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Can the Future of South African Research be Built with BRICS?

Cape Town,

48 QRCA VIEWS Fall 2013 www.qrca.org By Corette Haf Corporate Research Consultancy (Cape) CC • Cape Town, South Africa • [email protected]

uring the last week of March 2013, general development, as well as to uplift the fifth BRICS summit took place humanity in order to establish a more D in Durban, South Africa. This was equitable and fair world. the first summit to be held on the Afri- As a result of the global economic can continent, and it completed the first crisis, many countries in the world are cycle of BRICS summits, since each of looking towards emerging markets (and the member countries has now taken a the BRICS members in particular) to turn to act as host. stimulate global economic cooperation BRIC is the original acronym for a and growth to provide renewed impetus. grouping of the world’s leading emerg- A study by the International Monetary ing market economies, namely , Fund has indeed found that BRICS’ , and . In December trade and investment with low-income 2010, South Africa was invited to join countries, of which most are in Africa, the bloc, which then became known as assisted these countries to weather the BRICS. The objectives of the group are impact of the crisis. wider than pure economic cooperation Some critics have questioned South and aim to promote peace, security and Africa’s right to be part of this group,

Some Stats about BRICS

• BRICS countries have increased their share of global GDP (gross domestic product) threefold in the past 15 years, amounting to between 20% to 25% of global GDP. • BRICS countries occupy 30% of global territory. • They are home to 45% of the world’s population. • Their contribution to global economic growth over the last decade has reached 50% (therefore, the leading power in global economic development). • BRICS’ combined foreign reserves are estimated at U.S. $4 trillion.

49 Can the Future of South African Research be Built with BRICS? C O N t i N u e D

since its economy is much smaller than the South African president peeping out imports and exports. Exports from S.A. that of the other members of the coali- of the jacket top pocket of the smiling to its BRICS peers rose from $12.1 tion. It has been said that other emerg- Chinese president. billion in 2010 to $15 billion in 2012. ing economies (such as Indonesia, Mex- South Africa does bring the follow- South African exports to China grew ico, Turkey and South Korea) are much ing strengths to the coalition: by 46%, to India by 20%, to Brazil by bigger than South Africa. It has also • Substantial non-energy mineral 14% and to Russia by 7% in the last been alleged that the BRICS group has wealth. South Africa is ranked as the few years. been “hijacked” by politicians keen to world’s richest country in terms of its Examples include: form a new power bloc in the world and mineral reserves, worth an estimated • 10 South African value-added prod- that South Africa was included to pro- U.S. $2.5 trillion. South Africa is the uct categories with unique selling vide broader intercontinental reach and world’s largest producer of platinum, points have been identified as export inclusiveness. It is, however, widely chrome, vanadium and manganese, opportunities to China. believed that the main reason why South and it is the third-largest miner of gold. • South African wine, with an estab- Africa was invited to join BRICS is to It offers highly sophisticated and pro- lished reputation as a quality product, provide a gateway to the rest of Africa’s fessional services with regard to min- is now in demand by Chinese con- markets. South Africa’s position going ing expertise. sumers. A joint venture (JV) with a into the summit was to align BRICS • Considerable construction and Chinese company has resulted in the member countries’ interests in support- engineering expertise. South Africa export of 5.2 million liters of premi- ing the integration agenda in Africa. is investing about $35 billion into um wine to China. Although this may Jim O’Neill, recently retired chairman expanding and improving its represent a minor share of S.A.’s total of Goldman Sachs Asset Management infrastructure. bottled wine market, the opportunity and the person who originally created • A proven reputation for financial mar- for future growth is promising. the BRIC acronym 10 years ago, feels ket development and sophistication. • A Russian-South African JV will see that South Africa can more than justify The World Economic Forum’s 2011/12 the development of table grape pro- its presence if it helps Africa to fulfill its Global Competitive Index displayed a duction in the Krasnodar region, using remarkable potential. “If South Africa high level of confidence in the coun- South African expertise on growing could also help to lead the rest of try’s financial market development, and processing grape by-products. the continent to reach its own stand- ranking it fourth globally. Regulation • A recent JV between Airports ards where these are high, the conti- of the Johannesburg Stock Exchange, Company S.A. and Brazilian Invepar nent would be on an accelerated as well as South Africa’s auditing and resulted in an $8 billion concession to path to greater economic might,” he reporting standards, ranked number overhaul and operate Brazil’s busiest has reportedly stated (published quote one in the world. South Africa was and most valuable airport, Sao Paulo from “SA’s BRICS Score Not All Gloom ranked second for both the soundness Guarulhos International Airport. and Doom,” Mail & Guardian Online, of banks and the efficacy of corpo- • Significant growth has also been March 30, 2012). “By exploring cross- rate boards. reported in local tourism from other border expansion in trade and infrastruc- • Excellence in science, technology and BRICS countries. ture, as well as considerable improve- innovation — e.g., hosting the Square ments in domestic productivity, South Kilometre Array (SKA, the world’s Some Summit Highlights, Africa will have more than justified its largest and most sensitive radio teles- Particularly for South Africa role as a BRICS member… I remain as cope, which will have a total collecting • The proposed creation of a BRICS excited about South Africa as I was 15 area of approximately one square kil- development bank and a $100 billion years or more ago.” ometer), for which other BRICS coun- contingent reserve arrangement to pool China, with the world’s second- tries supported South Africa’s obtain- currency reserves to protect against biggest economy, dominates trade and is ing the majority stake. volatility in global financial markets the top import partner for the rest of the • According to the World Economic and to head off short-term liquidity BRICS partners. At the end of 2012, its Forum’s 2012/2013 Global Com- pressures. Locally, it is hoped that the economy was almost 25% larger than petitiveness Report, South Africa bank will be hosted by South Africa, the other four BRICS nations com- remains the highest-ranked country in given the high regard for S.A.’s finan- bined. Standard Bank research analysts sub-Saharan Africa and third placed cial services sector and stock market. Jeremy Stevens and Simon Freemantle among the BRICS economies, after • The establishment of a BRICS busi- (among others) have sounded warn- China and Brazil. ness council, consisting of five top ing bells about the challenge posed by business leaders from each BRICS Chinese dominance. In particular, some South Africa’s Early Benefits member country. The first chairper- are very skeptical about China’s inter- from Joining BRICS son is South African mining mag- est in Africa. A cartoon published in According to Economic Development nate Patrice Motsepe. The objectives Business Day during the BRICS summit, Minister Ebrahim Patel, South Africa’s of the council will be to strengthen for instance, depicted the bigger four level of trade with BRICS countries now trade relations and promote business BRIC leaders next to each other, with accounts for a larger share of S.A.’s relations, technology transfer and

50 QRCA VIEWS Fall 2013 www.qrca.org

Can the Future of South African Research be Built with BRICS? C O N t i N u e D

cooperation in banking, green and Japan in terms of RFPs received and collection methodologies” but that economy, industrialization and manu- projects conducted for international the lack of innovation moves beyond facturing. The council aims to boost clients by their company. research design and into technology. intraBRICS trade to $500 billion by Mari Harris remarked that the Ipsos “With mobile phones being ubiquitous 2015. The first project will be the lay- group in South Africa has seen most in emerging markets, it’s a wonder that ing of the BRICS cable, a 28,400 km growth coming from the developing no researchers have cracked data collec- undersea telecommunications cable world and believes that this also prob- tion on cell phones, ranging from the linking BRICS countries. ably holds true for the other big research low-end feature phones up to the latest companies. Leonie Vorster, CEO at smartphones,” she commented. BRICS’ Effect on the Southern African Marketing Research Matthew and Andrea from KLA agree Market Research Industry Association (SAMRA), confirmed the with this sentiment and feel that even in South Africa trend that it is becoming quite fashionable on the African continent, we are being So, in practical terms, what does all this to do business with emerging markets and out-innovated by tech startups in Kenya, mean for the market research industry in has encountered increased interest in Nigeria and Ghana. “The mobile phone South Africa? I reached out to various the SAMRA conference from European, represents over a billion ways in which industry leaders and asked them whether Asia Pacific and American countries. anyone in the world can ask an African they had experienced any changes or The key strength of the South African consumer a question without any need have done different work as a result of market research industry was perceived of our involvement as South African our newfound BRICS membership. to be that our industry is highly devel- market researchers,” they pointed out, None of my colleagues have noticed a oped and established and can be com- “and we urgently need to respond to significant impact on the local research pared with the standards of other West- that challenge.” industry that can be directly ascribed to ern markets. We have expertise in areas Some of my colleagues were of becoming part of BRICS. The general such as psychology and statistics that the opinion that our skilled work- feeling was that it may be too soon to result in work of high-quality stand- force is aging and that it is difficult to expect a meaningful influence, consider- ards. It was also mentioned that we are attract good-quality young people to the ing that South Africa joined only a few globally connected and have good links industry. Sifiso Falala, CEO of Plus 94 years ago. The biggest reported increase to many global clients. Matthew and Research, remarked that research is not in RFPs have come from India, but this Andrea from KLA remarked, “We rou- viewed as a glamorous profession for seems to be a general trend that I have tinely switch between the developed and many youngsters: “Compared to, say, heard about from many international developing sides of our market in our management consulting, advertising, contacts and social media, not just from daily work. We can speak the language auditing, etc., research is a very poor those in the BRICS countries. of the ‘haves,’ while understanding the financial cousin.” Matthew Angus and Andrea Chemaly world of the ‘have nots.” Also, the feeling was expressed that from KLA (Kaufman Levin Associates, Some of the strengths of our we are experiencing a shortage of skills in Johannesburg, S.A.) also found that industry are also weaknesses on the and a talent crisis that both need to be the biggest increase in RFPs and projects flipside. Although we have what Andrea addressed by a focus on training. Fellow have come from India. They have also Rademeyer from Ask Afrika refers to as QRCA member Lee Kotze, of Qual- been in touch with and conducted pro- “great pockets of innovation,” clients itative Intelligence, feels very strongly jects for a few Chinese clients. They and researchers are often too conserv- about the lack of training. “Sadly, there have heard very little from Brazil and ative and risk-averse to embrace change is no training available for the young, absolutely nothing from Russia. They and experiment with new technology aspiring qualitative researcher,” he says. point out, however, that the BRICS’ and methodologies. Shirley Wakefield “While Unilever came along with plans economies lag well behind countries like from Pondering Panda feels that the to improve standards, they made it South Korea, the U.K., France, Singapore industry makes use of “archaic data- exclusive, in that only companies and

“We routinely switch between the developed and developing sides of our market in our daily work. We can speak the language of the ‘haves,’ while understanding the world of the ‘have nots.’”

52 QRCA VIEWS Fall 2013 www.qrca.org

Can the Future of South African Research be Built with BRICS? C O N t i N u e D

researchers working for Unilever will Similar to the sentiments expressed With regard to the future, the panel be exposed to better training.” Both Lee by our peers in developed markets, DIY of South African research leaders iden- and Andrea Rademeyer feel that there research and the blurring of boundaries tified Africa as the most obvious oppor- is no collaboration among companies between research and other disciplines tunity for our local research industry. and researchers, exchanging ideas and also pose a threat to the South African Sifiso Falala remarked that, for his com- new methodologies. market research industry. pany, interest in investment in Africa is already leading to more research requests than ever before from outside of South Africa. He states, “Africa is a bigger research opportunity than BRICS. Improved African trade and the removal of trade barriers within Africa will have a more immediate impact on Africans than BRICS.” Our colleagues from KLA share this sentiment: “The fifty-three markets to the north of us are the final frontier of human insight and many of our clients’ last chance at aggressive growth. In reality, it is the importance of Africa in general, not South Africa in particular, that has earned us a place at the BRICS table.” There is cautious optimism that, apart from Africa, growing collaboration with other BRICS countries can have a posi- tive effect on our future local industry. Andrea Rademeyer of Ask Afrika expressed the hope that “collaboration of our industry within this economic block will strengthen our voice on the global platform… This space creates the opportunity for collaboration with partners from the BRICS, who will have experienced some of our chal- lenges in their economies and consumer- scapes. I thus believe that BRICS pose a unique moment in time, which we should embrace, in order to generate new value for our industry.” Others cautioned against inertia and stressed that we need to take urgent and innovative action to address our chal- lenges. Shirley Wakefield of Pondering Panda concluded, “Emerging markets offer significant growth potential within the research world. By South Africa being a member of the BRICS, the hope is that communications and opportuni- ties will be enhanced, thereby increasing innovation, technology advancement and smart collaborations. The bottom line is that smart research in emerging markets requires agility and innova- tive thinking.”

54 QRCA VIEWS Fall 2013 www.qrca.org