As we work in multiple countries on any given day, we are often being asked to comment on the global economy and why some regions are performing poorly and others less so.
A lot of the Western World is concerned about stock prices. Since the beginning of the year, major stock exchanges are down (from the Footsie to the Big Board) from a couple of percent to nearly ten.
But frankly, that’s nothing compared to what’s going on in the BRICs. There was a time, not so long ago, when it seemed the rugged promise of the globe’s economic frontier could be summed up with a simple acronym: BRIC. To investors and corporate prospectors alike, Brazil, Russia, India, and China were like Gold Rush towns high in the hills—deep, rich veins of commerce that could be tapped by anybody quick enough, industrious enough, and brave enough to stake a claim. Marketing in these markets sure was fun too!
But slowing economic growth, oil prices and scandals have put an end to those golden children. Well, India seems to be holding on, but generally speaking BRC is not solid.
Where are the opportunities? For varying reasons the following are poised for growth – Indonesia, Malaysia, Mexico, Columba, Poland and Kenya. Want to know how to market here?
But back to oil prices for a moment. Due to our long standing focus in the Middle East, the question most recently has been ‘our sales are well below expectations this year, what can you do’?
Here’s the skinny. The Middle East’s economies are dependent upon black liquid gold. Oil price is at a low - around $32 a barrel at the time of writing. From Oct 2009 to Oct 2014 is bounced between $80 and $115 a barrel. The last time it hit $30 values was in 2002. Informally I hear that so long as it stays above $70 a barrel the Middle East is making a lot of money every day – which of course has a great effect on the economies locally and anyone selling into the Middle East.
Why is it so low right now? It’s a long, complicated and disputed story. From our point of view, in the simplest form – the cartel of the Middle East is artificially keeping the cost of oil low themselves (this not a demand problem – no matter how many electronic cars Mr. Elon Musk produces – the world is still dependent upon oil and is likely to be for a considerable number of years). Why would these economies keep something that fuels their own economy so low? Simply, because they are freezing out the competition from other economies (e.g. U.S. and Russia) who have found revolutionary drilling methods (that have a higher cost of production).
The Middle East is playing a long term game to remain the leaders in oil production. A year or so (if that) of lower oil price will achieve their goals. The price will then be raised and we’ll see the boom time that we experienced from 2009 to 2014.
What should an international business – that is selling into the Middle East - do right now? Re-set short term sales goals and take advantage of the lower cost to market to a competitive advantage. Invest (yes, marketing is an investment and not a cost of sales) in the region so when the price of oil re-bounds, you have a significant market share. In short, play the long term game, just like the Middle East region is.
Free yourself from stock market short term goals.
Not getting the #sales you want in the Middle East? Here’s what to do -