integrate them,” opined a third.
The CEO of Heidrick and Struggles – a top leadership advisory and executive search firm – told euronews that the best leaders of tomorrow all need to share a quality he calls “globality”.
Jory Marino: “It is clear to us that being a global citizen – being able to operate seamlessly in multiple cultures and be effective at all levels of an organisation are the key leadership qualities that we look for.”
Every year, the World Economic Forum in Davos provides a unique environment for business leaders to get together — and for those on the way to the top to view them in action.
Challenges for BRIC economies
Once at the forefront of global growth, the BRICs economies – Brazil, Russia, India, China and South Africa – had a bumpy ride in 2013 and this year is set to be another challenging one for them.
There is a lot of talk at Davos this year about who the new emerging market giants will be.
Some are predicting that in 2014 the BRICs could start making way for the new kids on the block – Mexico, Indonesia, Nigeria and Turkey – otherwise known as MINT.
But the International Monetary Fund says the catchy acronyms don’t tell the full story.
Both groups of emerging markets contain some economies that are very fragile – according to the IMF’s Deputy Managing Director, Ziu Min.
“The countries with big current account deficits, which means they depend too much on external capital – and the countries that have high inflation rates, which means the domestic economies are a little bit overheated. For those countries, it’s very important to use this opportunity to do structural reform, to carry on the policies of rebuilding the fiscal space and to tighten monetary policy,” said Ziu Min.
Brazil and India – from the BRICs – and MINT’s Indonesia and Turkey are all tackling large deficits.
So although the global economy as a whole is widely expected to do better in 2014, opinions are divided on which emerging markets will have the best year.
In our next programme we look at the role of humanitarian organisations in Davos, who remind the rich and powerful of their privilege and the potential positive impact they can have on the world.
In the meantime if you want to watch any of our stories again, got to visit our special web Davos web page