New allocation of roles

“Many German companies are bringing their production activities back from the Far East.” This quote comes from Die Zeit, the renowned German weekly paper, and describes how the division of labour is changing throughout the world just now, when globalisation has warmed up properly. Of course producers of branded goods, who are otherwise so proud of their European manu-facturing operations, are still having products that require an extreme amount of assembly work made entirely in China. But it is obvious that a new allocation of roles in the global game is in the offing. Many of our contributions to the regional report Asia in this current issue confirm the fact that the countries of eastern Asia are now being discovered as a sales market. And they themselves are discovering that they are able to do far more than just contract manufacturing. Is the West assessing these two developments correctly? The industrial countries have already made mistakes in the past, while establishing a sales market in China, for instance. They simply took the do-it-yourself business model that had been tried and tested in the West and transferred it more or less lock, stock and barrel to the Far East. Even though it was common knowledge that Chinese citizens would not have any great desire to shine as DIYers, too little attention was paid to this fact. The consequences are well known. The German market leader Obi withdrew long ago, while Kingfisher has just 41 stores in operation now – and these are still making a loss, although they have been severely downsized. Moreover, the biggest DIY retailer in Europe has handed over its 50 per cent stake of B&Q in Taiwan to the company‘s local joint venture partner Testrite. And how about the manufacturers? Production is not all they have learnt from the West. They have also learnt what a brand name is and the value it represents. This is exactly what they are working on now, with everything that entails, from logo to merchandising concept. Once learnt, never forgotten. Currently the trend is towards discovering India as a sales market. The retail market is estimated at a volume of US $ 590 bn for 2011, almost 17 per cent of it in modern retail outlets. Five years later the figure could be as much as 28 per cent of a total of US $ 1 011 bn. The third-biggest economy, biggest democracy and biggest English-speaking nation in the world, with a population of 1.3 bn, has as many as 90 mio citizens who see themselves as part of the upper…