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John & Doris Naisbitt:Thoughts from the Lake

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It is winter in Austria. The glass front of our house allows a grand view of a lake surrounded by the mountains. In the early morning the fog is lifting slowly, not yet revealing whether we will have a bright day or fog and clouds that will hang heavily over our valley.

In the news we hear that Austria’s former coalition partners, Austria’s People’s Party and Austria’s Socialist Party, have negotiated to form a new government under a new slogan: “The new style,” seeking constructive consensus instead of playing party-political games. The latest news from the US confirms the last minute solution in the political party quarreling that held not only America, but the whole world hostage. Even though the worse was avoided at least until early next year, there is no “new style” in sight. Is the“greatest nation on earth” about to commit brisk or creeping economic suicide? Winter for the world? Or can the fog be lifted?

We are cautiously optimistic. Not because we believe that America’s tea party will become moderate any time soon, but in the longer run America won’t matter that much anymore.

It is hard to understand, that a na- tion that does have all the potential to be ONE of the great nations on earth, does not get its act together and make a global reality check. Instead of an internal annihilation politicians of the two parties should put aside increasing polarization and move on to get ready for the economic and political headwinds their claim for universal supremacy will face.

According to a McKinsey study, by 2025 emerging and developing economies will pass the Western world in their share in global GDP. The economic decline of the West is accompanied by a relatively stable growth in emerging nations, with China in a leading role.

Emerging nations have been measuring their economic and political systems against the West. Now they start to measure it against their own history and culture. At the same time the increasingly important role emerging nations are playing on the global stage leads to a new self confidence. They are no longer accepting the leading role of the West in global decision making processes.

Emerging economies as well as old powers will have to grow into new roles -- as will companies, entrepreneurs and workers. This is not bad news. Not even for the West. The end of Western dominance is a great opening to a diversification of power and a multiple option world. Countries and businesses must be open for new sources of investment and innovation.

The transformation of global order will have an impact on markets. A rapidly growing middle class will result in a growing consumption, but the new consumers will be different from the consumers in saturated markets. The buying patterns of the new middle classes will most likely be more costconscious.

In the field of Business to Business companies will experience a much more diverse and dispersed customer base. Thousands of new large companies located in many more cities means that companies will have to reconfigure their logistic and communication networks. And they will have to adapt to different company and business cultures.

By 2025 around 45 percent of the Fortune 500 companies will be based in emerging regions, 25 percent more than today. The US is still leading with 132 companies; China is number two with 89 companies, many of them state owned.

Globally, there are about 8,000 companies with more than $ 1 billion revenue. Around 6,000 of them are located in developed regions. According to the McKinsey study, rising demand for consumer goods and services will push another 7,000 companies to this size in the next decade, and 70 percent of them will be based in emerging mar- kets. Emerging regions will host three times as many company headquarters as today.

In the past decades around 20 cities became home to more than onethird of large companies. In the coming decade more than up to 300 cities will host a large company for the first time. And we are sure that China is right on target in presenting its cities as great candidates. In the past years we did a lot of research on Western China, especially in Chengdu. When we started our research in 2010, there were 167 Fortune 500 companies settled in the city, today there are 233 in Chengdu, and we can’t be sure whether the number is has not risen since we checked. People all social levels are benefiting from the new economic opportunities. Suining a city of four million people, welcomes potential investors with a huge banner: “Suining is waiting for you.” Settled in a Tuscany like landscape only one and a half hours drive from Chengdu it is another example for economic dynamics that is not limited to China’s champion globally well known cities like Shanghai, Hangzhou, Guangzhou, Shenzen, Wuhan and many more, but also in aspiring cities in China`s developing regions.

We are witnesses and actors in a great opening up. And it does by far not mean that the West is going to be on the losing side. The borders for opportunities are not around countries, but around old stubborn thinking.

Competition and cooperation can become a uniting ribbon between “old”and “new” players. And while countries can be stuck in old mindsets, single regions or cities can adapt and benefit from the openings. Richard Daily, the former mayor of Chicago, launched a campaign to establish Chicago as the most China friendly city in the United States and he made five-city-trip to China to attract investment. London’s mayor Boris johnson signed a $1,6 billion deal with a Dalian Wanda group, China’s largest property developer to turn Royal Albert Dock into a Chinese business district. Jerry Brown, the governor of California, has been spending time in China developing economic alliances directly between California and various Chinese provinces.

Winter is coming in most parts of the West, but it can be the beginning of an economic spring.