The "emerging markets" gold rush is over !

The Big Four (not in consulting this time) but in countries - the BRIC - Brazil, Russia, India and China have deflated and this meltdown leaves them at half their pre-financial crisis levels. 

Everybody wanted to capitalise on the huge growth and the mass of people in these markets as huge guzzlers of all types of commodities and services! Today, people in these markets are not spending as much and suddenly the focus is back on the developed markets again.

All companies are taking a hard look at alternatives beyond the "BRIC".

Big believers in China like cosmetics maker Revlon said at the end of December it would leave China. The French  L'Oreal has stopped selling its Garnier beauty products in China. 

Some of India’s biggest investors announced they were slowing or abandoning billions of dollars worth of investments.Last year, Korea’s Posco scrapped plans for a $5.3 billion steel plant in Karnataka, and Luxembourg-based ArcelorMittal canceled plans for a $12 billion steel plant in Odisha. And over the past year or so, some major global companies — Fidelity, Morgan Stanley, Royal Bank of Scotland, and New York Life to name a few — have scaled down investment plans or simply left the country.

Multinational companies have been increasing their exposure to emerging markets dramatically in recent years. Now there is a rethink in this strategy! Emerging markets will still grow at a faster rate than developed markets this year but the difference in growth rates will be the lowest since 2002

The renaissance of United States demand is a big shift from a few years ago, when all the action seemed to be in Asia. The realignment has prompted some companies and governments to re-examine their priorities. German carmakers some years back reaffirmed their faith by investing and exporting more to USA, and their different vision of the future has paid off for them.The recovery in the United States auto market, which produced big earnings growth at Chrysler and Ford has also been a boon for Germany’s big three — Daimler, BMW and Volkswagen ! 

The BRIC will always have potential! I am sure these are difficult markets for everyone to handle. In the past, regardless of industry and regardless of product, everyone just ran to BRIC because there was an arbitrage opportunity. Today there's a much more sanguine decision-making process.

Even as rapidly as their economies are expanding, China and India together will contribute little more than one-quarter of the next decade’s forecasted $14 trillion growth in consumption. The US and other advanced economies will account for $6 trillion, or more than 40 percent of the total, and will continue to contain the majority of the global upper middle class. Their aging populations represent new challenges, not a petering out of opportunities. Not only will the advanced economies be a source of substantial growth, they may well be on the cusp of acceleration into a new “S-curve” after slowing down at the top of the last one.

Careful rethink is the call of the day. Big bets—and big wins—are on the horizon !