Changing consumer behaviour, shifting value chains
The new demand for better value-added products creates opportunities for even small nations to gain market access and benefit – as long as they are able to find niche sectors in which they can be competitive and where their companies can scale. As for policymakers, they need to realize the magnitude of the change and find the appropriate ways to respond, to create the business environment that will enable their exporters to benefit. That was the main conclusion at ‘Growing Value: meeting the demands of new consumer markets while strengthening local value addition’, the second plenary session at the second day of WEDF.
Moderated by James Zahn, Director of UNCTAD’s Investment and Enterprise Division, the audience heard how an increase in purchasing power and change in taste have shifter consumer markets. Dr Mari Elka Pangestu, Indonesia’s Minister of Tourism and Creative Industries pointe to the importance of women in consumer-spending decisions. She also argued that companies has to respond better to these changes.
Mr Tim Groser, New Zealand’s Minister of Trade and Climate Change Issues and Associate Minister of Foreign Affairs, emphasized that new market situation offers opportunities to not only large but also small countries, provided that they find their areas of comparative advantage. Not only can China become a place for manufacturing, he said, but a tiny Pacific island state such as Western Samoa has also been able to find a niche supplying organic virgin coconut oil to the Bodyshop company, at seven times the price of ordinary oil. Mr Groser said he was optimistic about the future of small economies that participated in the global value chains of successful companies. Specialization, he added, has always been the key to advancement: countries need to integrate their own economies, then with their neighbours, and finally with the world, finding their own niche.
According to Mr Muhamad Chatib Basri, of Indonesia’s Investment Coordinating Board, the growth of Indonesia’s middle class in Indonesia has attracted greater investment from countries such as Japan and Korea, as they too, want to tap into Indonesia’s growing demand. Meanwhile, Mr Douglas Comrie, Managing Director of B&M Analysts and Chief Facilitator of the Durban Automotive Cluster in South Africa, illustrated the challenges of clustering and industrial cooperation within a sector. He described the issues facing the automotive industry in South Africa, where production of 700,000 vehicles annually represents only 0.6% of global production. This, he said, means that local companies are not in a position to dictate neither design or nor location. He drew a comparison with Thailand’s highly successful auto industry. Thailand is now the world’s 8th largest producer of light vehicles, and, he said, South Africa could learn much from the Thai model in terms of clustering and cooperation between players in the same industry
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