The next 40 years: The emergence of a new Silk Road
A global rebalancing and ever-evolving technologies promise more complexity, but also greater rewards. By James Thompson
At the end of the 1990s, every chief executive demanded an internet strategy — even if it was limited to adding .com to the end of the company’s name. Now, as we move rapidly towards 2020 and beyond, many marketers and executives find themselves asking ‘what’s next?’
I believe we are on the cusp of something that is just as significant as the birth of the internet, but that requires rather more thought and commitment.
China has emerged as an economy that may surpass that of the United States as the largest in the world, while India is racing to catch up. While this rapid growth is exciting and represents a dramatic shift in the world as we know it, it is not the first time that India and China have been global economic powerhouses.
These countries hosted one of the largest informal networks in the world — the Silk Road — which was more of a concept than a well-worn path, but equally as intricate and interconnected as the internet. There was not one single, sign-posted road, but rather a number of arteries taking not only goods, but also ideas and philosophies from the East to the West and back again.
Over the next 40 years, I believe we will see the emergence of a new silk road that not only covers Asia-Pacific, but also ventures to the Middle East, Africa and South America, especially Argentina, Brazil and Chile.
As this network grows, it will help produce companies that may not currently enjoy a global profile, but which one day will be among the largest and most powerful firms on earth. These include companies such as Nigeria’s Dangote, China’s Chery, India’s Suzlon, Australia’s Riversdale, and places such as Hambantota Port in Sri Lanka and the new super port in São João da Barra, Brazil.
China overtook Japan as the world’s second largest economy earlier this decade and may already be the world’s greatest energy consumer. It is set to become Brazil’s top foreign investor. A recent study by Deloitte predicted that Chinese investments in Brazil could hit an average of about US$40bn a year between now and 2014, with companies throwing money at sectors ranging from telecommunications, infrastructure and farming, to oil, biofuels, natural gas, mining and steel manufacturing.
And why does a man working for a luxury and lifestyle business care about the size of ports or mining companies? Aside from the obvious fact that these changes will hopefully accelerate the advancement of many societies, providing people with the means to make choices about what and how they consume, it also transforms the way we market our products in two key ways.
Firstly, as a luxury business this zeitgeist is particularly exciting for us as we are seeing consumers across the entire socio-economic scale seeking to trade up. Premiumisation is a core strategy for the Diageo Reserve business and we are constantly innovating with our products and experiences to meet the desires of a new generation of aspirational and luxury consumers. Standing still is definitely not an option. This brings me to my second point. The flip side of this new global economy with constant technological innovation and rapid transfer of information is the risk it poses to our business — perhaps one of the biggest we face. While innovations are important to drive commercial success, they are equally as important to build brand equity and protect us in times of crisis.
Along these same lines, companies like Google are creating opportunities for marketers that 40 years ago would have seemed impossible. We no longer just understand preferences and buying patterns, but also behaviour and other activity that would have been considered personal and unattainable.
While in many ways this advancement is thrilling and gives modern marketers an extraordinary edge, it also opens a veritable Pandora’s Box with regards to ethical issues around privacy and freedom of information. I think it is still very much a grey area and one we will see evolve. But I wonder: will there be a debate over the rights of citizens in a world where marketers have powers of which individuals may be unaware, or will the ease and immediacy that the technology brings result in a willing submission of privacy? I don’t have all the answers here, but it’s an area of great interest to me.
Ultimately, what makes me excited about the new Silk Road is that underpinning these new companies, economies and societies is a complex web of science, technology and innovation which presents marketers with unprecedented opportunities and previously unimagined challenges.
It is of course, a complex web that spreads far beyond the new Silk Road and pervades all four corners of the globe. This combination will make our jobs infinitely more challenging, but also, a hundred times more rewarding. The brands we represent, the business we help shape, and the careers we will build will all be influenced by new arteries being opened up for trade, creativity, and sharing.
James Thompson is MD of Diageo Reserve Brands