One great economic lament has emerged full-throated from the post-cold-war period: Where is demand? Europe and Japan remain mired in recession. The U.S. expands only fitfully. Where, business asks, can it find the kind of robust demand for products and services that generates sizzling 4% growth, and with it, lots of jobs?
Psst! Want access to about 400 million members of a new global middle class, one that's growing so fast it will double in a mere decade? About one-quarter of them are ex-communists, half used to be locked away in centralized, autarkic societies, and the rest are graduates of what were once Third World countries. Today, they're all new participants of the global market economy, hungry for goods and services.
The advent of a global middle class is a new phenomenon that Corporate America has barely discovered. For many years, the market-oriented, capitalist trading system was composed of North America, Japan, and Europe--some 800 million people by the mid-1980s. But now China, Eastern Europe, Russia, and Latin America have all "gone market." The Four Asia Tigers have taken off, and a second pack of Emerging Tigers is right behind them. Even India, with its huge middle class, is in the throes of opening itself to the international economy. The new total for people participating in the open global market? Three billion and counting.
Explosive economic growth within newly market-oriented nations has sent the number of people that one might consider middle class soaring. Today, some 10% of China's 1.2 billion population can own their own homes and have TVs. Nearly half of the people in South Korea, Taiwan, Hong Kong, and Singapore have worked their way into the middle class. And in Thailand, Indonesia, and Malaysia, up to 20% of the population is headed there, too. Tens of millions more are in Mexico, Chile, and Argentina, soon to be joined by people from Eastern Europe, Russia, and the Middle East.
To date, the historic expansion of the market economy to global dimensions has been mourned by most American businesses and workers. They have focused on the supply side--the sudden flood of inexpensive goods and labor and increased competition coming from overseas. U.S. companies have been preoccupied with holding down wages and prices and cutting jobs. It's time to focus on the surging demand side. The new global middle class is a rich market. Message to Corporate America: Get out there and sell.