What's New

Mckinsey's "Next-shoring: A CEO’s guide"

In a new report - Next-shoring: A CEO's Guide, January 2014, McKinsey Quarterly shows that robtoics and 3-D printing do not necessarily spell the end of outsourced manufacturing to emerging markets. Click here

What Mckinsey terms "Next-shoring" means -

"Proximity to demand and innovative supply ecosystems will trump labor costs as technology transforms operations in the years ahead".

"Next-shoring isn’t about the shift of manufacturing from one place to another but about adapting to, and preparing for, the changing nature of manufacturing everywhere".

"In the world we’re entering, the question won’t be whether to produce in one market for another but how to tailor product strategies for each and how to match local needs with the latest veins of manufacturing know-how and digital expertise".

At the end of the day, the world's rapidly changing and much more diffused technology and innovation landscape translates into how best to make things better and more cost-efficiently across the globe and how best to supply the biggest customers that bring in the largest revenue streams.

China with her rapidly rising middle class is poised to become at least one of the world's largest consumer markets.The exploding consumer demand is characterized by huge differences in regional tastes, trends and supply chains. Click here

Additionally, where economics dictate, China is also starting to embrace the latest technologies such as robotics and 3-D printing, which, after all, are not rocket science.

Moreover, the rise of internet-savvy Chinese business giants such as Alibaba and Tencent is rapidly shaping how consumer demand is met, making China the world's largest "e-tailing" marketplace. Click here

China has built up a peerless, super-efficient, global supply and production chain supported by excellent infrastructural links to the four corners of the globe, including six of the world's busiest container ports.

On the basis of McKinsey's "Next-shoring" findings, therefore, China may not necessarily lose her position as the world's most vibrant manufacturing and consumer business hub any time soon.

However, a recent McKinsey Quarterly report (3-D Printing Takes Shape, January 2014) shows here how fast-evolving disruptive technolgies and capabilites of additive manufacturing are vastly shortening product development cycles, creates efficient besspoke products, and spawns new manufacturing strategies and footprints. China's manufacturing and consumer business hub will need to harness these new technologies and strategies quickly to stay ahead of the game.

The Golden Age of Gas

"Shale gas should make the world a cleaner, safer place" - The Economist, 6 August, 2011 Click here

The Map of the Golden Age of Gas shows that China and America have respectively the world's largest and second largest technically recoverable shale gas reserve. The IEA scenario chart shows that the share of unconventional gas, including shale, is increasing from 12% in 2008 to 25% of global gas production by 2035.

An Economist Intelligence Unit report 2011 (Table 1-3) shows China has the world's largest technically recoverable shale gas resources at 1,275 trillion cubic feet, ahead of the United States at 862 tcf. China lags behind the U.S. in shale gas technology and has still to roll out a comprehensive plan to grow the market and achieve economy of scale. These difficiencies, however, are not insurmountable. Click here

Shale gas is set to become a gloabl game-changer as it defines the global energy landscape, with epochal repercussions in geopolitics across the globe. For starters, it will significantly reduce global oil dictatorship of the Middle East (Chapter 6 - Hot, Flat and Crowded, Thomas Friedman, 2009) as well as change energy game plans in the United States and China.

China's shale gas reserves are located in much more difficult geological terrain. Moreover, shale gas extraction is extremely water-intensive with high risks of aquifer contamination. So a water-scarce and water-polluted China has to figure out how best to square the circle.

The following reports contain useful data and ideas for the future, addressing broader issues of the environment, Climate Change, governance, and energy geopolitics.

"Abundant Shale Gas Resources: Some Implications for Energy Policy" dated April, 2010 
by Stephen P.A. Brown, Steven A. Gabriel, and Ruud Egging, a Background Paper for the Resources for the Future and National Energy Policy Institute project “Toward a New National Energy Policy: Assessing the Options” Click here

Are we entering a Golden Age of Gas? Special Report, World Energy Outlook 2011, International Energy Agency. Click here

World Shale Gas Resources: An Initial Assessment of 14 Regions Outside the United States, U.S. Energy Information Administration, 5 April, 2011 Click here

Golden Rules for a Golden Age of Gas "Special Report on Unconventional Gas", World Energy Outlook 2012, International Energy Agency Click here

Edge Debate, ""Shale Gas: A game changer?", 23 April, 2012  Click here

"China has high hopes for shale gas"", Worldwatch Insitute, 16 August, 2012 Click here

Central China Will Be the Battleground Where- Shale Gas Competes With New Low-Cost Coal Supplies, ChinaSignPost, a strategic analysis organisation -28 Sept, 2012

Download ChinaSignPost - Central China Will Be the Battleground Where- Shale Gas Competes With New Low-Cost Coal Supplies, 28 Sept, 2012

"China's Growing Natural Gas Insecurity and the Potential of Chinese Shale Gas", John Seaman, IFRI, a  leading Paris-based global think tank, April, 2013 Click here

"From Sunset to New Dawn", an article in The Economist, 16 November, 2013, shows how a golden age of gas would help turn America's industry and economy around, creating millions of new jobs across many sectors. Click here

"China Natural Gas Shortage Poised to Drive Record LNG Imports", a report dated 9 December 2013 by China SignPost  Download China's Gas Shortage Poised to Drive Record LNG Imports, ChinaSignPost 

"China's shale gas revolution - Will it take off?" - A report dated 17 January 2014 in China Dialogue, a publication on China's environment, shows how western energy companies are flocking to China to help unlock its shale reserves. Click here

The explosive growth of China's new consumers

The salient features of the explosive growth of China’s consuming middle class are captured in the McKinsey Quarterly report – Mapping China’s Middle Class (June, 2013) here  -

• Urban consumers (those with $9,000 - $34,000 household income, which in Purchasing Power Parity terms(roughly 2.5 times) would be equivalent to those in Brazil/Italy) are expected to grow from 4% (2000), 68% (2012), to 75% (2022) of urban population.

• The share between the Upper Middle Class ($16,000 - $34,000) and the Mass Middle Class ($9,000 - $16,000) will be reversed from 14% v 54% in 2012 to 54% v 22% by 2022.

• The drivers of such growth are expected to shift from Megacities (Tier 1) to Tier 3/4 cities from a proportion of 40% versus 15% + 3% in 2012 to a proportion of 15% versus 31% + 8% by 2022.

• The new Generation 2 (G2) consumers (those up to 25 years of age) number 200 million, accounting for 15% of urban consumption in 2012. They will take up 35% of urban consumption and will be numerically three times larger than the United States baby boomers by 2022.  

To find the holy grail to this massive and yet diversified growth, Mckinsey Quarterly comes up with a specific report - Winning the battle for China’s new middle class here which stresses the following -

• While functionality used to dominate purchases, the young upper middle class are increasingly attracted by emotional and aspirational factors

• As the market is non-uniformed across regions, age groups, and other differences, a dual track or multi-track strategy is advisable aiming at different market segments.

• Timing of transition from the lower to the higher end is the key, as well as -

• Innovative, on-the-ground, and interactive marketing methods where suitable.   

The Next Chapter of China’s consumption is the rise of the Generation 2 consumers and e-tailing as their preferred mode of consumer experience. China is now the world’s largest e-tailing marketplace.  Click here    

As proof of transition to a demand-led consumer economy, a panel discussion of the Economist Intelligence Unit in late 2013 suggested that China by year end would have become the world’s largest grocery market, the largest luxury market, and also the largest e-commerce market. China is also expected to spend more on retail abroad than any other country. China is likely to  overtake the US as the world’s largest retail market by 2016—four years before China also becoming the world’s largest economy in 2020. By 2022, China is estimated to account for a quarter of global retail sales.

Download Potential of China Retail Industry - Panel Discussion, EIU

Watch the beauty and majesty of Earth from above

A visually-stunning and emotionally-touching film, the HomeProject produced in 2009 by the Goodplanet.org, unveils the sheer beauty and bounty of Nature and shows how they are being destroyed by the ugliness and ferocity of human folly. A timely reminder of how the human species needs to re-think a more sustainable relationship between ourselves and with its only and living HOME in an age of fast depleting resources, climate chaos, dwindling bio-diversity, and grotesque inequalities.

The film ends with a note of hope as more NGOs are taking up the baton to save the earth and more initiatives are launched to find a better way to live with Nature. "It is too late to be a pessimist", the narator refrains.

But hope cannot change reality. Unless ALL nations and peoples act together, what isolated efforts now put in place can hardly match the global momentum of rising consumerism and profligate use of energy, water and other resources. Let's make sure that it really is not too late.

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