Rochester Institute of Technology RIT Scholar Works Books 2007 Emerging global markets: A Five-country comparative study Frank Cost Stanley Widrick Follow this and additional works at: http://scholarworks.rit.edu/books Recommended Citation Cost, Frank and Widrick, Stanley, "Emerging global markets: A Five-country comparative study" (2007). Accessed from http://scholarworks.rit.edu/books/9 This Full-Length Book is brought to you for free and open access by RIT Scholar Works. It has been accepted for inclusion in Books by an authorized administrator of RIT Scholar Works. For more information, please contact [email protected]. Emerging Global Print Markets: A Five-Country Comparative Study By Stanley Widrick, Ph.D. Senior Associate Dean E. Philip Saunders College of Business Rochester Institute of Technology Frank Cost Associate Dean College of Imaging Arts and Sciences Rochester Institute of Technology A Research Monograph of the Printing Industry Center at RIT No. PICRM-2006-06 Emerging Global Print Markets: A Five-Country Comparative Study Part A By Stanley Widrick, Ph.D. Senior Associate Dean E. Philip Saunders College of Business Rochester Institute of Technology Frank Cost Associate Dean College of Imaging Arts and Sciences Rochester Institute of Technology A Research Monograph of the Printing Industry Center at RIT Rochester, NY October 2007 PICRM-2006-06 © 2007 Printing Industry Center at RIT— All rights reserved. i With Thanks The research agenda of the Printing Industry Center at RIT and the publication of research findings are supported by the following organizations: bc ii Widrick & Cost (PICRM-2006-06) Table of Contents Table of Contents Acknowledgements ....................................................................................................... 3 Abstract ........................................................................................................................... 4 Chapter One: Introduction .......................................................................................... 5 Methodology .......................................................................................................... 6 The Importance of Emerging Markets ................................................................ 8 Overview of the General Impact of Emerging Markets .................................12 Chapter Two: Top Opportunities for Printing in Emerging Markets...................13 Macro-Environmental Drivers of Print Consumption ...................................13 Micro-Environmental Data Impacting the Printing Industry .......................30 Forecasting the Future in Emerging Markets...................................................35 Forecast of Likely Growth ...................................................................................37 Chapter Three: Doing Business in These Emerging Markets ................................39 Doing Business in China ....................................................................................49 Doing Business in India ......................................................................................54 Doing Business in Russia ....................................................................................63 Doing Business in Mexico ..................................................................................66 Doing Business in Brazil .....................................................................................71 Appendix A: China—Printing & Publishing Market .............................................74 Appendix B: India—Printing & Publishing Market ...............................................86 Appendix C: Russia—Printing & Publishing Market .............................................93 Appendix D: Mexico—Printing & Publishing Market ...........................................99 Appendix E: Brazil—Printing & Publishing Market ............................................105 Appendix F: People Interviewed For This Study ...................................................114 Appendix G: Interview Guide ..................................................................................116 References ...................................................................................................................117 Emerging Global Print Markets: A Five-Country Comparative Study 1 2 Widrick & Cost (PICRM-2006-06) Acknowledgements Acknowledgements The authors would like to acknowledge the following students (listed alphabetically) who worked on this project as research assistants: • Daliana Abreu — Brazil • Anna Boriskina — Russia • Richard Chen — China • Byron Cuellar — Mexico • Justin Doyle — Overall • Amit R. Raina — India Without their assistance, this project could not have been completed. Emerging Global Print Markets: A Five-Country Comparative Study 3 Abstract Abstract In 2005, the GDP of the emerging economies of the world accounted for more than 50% of the total world’s GDP (measured at purchasing power parity). This means that the rich countries (i.e., United States, the European Union, Japan) no longer control the world economy. When combined with the impact of digital technologies, this continu- ing shift in economic power means that the printing industry is increasingly focusing on emerging markets seeking opportunities and profits. This exploratory study focuses on five of the largest emerging markets: China, India, Russia, Brazil, and Mexico. The study includes two phases. Phase one involves gathering public and industry macro- and micro-economic data in each of these emerging market countries. Phase two involved interviewing local printing experts in each country. In addition to individual country industry profiles the study looks at several common challenges facing the printing industry in all five countries. These include overcapac- ity of aging production facilities, fierce price competition for basic commodity prod- ucts and services, the impact of the Internet on print media consumption, monetary and taxation policies, national industrial and international trade strategies, and changes in educational policies and literacy rates. Comparisons among the five countries result in a number of interesting observations. For example, it is clear that tariff and tax poli- cies in each country strongly influence the rate of development of the globalizing part of the industry. These observations combined with macroeconomic and industry-specific data from each country have led the researchers to a better understanding of how these countries will likely participate in the emerging global print communications industry. In each of these five countries there are two distinct segments of the printing industry. First, the old indigenous industry that serves traditional domestic markets with prod- ucts and services that often is price-driven and usually falls short of meeting the needs of domestic companies seeking export business or of multinational corporations doing business domestically. And second, an emerging industry that provides value-intense and world class manufactured goods and services. These include products such as the leading national newspapers manufactured in India, packaging materials manufactured in Mexico, and high-end books manufactured in China. 4 Widrick & Cost (PICRM-2006-06) Chapter One: Introduction Chapter One: Introduction This study focuses on the current state and near-term growth trends of the print- ing industries in five countries with emerging market economies: Brazil, China, India, Mexico and Russia. The general economies in three of these countries – Russia, China, and India – are growing at rates between two and four times that of the United States. The economies of Mexico and Brazil have recently experienced less robust growth rates. However, in all five cases the printing industry is evolving rapidly to meet the challenges brought about by technological change. The U.S. printing industry is notoriously difficult to characterize and measure because it is highly fragmented and, for the most part, privately held. When we turn our attention to the printing industries in emerging markets, the problem is compounded by other factors that are hidden from outside view, such as a lack of information about local busi- ness realities. In the U.S. and in other developed economies, the industry is mature and its overall growth has not kept pace with GDP in recent years. In contrast, develop- ing economies are armed with opportunities for explosive growth within some market segments. In areas where the per capita consumption of print is only a small fraction of what it is in the developed world, the unsatisfied appetite for print is powerful. As emerging markets afford their residents with more disposable income, the markets for certain kinds of printed products have the potential to expand rapidly. At the same time, there is the possibility that societies will leapfrog over older media forms altogether. For example, it makes little sense to create a telecommunication infra- structure based on land-lines in developing countries. This begs the question: will certain long-established forms of print be leapfrogged by electronic media in the devel- oping world? This question was often raised in our interviews, inspiring a great deal of debate and speculation about how the future will likely unfold. Examples include the potential for marketing through direct mail. In Russia, using the postal system to deliver printed transactional and marketing collateral is all but unknown. Will such markets