Innovating Down The Value Chain

Business, Company Strategy, Economics, India, Innnovation

By John Richardson

THE lack of depth and thought behind “analysis” of the economic challenges facing developing economies has worried the blog for some time.

It is undoubtedly the case that as hundreds of millions more people in countries such as India and China emerge from poverty, the opportunities for the chemicals industry are enormous.

For the first time in their lives these people will have a small amount of money to spend on a few basic luxuries such as a single-serve portion of shampoo, or maybe if they are exceptionally lucky a motor scooter.

These are some of the themes we explore in Chapter 6 of our e-book, Boom, Gloom & the New Normal.

They will not be middle class in the Western sense of the word. In fact as the chart below shows, by Western standards many of the richest people in India would qualify for social welfare problems.

Presentation2.jpg

Constant talk about the rise of the Asian “middle classes”, without qualification of what exactly this means, is highly misleading. This is not a sudden enormous army of BMW-buying Western-style consumers.

And so it is up to chemical companies, prompted by more-informed investors, to start describing exactly how they are going to innovate down the value chain – i.e. how they are going to keep costs low-enough to help manufacture a refrigerator that, say, retails for less than $50.

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