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Local Market Attractiveness

2013 Global Manufacturing Competitiveness Index


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Size and access to local markets is the most important driver in this category, according to 2013 GMCI Survey results. It is perhaps no surprise that China — with its large population and explosive economic growth — is considered among the most competitive of the six focus nations highlighted in this report, along with the U.S. and Germany.

In contrast, it is interesting that similar percentage of executives rate Japan, India and Brazil as competitive in terms of local market attractiveness. Surprisingly, Figure 17 shows China, India and Brazil experienced substantial 10-year CAGR growth on per capita personal disposable income between 2001 and 2011. Yet, executives surveyed ranked Brazil and India much behind China.

At the same time, relative market attractiveness parity among China, the U.S. and Germany demonstrates that country size is not the only factor. Rather such parity between emerging and developed economies on competitive advantage is driven by a vibrant domestic consumer base with significant spending power. These nations, as well as others like Singapore and South Korea, all have established middle class consumers that demand more complex and higher quality goods — and as a result, are likely to make these markets more attractive for large multinationals.

Of the emerging nations, executives felt the local markets in India and Brazil were less attractive that first-ranked China, despite all three nations experiencing substantial 10-year CAGR growth for per capita personal disposable income between 2001 and 2011 (Figure 17).

In the long term, trends for emerging economies to have higher disposable incomes bodes well for those lower-cost manufacturing destinations, as the good manufacturing jobs will inherently create economic prosperity for their citizens. These trends then act to create a virtuous manufacturing cycle: increased incomes, higher spending ability and increased market attractiveness.

Demographics, more specifically aging populations, will have a significant impact on market attractiveness over the coming decades, with some nations like Japan, and even China, despite its large population, significantly inhibited by their aging populations and others, including the U.S. with favorable population age demographics gaining the upper hand as time passes.

2013 Global Manufacturing Competitiveness Index

Main page: Return to the 2013 Index overview
Continue reading: Country analyses, appendix A

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