Forty Key Trends For The Next Decade

Forty Key Trends for the Next Decade: 20 Key Global Trends and 20 Key Consumer Trends
2005-2015
2. TWENTY GLOBAL TRENDS – THE CONTEXT FOR THE CONSUMER OF 2015
2.1 Key Global Trend 1: Demographic Time Bombs

Globally, the number of over-65s will increase by 84 million between 2005 and 2015, a huge increase in consumers with the
preoccupations of the annuitant, though also influenced by the dominant presence of retired baby boomers.
Population growth
The world in 2015 will be populated by some 7.2 billion people, up from 6.1 billion in the year 2000. The rate of world population
growth will, however, have diminished from 1.7% annually in 1985, to 1.3% in 2005, to approximately 1% in 2015.
Demographic trends will sharply diverge: more than 95% of the increase in the world population will be due to developing
countries, nearly all of this in rapidly expanding urban areas.
Table 1 World: Population Growth by Region 2005-2015

'000 2005 2015 % growth
Africa and Middle East 1,064,145.0 1,305,797.0 22.7
Latin America and Caribbean 552,775.4 623,094.8 12.7
Asia-Pacific 3,649,715.0 4,061,922.0 11.3
Australasia 24,253.4 26,329.3 8.6
North America 318,837.8 345,855.8 8.5
Western Europe 468,637.8 486,024.7 3.7
Eastern Europe 335,279.9 321,554.7 -4.1
WORLD 6,413,644.0 7,170,578.0 11.8

Source: UN, Euromonitor International
India's population is predicted to grow from 1,089 million in 2005 to more than 1.2 billion by 2015, while that of Pakistan is likely
to increase from 140 million to some 195 million. On the other hand, Russia and many post-Communist countries of Eastern
Europe will have declining populations. As a result of high mortality and low birth rates, Russia's population may drop from its
current 142 million to as low as 135 million in 2015, while the neighbouring states of Central Asia will experience continued
population growth. In Japan and West European countries such as Italy and Spain, populations also will either remain static or
decline slightly. The US and Australia – traditional magnets for migrants – will continue to have the highest rates of population
growth among the developed countries, with forecast population growth of 8-9% between 2005 and 2015.
Table 2 Population Growth by Selected Country 2005-2015

'000 2005 2015 % growth
Malaysia 26,097.2 30,698.6 17.6
Egypt 68,877.1 78,785.1 14.4
India 1,089,072.1 1,239,325.0 13.8
Vietnam 83,032.1 94,184.2 13.4
Turkey 72,838.0 82,337.0 13.0
Indonesia 223,961.6 249,273.2 11.3
South Africa 48,565.4 54,047.4 11.3
Brazil 181,341.5 201,517.5 11.1
Chile 16,136.1 17,911.7 11.0
Canada 32,240.8 35,365.7 9.7
Argentina 37,729.8 41,026.0 8.7
Australia 20,206.2 21,967.1 8.7
US 286,596.9 310,490.1 8.3
China 1,313,015.1 1,401,346.3 6.7
France 60,287.7 62,966.3 4.4
Netherlands 16,352.4 16,955.5 3.7
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UK 59,801.7 61,907.3 3.5
Sweden 9,002.4 9,302.3 3.3
Austria 8,131.4 8,347.9 2.7
Denmark 5,421.4 5,551.1 2.4
Portugal 10,490.4 10,683.1 1.8
Switzerland 7,337.9 7,468.3 1.8
Belgium 10,424.0 10,609.0 1.8
Spain 40,878.6 41,234.5 0.9
Japan 127,868.3 128,549.3 0.5
Germany 82,707.3 82,831.1 0.1
Greece 10,659.4 10,668.9 0.1
Italy 58,332.5 58,297.2 -0.1
Czech Republic 10,193.9 10,066.4 -1.3
Poland 38,549.2 38,036.0 -1.3
Hungary 10,062.1 9,632.7 -4.3
Russia 141,713.0 135,247.6 -4.6
WORLD 6,413,644.0 7,170,578.0 11.8

Demographic surprises
However, population growth is not always predictable, and consumers can sometimes confound statisticians. According to a recent
statement by a senior government minister, France's population is likely to rise to 75 million by the middle of the century, making
it the largest of the European Union's present 25 member states. The national statistics office, INSEE, had previously predicted
population growth from France's current 60 million to 64 million over the coming 45 years, but French officials have recently
revised their thinking on population trends. Based on these forecasts, France would then replace Germany as the most populous
country of the EU. The German population is predicted to fall from 82.7 million to under 71 million by 2050. Italy's population is
forecast to fall from 57 million to 43 million in 2050.
However, France will not boast the largest number of consumers in the EU should Turkey become a member: Turkey currently
has a population of some 73 million, and this is expected to grow to more than 100 million by 2050, according to estimates by the
United Nations.
In most countries in the 25-member EU, populations are falling because of low birth rates. In 2003, the last year for which official
figures are available, the EU's overall population growth of 216,000 was almost entirely in France, where numbers went up by
211,000. The growth in France is mainly due to a birth rate of 1.9 babies per woman, according to INSEE. Immigration accounted
for about 25% of the growth.
Ageing societies
Falling populations and increasing life expectancy have created widespread concern, particularly in developing countries, over
how to finance welfare and pensions in the coming decades, with warnings that immigration will be the only answer. In developed
countries and many of the more advanced developing countries, the declining ratio of working people to retirees will strain social
services, pension systems and health systems. Governments will seek to mitigate the problem through measures such as
delaying retirement, encouraging greater participation in the workforce by women, and relying on migrant workers. However,
dealing effectively with declining dependency ratios is likely to require more extensive measures than most governments will be
prepared to impose. The shift towards a greater proportion of older consumers will change consumer dynamics: perhaps
becoming more reactionary, perhaps becoming more liberal, perhaps spending proportionately more on the home.
At the same time, "youth bulges" will persist in some developing countries, notably in Sub-Saharan Africa, a few countries in Latin
America and the Middle East, and also in North America, particularly among lower income socioeconomic groups. Where this
occurs, a high proportion of young people will be destabilising, particularly when combined with high unemployment or racial
tension.
Table 3 World: Change in Under-14s Population by Region 2005-2015

'000 2005 2015 % growth
Africa and Middle East 429,566.6 497,102.8 15.7
North America 64,998.6 68,859.7 5.9
Latin America and Caribbean 165,479.3 165,014.1 -0.3
Western Europe 85,700.0 84,200.7 -1.7
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Asia-Pacific 971,972.8 948,113.4 -2.5
Australasia 4,761.0 4,525.3 -5.0
Eastern Europe 52,542.5 47,923.0 -8.8
WORLD 1,775,021.0 1,815,739.0 2.3

Table 4 World: Regional Change in Over-65 Population 2005-2015

'000 2005 2015 % growth
Latin America and Caribbean 32,259.5 44,439.8 37.8
Australasia 3,078.9 4,091.2 32.9
Africa and Middle East 36,427.8 47,889.5 31.5
North America 39,182.2 49,508.4 26.4
Asia-Pacific 243,230.8 286,507.7 17.8
Western Europe 71,083.8 78,280.5 10.1
Eastern Europe 47,477.4 45,324.0 -4.5
WORLD 472,740.3 556,041.1 17.6

The ageing of the population and low birth rates will be major challenges to European prosperity and cohesion. Greater
percentages of state budgets will have to be allocated to the ageing, while, at the same time, there will be significant, chronic
shortages both of highly skilled workers in IT and other professions, and unskilled workers in basic services. Legal and illegal
immigration will mitigate labour shortages to a limited extent but at a cost in terms of social unrest and crime.
Table 5 Over 65s Population Growth by Selected Country 2005-2015

'000 2005 2015 % growth
Malaysia 1,106.5 1,634.9 47.8
Brazil 10,131.5 14,225.7 40.4
Chile 1,248.4 1,693.4 35.6
Australia 2,599.6 3,507.1 34.9
India 57,342.7 76,868.4 34.1
Egypt 2,890.9 3,843.4 32.9
Indonesia 12,087.0 15,705.0 29.9
Canada 4,142.2 5,344.6 29.0
Denmark 806.7 1,021.0 26.6
US 35,040.0 44,163.9 26.0
Turkey 4,199.0 5,280.0 25.7
Netherlands 2,245.3 2,809.3 25.1
Czech Republic 1,398.6 1,726.0 23.4
Sweden 1,554.2 1,884.8 21.3
Japan 24,755.5 29,974.1 21.1
UK 9,652.1 11,613.2 20.3
South Africa 2,576.8 3,005.3 16.6
Austria 1,303.7 1,509.5 15.8
Argentina 3,751.9 4,314.0 15.0
Switzerland 1,140.3 1,308.6 14.8
Vietnam 4,474.7 5,119.4 14.4
France 9,655.3 10,569.2 9.5
Hungary 1,547.9 1,687.9 9.0
Poland 4,957.2 5,369.2 8.3
Italy 10,939.9 11,532.1 5.4
Germany 14,992.3 15,511.3 3.5
Portugal 1,752.8 1,812.5 3.4
Belgium 1,754.0 1,796.0 2.4
China 104,346.0 105,291.8 0.9
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Spain 6,899.8 6,924.4 0.4
Greece 1,976.2 1,974.5 -0.1
Russia 19,741.6 17,735.4 -10.2
WORLD 472,740.3 556,041.1 17.6

The proportion of the population accounted for by children and by over 65s is of great importance economically, socially and in
terms of consumer behaviour. In 2015, the proportion of the global population aged up to 14 will have fallen to some 25%, but
huge differences will still exist regionally, with proportions of less than 20% in Eastern Europe, Western Europe and Australasia,
and almost 40% in Africa and the Middle East. The dependency ratio, ie the proportion of over 65s in the population, will rise to
some 16% in Western Europe.
Table 6 World: Change in Proportion of Population Accounted for by 0-14s by Region 2005/2015
% 2005 2015
Africa and Middle East 40.4 38.1
Latin America and Caribbean 29.9 26.5
Asia-Pacific 26.6 23.3
North America 20.4 19.9
Western Europe 18.3 17.3
Australasia 19.6 17.2
Eastern Europe 15.7 14.9
WORLD 27.7 25.3

The global proportion of over 65s is predicted to increase to nearly 8% by 2015, with a substantial contrast between developed
and developing world – 16.1% in Western Europe compared with only 7.1% in Asia-Pacific and Latin America, and 3.7% in Africa
and the Middle East.
Table 7 World: Change in Proportion of Population Accounted for by Over-65s by Region

2005/2015
% 2005 2015
Western Europe 15.2 16.1
Australasia 12.7 15.5
North America 12.3 14.3
Eastern Europe 14.2 14.1
Latin America and Caribbean 5.8 7.1
Asia-Pacific 6.7 7.1
Africa and Middle East 3.4 3.7
WORLD 7.4 7.8

The ageing of the population in developed countries is led by Japan, where it is forecast that in 2015, 23.3% of the population –
almost one in four – will be over 65 years of age. In India and China, only one in 16 and one in 14 of the population, respectively,
will be over 65 in 2015.
Table 8 Change in Proportion of Population Accounted for by Over-65s by Country 2005/2015

% proportion of population 65+ 2005 2015
Japan 19.4 23.3
Sweden 17.3 20.3
Italy 18.8 19.8
UK 16.1 18.8
Germany 18.1 18.7
Greece 18.5 18.5
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Denmark 14.9 18.4
Austria 16.0 18.1
Hungary 15.4 17.5
Switzerland 15.5 17.5
Czech Republic 13.7 17.1
Portugal 16.7 17.0
Belgium 16.8 16.9
France 16.0 16.8
Spain 16.9 16.8
Netherlands 13.7 16.6
Australia 12.9 16.0
Canada 12.8 15.1
US 12.2 14.2
Poland 12.9 14.1
Russia 13.9 13.1
Argentina 9.9 10.5
Chile 7.7 9.5
China 7.9 7.5
Brazil 5.6 7.1
Turkey 5.8 6.4
Indonesia 5.4 6.3
India 5.3 6.2
South Africa 5.3 5.6
Vietnam 5.4 5.4
Malaysia 4.2 5.3
Egypt 4.2 4.9
WORLD 7.4 7.8

Signposts to the future

Increased life expectancy in Australia
In the recent Kerford Oration, it was stated that, by 2050, Australian men and women will have a life expectancy of more than 90
years. By 2050, one in 11 residents will be over 85. In 2020, it is forecast that the average life expectancy of Australian men will
be 83 and women 87, while, by 2050, men will live to an average of 92 years and women to 95. Another implication of increasing
longevity is that although people will live better and live longer, death rates from neuro-degenerative disorders, such as
Alzheimer's and dementia, will also inevitably increase. About 500,000 Australians are expected to have dementia by 2040.
Dearth of young people as birth rates fall in Germany
The latest government statistics state that by 2020, Germany will have Europe's lowest proportion of young people. The number
of children born in Germany has fallen by 50% from 1.4 million in 1964 to just 700,000 in 2005. As the country's unemployment
figures continue to grow, many Germans are finding the prospect of raising a family too challenging, and many women view the
prospect of combining child-rearing and a career as too much of a deterrent.
According to the government, German women are currently having to choose between work and career and are opting for the
latter, while families on normal incomes are deciding against another child for financial reasons.
To fend off the threat to pensions of falling birth rates and an ageing population, the government plans to offer financial and job
benefits to working Germans who decide to start a family or expand an existing one. Creating good conditions for families is
viewed as an economic issue on the grounds that fewer young people means a declining workforce, lack of innovation and ever
fewer consumers. However, the problem of plunging birth rate is not just money or lack of child care, though Germany is still
short of some 1.2 million nursery places for children under three. Just as consumers stop spending when they lack confidence
about the future, so they also have fewer children.
Low birth rate and falling immigration in Netherlands
According to Statistics Netherlands, the Dutch population will grow on average by 92 residents per day in 2005. This is in
comparison with 443 per day in 1970. Immigration has ceased to be the power behind population growth since 2003. Reduced
employment levels, a weaker economic climate, and tougher immigration laws have made the Netherlands less attractive for
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immigrants. Statistics Netherlands forecasts that, as in 2004, a greater number of people will emigrate than immigrate in 2005. It
was stated that the Netherlands will lose 49 people per day due to net emigration in 2005 but the population will increase by 92
people each day due to the birth rate still exceeding the death rate. This will change in 2027, when the death rate is forecast to
exceed the birth rate. In comparison, in 1970, the population grew by 443 people per day, with an average of 655 births recorded
each day, compared with 300 deaths.
Demographically, the Netherlands is becoming a different country. It is forecast that, from 2040 onwards, the population will start
to fall by 30 people per day, due primarily to the higher death rate, with 110 more deaths than births per day forecast in 2040.
Thailand faces growing burden of ageing population
According to Mahidol University demographers, Thailand will face the growing burden of an ageing population and increasing
labour shortages over the next 20 years. The high number of births between 1963 and 1983, at more than a million a year,
resulted in a large number of working-age Thais. However, this demographic group will retire and will become burdens on the
state within two decades. The problem is made more acute by the fact that only eight million, or 20% of people currently of
working age, have joined social security or provident fund programmes.
The forecast labour shortage has been caused by the Thai baby boom generation being too busy leading hedonistic lives to have
children. It has been suggested that the government should prepare for the labour shortage by extending the retirement age or
granting citizenship to aliens who have lived in Thailand for a long time. Currently, working people still outnumber the elderly, and
there are more contributors to social welfare than clients. However, the ratio is falling as the working population shrinks. The ratio
of working people to elderly was 19:1 in 1970, 17:1 in 1980, 14:1 in 1990 and 11:1 in 2000. The population forecast predicts a
ratio of 8:1 in 2010 and 6:1 in 2020.
2.2 Key Global Trend 2: The World Gets Richer – Economic Growth and Increased Wealth
The growing global middle class – now two billion strong – is creating a cycle of rising aspirations, with increased information
flows and the spread of democracy giving political influence to formerly disenfranchised citizens.
The global economy is well-positioned to achieve a sustained period of dynamism through to 2015. Global economic growth will
return to the high levels reached in the 1960s and early 1970s, the final years of the post-World War II "long boom". Dynamism
will be strongest in emerging markets, especially in the two Asian giants, China and India, but will be broadly based worldwide,
including both industrialised and many developing countries. However, the rising tide of the global economy will not benefit
everyone, and the information revolution will make poverty more visible while regional differences will remain large.
The IMF in September 2005 forecast a robust growth rate of 4.3% for 2005 and 2006. Concerns were the excessive dependence
of global demand on consumption, especially in the US, the elevated level of asset prices, particularly housing, and the high and
volatile price of oil.
Other features of economic growth

The widespread improvement in recent years in economic policy and management is the foundation of future dynamism.
Inflation rates have been dramatically lowered across a wide range of economies. The abandonment of unsustainable fixed
exchange rate regimes in Asia, and the creation of European Monetary Union (EMU) will contribute to economic growth.
International trade and investment flows will grow, spurring rapid increases in world GDP. Opposition to further trade
liberalisation from special interest groups and some governments will not erode the basic trend towards expansion of trade.
International capital flows, which have risen dramatically in the past decade, will remain plentiful, especially for emerging
market countries that increase their transparency.
The pervasive incorporation of information technologies will continue to produce significant efficiency gains in the US
economy. Similar gains will be witnessed, albeit to varying degrees, in numerous other countries, as the integration of these
technologies proceeds. However, the absorption of IT and its benefits will not be automatic, because many countries will fail to
meet the conditions needed for effective IT utilisation, namely high educational levels, adequate infrastructure, and
appropriate regulatory policies.
Rapid expansion of the private sector in many emerging market countries, along with deregulation and privatisation in Europe
and Japan, will spur economic growth by generating competitive pressures to use resources more efficiently. The impact of
improved efficiencies will be multiplied as the information revolution enhances the ability of firms around the world to learn
"best practices" from the most successful enterprises.
Wealth per capita in India to double in a decade
According to a recent study by Deutsche Bank, over the next decade and a half, India's 1.1 billion people could see the nation's
wealth per capita doubled. The study also suggests that India could become the world's third richest economy within 15 years, as
it embraces free market values. The report implies that India's continued growth is conditional on its remaining committed to free
market values. India should remain an open economy and an open society, benefiting from a brain gain rather than losing talent
in a brain drain of well-educated young Indian professionals going abroad to seek their fortunes. India's future depends on its
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acceptance of and participation in globalising forces, and a readiness to welcome foreign investment and foreign trade. The ruling
Congress party, despite traditionally left of centre credentials, supports free trade and free market reforms.
Services rather than goods are now the rich indicator in the US
Consumer goods are no longer the wealth and social class indicator they once were. Rising incomes, flattening prices and easily
available credit have given many more Americans access to the prestigious goods which traditionally meant status. Thus any
middle class family may own a flat-screen television and drive a BMW. Similarly, with the rise of informal dress, the rich no longer
look rich. This is not to say, however, that the rich have lost their desire to demonstrate their wealth. It is the means which have
changed. Goods still exist that undoubtedly mean wealth, such as the US$130,000 Hummer in the drive, but the main indicator of
wealth is spending on personal services and exclusive experiences.
Thus, according to the American Personal Chef Association, Americans in the top wealth brackets now employ some 9,000
personal chefs, up from about 400 just 10 years ago. This social group is taking more exotic vacations, sometimes using private
planes, and visiting plastic surgeons for frequent cosmetic procedures.
Nevertheless, class continues to exert pressure on consumers to aspire to the appearance of wealth through aspirational
purchases. In a recent poll by The New York Times, some 81% of Americans said they had felt social pressure to buy high-priced
goods. However, because of the availability of credit and special deals, which make prestige brands available to most people, this
is not the simple matter it once was.
There has also been a subtle change in the nature of social pressure, according to an expert in consumer culture at Boston
University. While the rich may have always set the standards, the actual social competition at the neighbourhood level was
generally between people in roughly the same class. However, over the last 30 years or so, people have become increasingly
isolated from their neighbours, and a spate of magazines and television shows celebrating the houses, goods and services
purchased by the rich has fostered a whole new level of desire across class groupings.
"Horizontal desire," coveting a neighbour's goods, has been replaced by a "vertical desire," coveting the goods of the rich and the
powerful seen on television in MTV shows like Cribs. The old system was keeping up with the Joneses, the new system is keeping
up with the rappers.
Private jets for time strapped businessmen
Lufthansa has collaborated with NetJets to offer a new private jet service to its high-end customers. Business travellers are
attaching a growing importance to their time. Private jets offer customers maximum flexibility in their travel planning. The view is
that shortening the journey time is a defining factor in business success.
The equation of time and/or convenience equals money is a concept which could increasingly become a driving force of change in
the transport industry. The flexibility offered by systems which make businessmen less tied to airport schedules may be regarded
as offering real commercial advantage in dealings with clients and customers and, in addition, may be perceived as a more
prestigious way to travel.
2.3 Key Global Trend 3: The Haves and Have Nots – Inequalities Grow
The obvious counter trend to the increase in global consumer wealth is an accentuation of the gap, now a chasm, between
rich and poor. Disparities in health status between developed and developing countries, particularly the least developed
countries, will persist and widen.
Over the next decade, progress will vary according to region, country, and social group, triggering increased income inequalities,
within as well as between countries. The vicious circle by which the rich get richer and the poor get poorer is exacerbated by
technology. Lack of access to computers and the Internet, and lack of access to efficient transport, safe housing, education,
nutrition and medicine prevent the poor from catching up, while those able to take advantage of opportunities can race ahead.
Thus, school enrolments will decline in the most impoverished countries, in those countries affected by serious internal conflicts,
and in those with high rates of infectious diseases.
In developed countries, major inroads against a variety of maladies will be achieved by 2015 as a result of generous health
spending and major medical advances. The revolution in biotechnology holds the promise of even more dramatic improvements
in health status. Developing countries, by contrast, are likely to experience a surge in both infectious and non-infectious diseases,
and in general will have inadequate healthcare capacities and spending. Tuberculosis, malaria, hepatitis and, particularly, AIDS
will continue to increase rapidly. AIDS and TB together are likely to account for the majority of deaths in most developing
countries. In some African countries, average life-spans will be reduced by as much as 30 years, generating more than 40 million
orphans and contributing to poverty, crime and instability. AIDS and other diseases and health problems will also damage
prospects for transition to democratic regimes, as they undermine civil society, hamper the evolution of sound political and
economic institutions, and intensify the struggle for power and resources.
Rich poor gap expands in the all middle-class society of Japan
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The Gini coefficient is an index used to gauge the income gap in a country. It will read 0 if the income of the entire population is
equal, and 1 if a single person accounts for all income. Japan's Gini coefficient, which was 0.498 at the latest calculation, is on an
uptrend.
Traditionally, the income gap between the rich and the poor has been rather small in Japan, creating what has become known as
the "all-Japanese-as-middle class" mentality. During the 1990s, the aggregate income earned by the richest 10% of the
population accounted for about 21.7% of nation's total income, compared with 25-30% in other industrialised countries. Moreover,
the aggregate income earned by the poorest 10% of the population accounted for 4.8% of the total, much higher than the 1-2%
in other nations.
Thus, although newspapers carry many advertisements for luxury cars priced at ¥20 million and watches costing ¥5 million, there
are also "100 yen shops" selling a variety of cheap products which are reportedly thriving, demonstrating the existence of the
new poorer class.
EU membership winners and losers
The new Eastern European EU members saw gross domestic product rise by 5% in 2004, compared with 3.7% in 2003.
Economists forecast a further increase of more than 4% in 2005 – more than twice the rate of growth forecast for the "old" EU.
The problem in Poland and other Eastern European members is that accession has created new societal divides between the
beneficiaries of accession – young people living in fast-growing large cities, and those who feel they are losing out – the residents
of depressed small towns. In addition, although work in Western Europe offers opportunities for some emigrants, most countries,
with the exception of UK, Ireland and Sweden, have retained barriers on migrant labour to protect the indigenous workforce.
Mobile penetration in Europe versus Latin America
Only about 35% of the population in Latin America owns a mobile phone, compared with 90% in Europe. In the Netherlands, SIM
penetration exceeded 100% of the population during the first quarter of 2005. However, customer growth rates are slowing down
as operators seem less inclined to subsidise the acquisition of prepay customers. This negatively impacted overall customer
growth in the first quarter of 2005.
2.4 Key Global Trend 4: The Globalisation of Fear – Terrorism and Crime
The trend away from state-supported political terrorism and towards more diverse, transnational networks enabled by
information technology, will continue. The deadly threat posed by a combination of global terrorism with weapons of mass
destruction is a nightmare which haunts all consumers. Between now and 2015, terrorist tactics will become increasingly
sophisticated and designed to achieve mass casualties, and the trend towards greater lethality in terrorist attacks will
continue.
Since the beginning of the decade, the developed world has faced a new totalitarian threat – jihad terrorism. This form of
terrorism pursues the strategic goal of pushing back Western values, weakening moderate states and, through a "war of
cultures", putting in place a fundamentalist order in many Islamic countries. Poverty, a low level of education, lack of resources,
environmental destruction, natural disasters and excessive population growth are the breeding-ground for illegal migration,
extremism and organised crime. Worldwide networks mean worldwide vulnerability. Borders no longer offer protection. Threats
have become diffuse. Like terrorism, security is becoming globalised, detached from its traditional territorial and national
reference points and subject to globalisation.
The terrorist attacks in London in 2005 have moved multiculturalism into focus throughout Europe. Issues include whether
education can be separate, thus perpetuating divisions, or whether it should be a tool of integration. Another key issue is the
treatment of language. For companies marketing products to multicultural societies there are issues of whether or not to create
ethnically distinct product and brand extensions, and whether or not to identify companies and brands with particular social
groupings within societies in the interests of popularity and promoting sales.
Consumers in the countries concerned will inevitably be affected by the climate of fear generated by the terrorist attacks in Spain
and the UK, and by the various threats made by Islamic extremists. The effect on consumer behaviour in countries with no recent
history of terrorist atrocities is not easy to predict. The consumer buying behaviour following the attacks of 11 September 2001 in
the US was characterised by a decline in purchases of luxury goods and other discretionary items. However, subsequently there
has also been evidence of defiance and a "devil may care" purchasing attitude. Nevertheless, fear of crime in general is
increasingly becoming a primary influence on consumer behaviour and spending, and the need for governments to provide
security is paramount for many consumers. This is particularly so for the over-60s, the demographic group which will grow fastest
between 2005 and 2015.
Civil liberties bow to fear in Europe
The Italian government has approved a package of anti-terrorism measures allowing authorities to take DNA samples of suspects
and make it a specific crime to recruit and train people for terrorism. The new measures will also increase security on Italy's
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transport system. Similar legislation has been passed in the UK. Several countries in Europe have passed laws allowing the taking
of DNA samples, including the Netherlands, Switzerland and Sweden.
Is Mexico going to be the next Colombia?
A wave of killings along the Mexico-US border has provoked fears of the "Colombianization" of Mexico. Colombia is the source of
90% of the cocaine and much of the heroin consumed in the US. Mexico is the smuggling route for most of this cocaine and
heroin, and is also itself a small producer of heroin and marijuana. Mexico's government has pledged a war without quarter on
the country's powerful drug gangs. However, fear exists that the nation could be overwhelmed by the kind of violence that has
long been a feature of the drugs trade. An atmosphere of violence and fear, and the conviction that the drugs business and
organised crime cannot be controlled is damaging to commerce and to consumer confidence. Failure to bring violence under
control ultimately damages both the reputation of a country and the confidence of its consumers in the government and in the
future.
2.5 Key Global Trend 5: Global Warning – Famine, Water Shortage, Expensive Energy
The vast majority of consumers now believe that global warming is a fact. In developed and developing countries it has
become a part of the consumer mindset and as such it will increasingly influence lifestyle decisions in terms of future plans,
living locations, political attitudes, holidays, financial provisions, and confidence in the future.
Food
Driven by advances in agricultural technologies, world food grain production and stocks in 2015 will be adequate to meet the
needs of a growing world population, but despite the overall adequacy of food production, problems of distribution and availability
will remain. The number of chronically malnourished people in Sub-Saharan Africa is forecast by the CIA to increase by more
than 20% over the next 15 years. The potential for famine will still exist where the combination of repressive government or
internal conflict and persistent natural disasters prevents or limits relief efforts, as in Somalia in the early 1990s and North Korea
more recently. Donors will become more reluctant to provide relief when the effort might become embroiled in military conflict.
The use of genetically modified crops has great potential for meeting the nutritional needs of the poor in developing countries.
Popular and political opposition in the EU countries and, to a lesser extent, in the US has, however, damaged the prospects for
applying this technology.
Water
By 2015, nearly half the world's population will live in countries that are "water-stressed" ie have less than 1,700 cubic metres of
water per capita per year. These people will mostly be in Africa, the Middle East, South Asia and northern China. In the
developing world, 80% of water usage goes into agriculture, a proportion that is not sustainable; and in 2015 a number of
developing countries will be unable to maintain their levels of irrigated agriculture. Over-pumping of groundwater in many of the
world's important grain-growing regions will be an increasing problem: about 1,000 tonnes of water are needed to produce a
tonne of grain.
Energy
The global economy will continue to become more energy efficient in the period to 2015. Traditional industries, as well as
transportation, are increasingly efficient in their energy use. The most dynamic growth areas in the global economy, especially in
services and the knowledge fields, are less energy intensive than the economic activities that they replace. Energy production
also is becoming more efficient: technological applications, particularly in deep-water exploration and production, are opening
remote and hostile areas to petroleum production. However, sustained global economic growth, along with population increases,
will drive a near 50% increase in the demand for energy over the next 15 years.
Global warming
The perennial problem is that governments, and particularly those depending on voters, rarely have the courage to think long-
term, since the necessary measures, such as adopting cleaner forms of energy, lowering carbon emissions and adopting low
carbon technologies, make them unpopular with powerful lobbies which, in turn, influence consumers, who fear the short-term
economic consequences, such as job losses.
Canadians blame global warming for hot summer
According to a poll conducted by Ipsos-Reid, 56% of Canadians thought 2005's high temperatures were the result of global
warming, while 43% said they believed it was "just an example of a very hot summer that comes along every once in a while".
Some 52% of Canadians said they believed the federal government was not doing a good job in addressing global warming. Of
these, 40% thought the government was doing a poor job, while 12% thought the government was doing a very poor job.
2.6 Key Global Trend 6: Urban Growth, Rural Decay and Inner City Exodus
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The ratio of urban to rural dwellers is steadily increasing. By 2015 more than half of the world's population will be urban. The
number of people living in "mega-cities" – those containing more than 10 million inhabitants – will double to more than 400
million.
The economic enfranchisement of the rural population represents the next great step forward for China, and would effectively
treble consumer expenditure, powering GDP past that of the US.
In 1800, only 2% of the world population lived in urban areas. The United Nations predicts that, by the year 2008, 50% of the
world's 6.1 billion people will be living in cities, and that this proportion will grow to 60% in a further 20 years. Cities across the
world are expanding, as are the urban developments which surround them. In 1950, New York was the only metropolis with a
population of more than 10 million. Today there are 20 such "mega-cities" in the world, many of them in developing countries.
However, while urbanisation continues to sweep the world, a counter trend is in progress: the emptying of inner cities. As
businesses and industries escape the urban core, seeking lower costs in small towns and the countryside, demographic surveys
show that the population is following, in pursuit of better lifestyles. After a brief surge in inner-city populations in the late 1990s,
since 2000 most older American cities have lost more people than they have gained. Families, retirees and immigrants, which are
the key sources of new population growth, are largely deserting the urban core. In Europe, this is true for London, Paris,
Hamburg, Milan, Berlin and Frankfurt. In the US, it is true for Baltimore, Cleveland, Philadelphia, Detroit, San Francisco,
Minneapolis and Chicago. In many European cities, the only rapidly growing group is immigrants, most of them Muslim, including
many, according to reports, who are increasingly targeted by Islamic extremism.
The "fear factor" and city centre depopulation trend
Many analysts now believe that "the fear factor" is a major cause of the trend towards city centre depopulation. American inner-
city dwellers reacted far more intensely to the terrorist attacks of 11 September 2001 than people in suburbs and smaller towns.
Polls taken some months after the attacks showed that twice as many big-city residents as suburbanites, and four times as many
as rural residents, felt "great concern" about future attacks.
The fear of terrorism and crime is certainly a key factor in decisions by financial services companies to shift operations to suburbs
and smaller towns, and also in the outsourcing of financial and other high-end service jobs to less vulnerable and less expensive
provincial cities, as well as offshore locations in India and other parts of the developing world.
Mexico City has lost jobs, businesses and educated residents to Monterrey and Guadalajara, which consumers perceive as safer,
while concerns about safety have slowed economic growth in cities such as San Salvador, Rio de Janeiro and Johannesburg. The
US cities that have declined quickest, such as Baltimore and Detroit, are those with the highest crime rates.
Cocooning
It is difficult to predict how businesses and consumers will react over time if terrorist attacks become more common. The trend
towards "cocooning" – the retreat to homes which are secure entertainment palaces – is one reaction.
Chinese farmers remain marginalised economically
The National Bureau of Statistics recently highlighted the widening gap between the quality of life of urban residents, and the farm
workers who make up the main part of China's 1.3 billion population. The income gap between city dwellers and farm workers
has widened since 1997. During the seven years to 2004, rural people's annual incomes per capita increased by 6.8% to 2,936
(about US$350) on average, nearly a quarter of the income of urban dwellers.
These earnings have also dragged down the education status in rural areas far behind cities, with farmers unable to send their
children to school. For instance, university graduates from the countryside account for a mere 2.3% of the total, and only 10% of
rural people are now under the nation's social welfare umbrella for free medication, which covers some 40% of city residents.
The life of farm workers who mainly feed themselves from what they grow has been worsened by the nation's persistent
contractions in its expenditure on agriculture. The money earmarked for agriculture in 2003 was 7% below that spent in 1978.
China has more than 800 million farmers, or nearly 60% of its 1.3 billion population. According to official estimates, in 2004, 26.1
million rural people were close to absolute poverty, and 50 million were living at the least sustainable level. However, the plight of
China's vast farming population has long been under the spotlight and, following the early 2005 abolition of agriculture taxes, it
has been announced that education will be completely free in the countryside by the end of 2005.
Increased security
Enhanced security is one obvious answer to consumer fears. This might mean increased surveillance using CCTV, the introduction
of identity cards, the employment of more police, and more money being spent on anti-terrorist measures. On the other hand, it
is feared that imposing the kind of controls now seen at airports, such as magnetometers, scanners and body searches, at train
and bus stations and in other public places in major cities might have the opposite effect on consumers to the one intended, and
accelerate the exodus from city centres.
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The problem is that many great cities have been built upon the values of openness, freedom of movement, privacy and tolerance,
and there is a level of consumer expectation that these will continue, amid the fear and the desire for "something to be done".
Achieving the balance between control, protection and freedom for the consumers of the 21st century is vital for cities and for
businesses worldwide.
Modern cities already face the challenge of a telecommunications revolution that is undermining their traditional monopoly on
information and culture.
In continental Europe, the multiculturalism generally seen as a positive is now being regarded as a danger which polarises society
groups and breeds prejudice and mistrust.
2.7 Key Global Trend 7: Flashing the Plastic – Financing Consumer Purchasing
While macro factors and political concerns threaten the growth of credit and the consumer boom which has bolstered many
otherwise moribund economies, the credit industry itself, notably the card providers, is growing the global market and
introducing new payment and credit-based products intended to boost both general card usage and purchasing on credit.
The impact of increased credit has been to create a consumer whose purchasing behaviour is less cautious than a decade ago,
and whose credit limits are far higher. This has benefited economies, retailers, consumer products manufacturers and consumer
services providers, generating consumer expenditure growth while industrial markets have stagnated. The trend has gained force
due to interest rates reaching historically low levels, due to supply based economic policies, which have reduced inflation to
manageable levels. It has also been due to comparatively unregulated markets.
There have also been a succession of "must have" electronic goods – VCRs, camcorders, mobile phones, notebook computers,
digital cameras, DVD players, wide screen TVs – in developed markets, which have also helped to boost demand for credit.
Rising property values drive consumer spend
In some markets, the reduction in savings ratios, the abandonment of parsimonious purchasing habits and the acceptance of high
levels of credit card debt have been predicated on rising property values. The baby boomer generation, with generally high levels
of equity in property, has been a major spender and borrower for this reason. However, over the last three years, younger
demographic groupings, with less equity but high incomes, have been larger borrowers in proportion to assets and income.
Competition for consumer borrowing has steadily increased, with growing numbers of companies offering credit cards and
interest-free purchasing. Interest-free hire purchase offerings have witnessed growth among retailers for some time, with store
cards competing with credit cards for customers' business. Services, discounts and free gifts are offered by credit card operators
to differentiate products, all of which encourage consumer spending.
Cards are the dominant medium for buying on credit, and this remains very much a growth market. Cards branded Visa, the
world's leading payment brand, generate more than US$2.3 trillion in spending annually, and are accepted at more than 29
million physical locations around the world, including more than 800,000 ATMs.
Prepaid cards and 10 million Chinese
A key growth area is prepaid card products, such as payroll cards, gift cards and money transfer cards. This is of great
significance to consumer product companies since it opens various retail channels and products to a new demographic. It is
estimated that the global market opportunity for prepaid products stands at over US$2 trillion. In October 2002, Visa International
announced the launch of its International Travel Card in China, with the potential to serve 10 million outbound Chinese travellers.
Prepaid products offer customers the flexibility to pay now, pay later or pay before. Only 5% of the 10 million annual outbound
travellers from China own international payment cards. Prepaid cards may be non-personalised, have an expiration date, and can
exist in the physical or virtual world. They can be reloadable or disposable.
Prepaid is viewed as covering nine distinct categories: travel; gift-giving; consumer rebates and promotions; emergency needs;
employee wages and expenses; domestic and cross-border money transfers; government benefits disbursements; money
management for young adults; and electronic payments in rural locations and closed venues (eg events, university campuses,
military bases and shopping malls).
Boom or bust
The pace of growth of all cards is likely to accelerate as more financial institutions come to understand the value of using chip
technology. Smart cards offer a long-term solution to the problem of fraud on payment cards, while providing additional
advantages through value-added programmes. In addition, smart cards make it easy for software developers to create non-
financial programmes, such as loyalty or identification, network access, PC access, transit and other functions. These are all
highly positive developments for credit.
The future will see a trade-off between a number of opposing forces. On the one hand, there is the growth of the credit industry,
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spearheaded by the established success of credit cards and constantly stimulated by marketing initiatives and the introduction of
new technology.
On the other hand, there is the spectre of higher interest rates and a credit squeeze, against a background of global economic
slowdown and fears of bad debts. The outcome is of huge significance for governments, financial institutions and consumer
product companies, and requires marketers to formulate contingency plans and answer the questions: what replaces credit
growth as a market driver? Should it be thrown into reverse? Will it be thrown into reverse?
2.8 Key Global Trend 8: Bangalore on the Line – Outsourcing

Outsourcing is no longer merely about call centres and manufacturing. Increasingly, such functions as payroll administration
and research and analysis are moving overseas. India has the potential to become the knowledge engine of the world if it
leverages its vast youth power and attracts foreign investment to sharpen its knowledge base. In the next few decades, India
will have the world's largest young people resource.
Outsourcing is the relocation of production operations or services to countries with lower labour costs. Companies from highly
developed countries mainly outsource to China, India and other Asian countries. A pool of qualified, English-speaking scientific
and technological manpower will provide India with the large base of research and development activity to attract global
investment, provided the country puts in place the required legal and physical infrastructure that can attract more foreign
investment in research activity.
Major corporations are particularly targeting India, China and Brazil, both to support local growth and to produce goods and
services at a lower cost by exporting skilled jobs abroad. In developing countries there is growing demand for business
transformation services. The corporations transferring skills to India are also very conscious of the burgeoning new class of
middle class consumers who, as well as supplying their employees, will also be their future customers.
The accession of Poland to the EU is regarded as an opportunity for outplacement and outsourcing. Analyses show that, from the
point of view of Western European states, in some industrial sectors the new EU countries are more profitable outsourcing sites
than Asia. One example of this development is the investment project launched by Hewlett-Packard in Wroclaw that will create
more than 1,000 jobs.
Although Eastern European accession countries such as Poland may not be able to match the Asian countries in terms of labour
costs, staff qualifications and management, set against this might be effectiveness and logistics, the perception of stability and
lower risks. Industry sectors identified as holding strong potential for outsourcing to Poland are the automotive industry and the
production of large household appliances and furniture.
Knowledge commission for India
A Knowledge Commission has been set up to devote its attention to a wide variety of areas to leverage India's knowledge
strength, including education, agriculture, science and technology and e-commerce. The Knowledge Commission will advise on
how India can meet the knowledge challenges in this century, in education, scientific institutions, intellectual property and
agriculture.
Fears of Eastern dominance
At the recent Russian Outsourcing and Software Summit (ROSS) 2005, held in St Petersburg, delegates warned that either the IT-
strong India or new competitors like China and the Philippines would come to dominate the outsourcing market if Russia does not
act promptly. The Russian Economic Development and Trade Ministry proposed setting up two types of special zones: for
manufacturing and hi-tech. Within the zones, the state will offer a reduction in social tax from 26% to 14%, a chance to import
equipment without paying customs duties, and the construction of modern infrastructure to be financed by the state. Delegates at
ROSS also stressed the need to pay attention to modern IT education, and to follow the Indian model by establishing special IT
units on the basis of five or six elite universities.
Hungary sets up outsourcing association
A group of IT companies, along with the Budapest Technical University, recently announced the foundation of the Hungarian
Outsourcing Association. The association, whose 11 founding members include international names such as IBM Magyarország,
Siemens and British Telecom, seeks to both make Hungarian companies aware of the business opportunities available in
outsourcing, and promote Hungary as a high quality outsourcing location.
A million jobs to be outsourced
A report by Cushman & Wakefield Healey & Baker indicates that Western Europe will outsource some one million jobs to offshore
locations in the next 10 years, of which around 60% will consist of financial, manufacturing and IT-related activities. The report
classifies Hungary, along with Poland and the Czech Republic, as "preferred countries" for outsourcing locations, due to low-cost
real estate, skilled labour, and membership of the European Union.
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2.9 Key Global Trend 9: Made in Poland USA – Globalisation and the Threat to Domestic Wages
Globalisation, technology and the interplay of the two have long worked to erode the bargaining power of employees in
developed countries, with the main slide in the wage share occurring between 1985 and 1995. The extent to which abundant
and cheap pools of labour are now opening up is taking the phenomenon to another level, causing corporations to think long
and hard about giving higher rewards to workers at home.
As Western businesses become less dependent on their home markets through globalisation, standards of living may be stalling in
the rich nations, even as they improve in emerging economies. Wages have lagged behind productivity growth in Europe and the
US over the past three years. In 2004, when adjusted for inflation, they fell in both America and Germany. After hovering around
70% of business sector income for decades, wages in industrialised countries have declined over the past 20 years, reaching
about 64% today, according to statistics from the Organization for Economic Cooperation and Development.
Meanwhile, the share of corporate profits in the combined national income of the Group of 7 industrialised countries (Canada,
France, Germany, Japan, Italy, United Kingdom, United States) has reached an all-time high, according to a study by UBS
Warburg. Even in Germany, which is currently characterised by a moribund economy, businesses are on a roll. From General
Electric to Deutsche Bank, healthy balance sheets are translating into handsome dividends, which, companies argue, help them to
attract investor capital. International trade soared to 28% of global GDP in 2004, compared with 19% in 1991, according to
Morgan Stanley. A whole range of services that were once considered "untradable" can easily be provided on the other side of the
globe: anything from accounting and legal services to software programming, engineering and financial analysis.
Some economists argue that companies are taking a dangerously short-term view by curbing their customers' buying power with
lower wages. In the US and the UK, much growth has been propelled by consumer spending. However, much of this has been
fuelled by cheap credit and may not last. In Europe, where high unemployment has already made many uncomfortable with
spending freely, the lack of consumer demand has been holding back economic expansion.
Skill transfer to India
IBM recently announced plans to increase its payroll in India in 2005 by 14,000 workers as it cuts up to 13,000 jobs in Europe and
the US. This is an example of the transfer of skilled jobs from high-wage to low-wage countries such as India. The move will
mean that IBM's Indian workforce will rise to 38,196 in 2005 from 24,150 in 2004. IBM has a policy of increasing its staff in high
growth countries such as India to meet increasing demand. IBM is India's sixth largest IT employer. Skill transfer is better than
outsourcing for developing countries such as India, since more permanent and secure jobs are created, and there is more
integration with the financial infrastructure of the host country.
Whirlpool makes fridges for the US in Poland
Whirlpool, the American appliance maker, pays high-wage workers to produce expensive front-loading washing machines at its
plant in Schorndorf, Germany. Some of the machines are sold in the US, despite higher labour costs – US$32 an hour, including
benefits, versus US$23 in the US. The reason for this is that the necessary technology existed in Germany when Whirlpool
decided to sell front-loading washers to Americans, as did a trained workforce and a Whirlpool factory already making a European
version of the front-loader.
Job growth and the expansion of US companies are mainly happening abroad. More than 40% of the nation's imports are from the
overseas subsidiaries of American companies, contributing to the trade deficit but also making companies more competitive.
Whirlpool is a typical example: its employment in the US has not risen in years, while it has tripled abroad.
Outsourcing threatens domestic workers
The threat of outsourcing to poorer countries is putting employees in rich countries increasingly under pressure. Siemens and
Bosch are among the companies that have extracted longer working hours from their employees by threatening to move factories
from Germany and France to Eastern Europe in 2004. Even in sectors that cannot outsource, wage scales appear to have shifted,
especially for low-skilled workers.
The prospect of a gradual redistribution of wealth in the West from employees to shareholders is already generating fears of a
potential backlash, raising the heat on corporations from unions and politicians. In France, where labour unions remain more
militant than in many other countries, the squeeze on wages brought 600,000 outraged employees onto the streets in March
2005.
Companies, themselves subject to fierce international competition, say profits are only temporarily soaring, thanks to cost-
cutting. Economists concur that wages cannot be in relative decline indefinitely. Eventually, economic development in Eastern
Europe and Asia will reach a level where workers there raise their own pay demands, limiting the ability of companies to play
them off against their counterparts in rich countries. Slowing population growth in Europe, America and even China should
accentuate this trend by shrinking the labour pool. However, these trends are long-term, and unlikely to placate those employees
currently experiencing falling living standards.
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2.10 Key Global Trend 10: Workers on the March – Economic Migration and Guest Workers
The trend towards seeking work in other countries is massive and growing, facilitated by declining workforces in developed
countries, financial dissatisfaction in developing countries and the enlargement of the EU, which, in principle at least, allows
workers in its member countries to work in any of those countries.
Although Turkey is not part of the EU, there are still more than two million Turkish gastarbeiter (guest workers) in Germany. At
the same time, the enlargement of the European Union has brought so many Poles to Germany that many Germans wish to close
the doors because of the effect on the domestic job market of people willing to work for lower wages than indigenous workers. In
Eastern Europe, surveys indicate that those wishing to work abroad are primarily students, the jobless and poor people, but also
skilled manual workers.
In developing countries, the mobility of workforces and their new knowledge and ability to communicate and share information
can be a means of empowerment and a protection against exploitation. In China, analysts say the days of factory owners being
able to keep wages stagnant for a decade, as they were in Guangdong, are over. The reason for more knowledgeable workers is
mobile phones and the Internet. Another factor is China's one-child policy, which makes parents less willing to see their only child
leaving home to find work, and means that the new boom in the interior is keeping more workers closer to home. Thus, although
China's poor migrant labourers are a long way from having serious bargaining power, there are signs that they are beginning to
realise their power.
Polish students want to work abroad
According to a poll by the Pentor Institute for Opinion and Market Research, a majority of high school and university students in
Poland believe the best career opportunities are located abroad. According to the poll, conducted in March 2005, some 60% of
Poles aged 15-30 want to live and work in the West, and as many as 40% of Poles would leave Poland if they could. These results
demonstrate Poles' widespread dissatisfaction with the situation in their country, characterised by high unemployment and lack of
confidence in state institutions. The poll found that potential emigrants are convinced that their prospects are not good because
Poland is a relatively poor country and in other countries life is easier, more secure and living standards are higher.
German workers travel further afield
Germany has a tradition of gastarbeiters (guest workers) coming to Germany to do the jobs too badly paid and unpleasant for the
national labour force. However, due to economic stagnation in the country, there has been a change, in that many Germans,
especially young people from the former East Germany, are travelling abroad in search of work. These young people are
becoming ethnic German gastarbeiter in Austria, Switzerland, Iceland and other countries. According to news reports, 45,000 are
working in Austria, compared with half that number five years ago.
The establishment of job placement services in locations such as Mecklenburg Western Pomerania, which are recruiting young
Germans for positions as nurses, hospital orderlies and waiters in Austria, shows how things have changed. Negative perceptions
of the economic and employment prospects in one's native country are the main stimulus to mobility of the labour force within the
EU and elsewhere, but such trends in the developed countries of Europe, where demographic projections suggest a shortage of
labour in the future, could be a cause for concern.
Workers in China begin to have choices
China's southern coastal provinces were formerly renowned for their supply of cheap, migrant labour, helping to turning the
region into the world's manufacturing powerhouse. However, just as the boom originally moved from Hong Kong to southern
Guangdong, now it is moving further inland, leaving the province in the strange position, for the world's most populous country, of
being more than 2 million labourers short. The reason is that, inland, electricity and other utilities are far cheaper, so factories are
shifting there, and so are workers. With a rural population of 800-900 million out of a population of 1.3 billion there remain many
agricultural workers willing to work in China's factories. Currently one in eight per year are leaving the land to work in cities, but
the conditions which drew them to Guangdong are changing.
Factory owners are realising that land and operating costs are cheaper inland, and provincial governments are offering incentives
to lure them. Because of poor working conditions and low salaries, workers in Guangdong, many of whom came from inland in
the first place, would prefer to work in factories closer to the areas they came from and where they have families. As those areas
begin to develop, workers are realising they can find similarly paid work closer to home.
2.11 Key Global Trend 11: The Rising Tide – Immigration

Legal and illegal migrants now account for more than 15% of the population in more than 50 countries. Their numbers will
grow substantially and will increase social and political tension and perhaps alter national identities, even as they contribute to
demographic and economic dynamism. Divergent demographic trends, the globalisation of labour markets, and political
instability and conflict will fuel a dramatic increase in the global movement of people between 2005 and 2015.
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States will face increasing difficulty in managing migration pressures and flows, which will number several million people annually.
Over the next 15 years, migrants will seek to move:
To North America, primarily from Latin America and East and South Asia.
To Europe, primarily from North Africa and the Middle East, South Asia, and the post-Communist states of Eastern Europe and
Eurasia.
From the least to the most developed countries of Asia, Latin America, the Middle East, and Sub-Saharan Africa.
For high-income receiving countries, migration will relieve labour shortages and otherwise ensure continuing economic vitality. EU
countries and Japan will need large numbers of new workers because of ageing populations and low birth rates.
Immigration will complicate political and social integration: some political parties will continue to mobilise popular sentiment
against migrants, citing the strain on social services and the difficulties in assimilation. European countries and Japan will face
difficult dilemmas in seeking to reconcile the protection of national borders and cultural identity with the need to address growing
demographic and labour market imbalances.
For low-income receiving countries, mass migration resulting from civil conflict, natural disasters or economic crises will strain
local infrastructures, upset ethnic balances, and spark ethnic conflict. Illegal migration will become a more contentious issue
between and among governments.
For low-income sending countries, mass migration will relieve pressures from unemployed and underemployed workers and
generate significant remittances. Migrants will function as ethnic lobbies on behalf of sending country interests, sometimes
supporting armed conflicts in their home countries, as in the cases of the Arab, Albanian, Kurdish, Tamil, Armenian, Eritrean and
Ethiopian diasporas.
At the same time, emigration will increasingly deprive low-income sending countries of their educated elites. An estimated 1.5
million skilled expatriates from developing countries are already employed in high-income countries. This brain drain from low-
income to high-income countries is likely to intensify over the next 15 years.
Education will be determinative of success in 2015 at both the individual and country levels. The globalising economy and
technological change inevitably place an increasing premium on a more highly skilled labour force. Adult literacy and school
enrolments will increase in almost all countries. The educational gender gap will narrow, and will probably disappear in East and
Southeast Asia and Latin America.
Immigrants flow North, cash flows South
Mexico loses nearly 500,000 members of its workforce every year, with only China losing more. This yearly exodus is associated
with the weak economy, particularly in rural areas, and the inability of the government to create sufficient jobs to retain its
workforce. The US, Canada, Germany and the UK are the four most popular destinations for Mexican emigrants seeking work, but
the US is by far the main destination.
Following the 1994 North American Free Trade Agreement, Mexico has not been creating jobs but exporting large parts of its
workforce. At the same time, the US is, in effect, outsourcing low paid but vital jobs to a vast pool of illegal immigrant labour.
According to the World Bank, nearly half of the Mexican population is just as poor today as it was in the 1960s. On what then is
Mexican economic growth based? According to analysts, some US$20 billion in US dollars is sent home by Mexicans working in the
US. This surpasses income from oil and tourism and is, as such, vital to Mexico's economy.
Spanish government tries to bring illegal immigrants in from the cold
Spain's government controversially relaxed the rules for illegal immigrants for a period in 2005, a move running counter to the
crackdown on illegal workers in Germany and elsewhere. The new rules allow immigrants to use documents such as utility bills or
school enrolment papers to establish residence. Immigration is a burning issue throughout Europe, and one which it is difficult to
separate from the idea of free movement of labour, as enshrined in EU statutes. The issues of cheap labour and minimum wages
are also relevant to the immigration debate, which is further complicated by the recent expansion of the EU to include Eastern
European countries. Demographics are also relevant: the government argues that Spain needs more immigrants, as the birth rate
is declining and there will be insufficient Spaniards to pay for pensions by 2050.
German crackdown on illegal workers
The German government, in contrast, organised raids on sectors heavily reliant on East European labour to find illegal workers.
These were sectors such as meatpackers and tile layers, while tourism, taxi and courier businesses reportedly rely on illegal
labour for up to 25% of their workforce. This action is part of an attempt by Germany to maintain high wages among its citizens,
and is symptomatic of the difficulties faced by Western European countries in defending tax revenues, jobs and social security
systems from the competition introduced into the labour market by new EU member states, and has led to accusations of
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protectionism.
France's crackdown on illegal immigrants
According to the French government, the number of illegal immigrants currently in France is between 200,000 and 400,000. Many
of these are people who entered the country lawfully but have overstayed their visas. A 20% increase in the level of lawful
immigration over the last seven years was largely due to an explosion in the number of marriages between French nationals and
foreigners – thousands of which are arranged every year. To combat such arranged marriages, the government announced a
change in the civil code so that marriages contracted abroad would not automatically be recognised in France. Foreign consulates
would be required to check that marriages conform to the requirements of French law. To enable French authorities to detect
immigrants who outstay their time, "biometric" visas with fingerprint or other personal information will be the norm in consulates
around the world within three years.
2.12 Key Global Trend 12: Continuous Revolution – the Internet Rolls on
By 2015, information technology will make major inroads in rural as well as urban areas around the globe. Among developing
countries, India will remain in the forefront in developing information technology, led by the growing class of high-tech
workers and entrepreneurs. China will lead the developing world in utilising information technology, although the
government's capacity to control or shape the content of information is likely to be sharply reduced.
Over the next decade, a wide range of developments will lead to many new IT-enabled devices and services. Rapid diffusion is
likely because equipment costs will decrease at the same time that demand is increasing. Local-to-global Internet access holds
the prospect of universal wireless connectivity via hand-held devices and large numbers of low-cost, low-altitude satellites.
Satellite systems and services will develop in ways that increase performance and reduce costs. Some countries and populations
will, however, fail to benefit much from the information revolution. Although most Russian urban-dwellers will adopt information
technologies well before 2015, the adoption of such technologies will be slow in the broader population.
Latin America's Internet market will grow exponentially. Argentina, Mexico and Brazil will derive the greatest benefits because of
larger telecommunications companies, bigger markets, and more international investment. In Sub-Saharan Africa, South Africa is
best positioned to make relatively rapid progress in IT.
An increasing concern in non-democratic developing countries such as China will be the spread of "cultural contamination."
Governments everywhere will be simultaneously asked to foster the diffusion of IT while controlling its "harmful" effects.
Almost 50% of Germans use email
In the first quarter of 2004, some 47% of Germans over the age of 10 used the Internet to send and receive messages, up from
35% in 2003, according to the German Federal Statistical Office. The statistical office stated that there was considerable variation
in use of e-mails as letter substitutes among age groups. Whereas 77% of 15 to 24 year-olds had sent or received electronic mail
in the first quarter of 2004, among those above 64 years of age the proportion was only 10%. Students, at 97%, were the largest
users. Level of use of email may be taken as a strong indicator of the degree of Internet participation. Some 91% of 24 year-olds
were users, whereas only 11% of over 64 year-olds were users.
Internet usage in India
Over the decade since its advent in India, Internet usage has evolved more in "depth" than in "spread", according to a recent
study. The study, conducted among Internet users in April 2005, sampled over 30,000 users, and found that Internet growth in
India is being driven through increased usage by existing users rather than assimilation of newer ones. The study found that
around 17.5 million urban Indians are using the Internet regularly, with another 5.2 million using it sparingly. The current total is
thus around 23 million urban users at present, which puts the penetration of the Internet among urban Indians at around 9%.
Assuming marginal usage in rural areas, the national penetration level stands at around 2%.
A recent study shows that the Internet is now playing a major role in the progress of tourism, with the number of people planning
and booking their holidays using the Internet growing substantially. Indian Railways sells 39% of its tickets on-line, while some
29% of airline tickets are purchased on-line, and some 20% of hotel reservation bookings are made through the Internet.
Internet "consumers" are concentrated in the younger demographic: people between 18 to 35 years of age account for 77% of
on-line air ticket sales. Among those booking hotel rooms, 71% are between 26 and 45 years. For rail travel, some 47% of tickets
are bought by those between 26 and 35 years of age.
50% of Western European TV households to go digital by 2008
According to a report from telecomms market research firm Informa Telecoms & Media, digital penetration is to reach 50% of
Western European TV households by 2008. Cable TV will have 26% digital penetration by the end of 2010, with DTH (direct-to-
home) and DTT (digital terrestrial television) at 20% and 13%, respectively. IPTV (Internet protocol TV) is forecast to be present
in 6% of the region's TV households by 2010.
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Digitisation of TV is a major and inexorable European trend. The number of digital TV households in Western Europe is expected
to rise by 25% in 2005, to reach 45.8 million by year-end. Having crossed the 20 million digital homes mark in 2001, the region
will pass 50 million in 2006. There will be almost 100 million digital subscribers by 2010, more than double the 2005 number.
Rapid advances in DSL (digital subscriber line) penetration have led to growth in IPTV, where high-profile launches are expected
in 2005 and 2006. This is forecast to be a fast growth sector in coming years, and because operators will have to compete with
established cable and satellite operators, consumers will benefit.
Wi-fi and satellite to connect small Italian towns
The National Association of Small Italian Municipalities (ANPCI) and Wifi Company, an Italian wi-fi and satellite communications
provider, have signed an agreement to deliver broadband Internet access to small Italian towns via wi-fi and satellite. (Wi-fi
stands for "wireless fidelity" and means high frequency wireless local area network or WLAN.) This is a positive development for
rural areas of Italy, and will bring significant numbers of consumers within the reach of on-line commerce. In addition, the video
surveillance facility is likely to prove a popular addition in the light of current fears sparked by the London bombings and the
threats of terrorist action in reprisal for Italy's role in the Iraq War.
The digitisation of knowledge – Googling the world
The Google Print project is a plan to digitise the whole library of literature, creating an "Internet library". The role of American
English as the "lingua franca" of the Internet is likely to become an increasingly controversial issue, since it has the potential to
offend cultural sentiments in many parts of the globe. It is thus important that any digitisation of national literary or cultural icons
be undertaken with great sensitivity. The French have raised objections to the Google Print project on these grounds.
For Internet-based marketing, where communication goes straight into the family living room, CRM (customer relationship
management) strategies taking account of national sensitivities are more vital than ever, and the role of Microsoft, AOL, Google,
Yahoo and similar key players on the Internet, a global stage, probably requires greater scrutiny from businesses and
governments.
High speed Internet future
South Korea remains the world's largest user of high speed Internet but China could soon overtake the US, with the greatest
number of high-speed households. The survey by the research firm eMarketer showed South Korea with 73% of its Internet users
with high-speed, or "broadband", connections. While the US still has more broadband households, with 34.3 million at the end of
2004, the US household penetration rate is no longer in the top 10. China will soon be the top broadband country in terms of total
households, even though only 6.5% of its households have high-speed connections.
Broadband has grown dramatically in China over the last two years, from four million broadband households in 2002 to over 23
million in 2004. Consistent economic growth over the last decade has enabled China to invest heavily in its telecommunications
infrastructure, so that in 2005 broadband is widely available in the major metropolitan centres.
In percentage terms, South Korea was followed by Hong Kong, with 59.1% of households having high-speed connections, Taiwan
(50.8%), Canada (42.7%), the Netherlands (41.3%), Japan (38.6%), Singapore (38.2%), Belgium (37.3%) Denmark (36.1%) and
Switzerland (33%). The US was ranked 11th, with 29.9%. In terms of numbers of broadband users, the US was followed by China
(23.2 million), Japan (17.5 million), South Korea (11.5 million), France (6.1 million), Germany (5.7 million), the UK (5.6 million),
Canada (5.3 million), Italy (3.8 million) and Taiwan (3.3 million). Latin America is expected to be the fastest growing region
through 2008, albeit from a very small base currently.
2.13 Key Global Trend 13: We Have Your Numbers – Cyber Crime
The spread of computer viruses in 2004 did global economic damage totalling between US$166 million and US$202 billion.
Incidents involving identity theft affect consumer confidence and, if sufficiently serious, could disrupt global economic growth
like a digital pandemic. For Internet commerce (and use of plastic cards) confidence is all.
According to the Kaspersky Laboratory, 46 massive viral epidemics were registered in 2004. The viruses MyDoom, Netsky, SpBig,
Klez and Sasser accounted for the heaviest financial losses, the Nezavisimaya Gazeta quotes Panda Software as reporting.
According to mi2g Intelligence Unit, about 115 million personal computers in 200 countries were infected during 2004.
Approximately 11 million PCs become "zombies" and without their owners' knowledge are used to disseminate spam and fishing,
start Dos-attacks or spread new viruses.
In the opinion of Kaspersky Laboratory analysts, some 2004 viruses – Sasser, Padobot, Bobax – made use of system
vulnerabilities as the only method of attack, and spread through the Internet from computer to computer absolutely ignoring the
"customary" methods. Other harmful programs, such as Plexus, as well as numerous versions of Bagle, Netsky and Mydoom,
combine the use of loopholes in the operating systems with other contamination methods (mass distribution, use of network
resources and P2P technology).
Under US federal law, credit card holders are liable for no more than US$50 of unauthorised charges, and many card issuers will
even waive the US$50. Nevertheless, consumers are highly sensitive to security problems regarding personal details and fearful
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of identity theft and loss of confidence in on-line financial security, which could potentially be disastrous for on-line businesses.
Although cyber crimes are reported all over the world, instances in India, such as the one described below, could prove
particularly damaging to a business where the confidence of foreign customers is paramount. Currently, US companies bring
some US$9 billion worth of business to the Indian business processing outsourcing (BPO) industry, which accounts for some 70%
of total BPO in India.
The largest security breach ever?
According to MasterCard International Inc, a computer hacker may have accessed more than 40 million credit card accounts in
what could be the largest in a series of recent security breaches involving consumer data. The breach was traced to Atlanta-
based CardSystems Solutions Inc, which processes credit card and other payments for banks and merchants. The breach would
affect all brands of credit cards. Although the data did not include addresses or social security numbers, it did include names,
banks and account numbers. The information could therefore have been used to steal funds but not identities. The FBI is reported
to be investigating. MasterCard said 14 million of its customers may have been exposed to fraud.
India, the US and the EU to cooperate in fight against cyber crime
India, the US and the European Union have agreed to combine to formulate a new set of cyber security guidelines following a
recent bank fraud involving a business outsourcing company that provided services to Citibank. The cyber security guidelines will
make it harder for computer hackers to steal cash from Internet bank accounts, although experts admit there will never be a
fool-proof mechanism to protect against rogue employees misusing customers' data. The Council of Europe has invited India and
the US to join the Cyber Crime Convention (CCC) and sign a multilateral treaty. CCC helps fight cyber crime worldwide.
Call centre scandal threatens outsourcing
Press reports have appeared that call centre employees in India are selling confidential details of British bank account holders
and their passport and credit card numbers. The allegations arose following a "sting operation" by an undercover reporter for The
Sun newspaper in the UK, who claimed to have obtained details of 1,000 accounts, passports and credit cards from a middleman
in New Delhi. The banks involved were NatWest and Barclays, the report added, although Barclays said that no personal customer
data were held in India.
This is not the first allegation of call centre fraud: according to reports, a prosecution in Pune, in April 2004, involved call centre
employees, who stole £200,000 from the accounts of New York-based customers. Officials stated that, although "offshoring"
carried risks, there was no evidence to suggest that the danger was greater in India than in British call centres. However, if not
disproved, the current story is likely to be taken as exactly that evidence.
2.14 Key Global Trend 14: Power in Your Pocket – Mobile IT Developments
The world is changing, and technology along with it. This is particularly true of the devices we carry and use every day. In just
nine years since the first GSM digital mobile network, telephones have been transformed into small but powerful multipurpose
terminals. The future will bring further, revolutionary changes in this market.
Today, multipurpose phones can handle tasks that have until recently been reserved for portable computers. Phones equipped
with an operating system not only recognise handwriting but also allow the user to install specialised applications suited to the
individual's needs. Thanks to these devices, data located on a company's file server can be accessed from the field and tasks
from headquarters, in turn, are received in real time, which means they can be completed and sent to the company at the last
minute. E-mail software allows the user not only to keep track of correspondence but also to download documents at any
moment, view them, make necessary changes, and send them back. For a few years there has been talk of broadband Internet
access via mobile phone. The UMTS, or third generation of mobile telephony, makes this possible. It has been widely introduced,
mostly by European operators, over the past year but other competitive technologies are already being proposed.
Hotspots based on the WLAN technology, providing Internet access through a small-range wireless network, have been installed
in places such as airports, hotels, business centres, shopping malls, restaurants and fast food chains.
In 2005, the first such access points based on the WiMax technology are expected to appear. This system allows data to be sent
over distances up to 50km, with speeds of up to 75Mb/s. It will be widely used in providing Internet access to local networks.
Because of its low implementation cost, it can also be used to send data to mobile networks, especially in places where high
throughput is needed but traditional broadband connections cannot be used.
Musical telephones
New Sony Ericsson mobile phones are not only photographic but musical devices, especially the W800c. This is a portable MP3
player that will appear on the market under the Walkman brand. The user can turn off the phone completely and use only the
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MP3 player function. It can store about 250 songs, (using the 1GB MemoryStick Duo card) which provides for well over 10 hours
of listening.
The next big thing – iPod video?
A number of media stories have covered prospects for the introduction of an iPod that plays video. The speculation stems from
rumours of negotiations between Apple and various record companies to license music videos, and the possibility of an iPod video
has been a recurrent rumour in recent months. A persistent story currently is that videos may be sold on iTunes, which some
commentators view as a more likely scenario than an iPod video gadget. iTunes already "streams" some videos, but content is
limited and quality, according to reports, is variable and undependable: ie consumers go to sites offering music videos then
cannot get them to play on iPods or MP3 players.
Phones with high resolution digital cameras
Phones equipped with high resolution digital cameras will become 2005's newest hit. Now on sale are phones with 1 megapixel
matrices. At the beginning of March 2005, Sony Ericsson presented phones such as the K750i and the W800c equipped with 2
megapixel sensors. Pictures generated by these cameras do not differ much from those taken with regular compact digital
cameras, and even these differences should disappear soon. For example, at the CeBIT fair, Samsung presented a phone with a
7 megapixel sensor and a regular, glass lens with 3x optical zoom.
2.15 Key Global Trend 15: The Book Has All the Answers Biotechnology and the Genome
By 2015, the biotechnology revolution will be well underway, with major achievements in combating disease, increasing food
production, reducing pollution, and enhancing the quality of life. Many of these developments, especially in the medical field,
will remain costly during the 2005-2015 period, and will be available mainly in the West and to wealthy segments of other
societies. Some biotechnologies will continue to be controversial for moral and religious reasons.
Among the most significant developments by 2015 are:

Genomic profiling: by decoding the genetic basis for pathology this will enable the medical community to move beyond the
description of diseases to more effective mechanisms for diagnosis and treatment.
Biomedical engineering exploiting advances in biotechnology and "smart" materials, will produce new surgical procedures and
systems, including better organic and artificial replacement parts for human beings, and the use of unspecialised human cells
(stem cells) to augment or replace brain or body functions and structures. It will also spur the development of sensor and
neural prosthetics, such as retinal implants for the eye, cochlear implants for the ear, or bypasses of spinal and other nerve
damage.
Therapy and drug developments will cure some enduring diseases and counter trends in antibiotic resistance. Deeper
understanding of how particular diseases affect people with specific genetic characteristics will facilitate the development and
prescription of custom drugs.
Human tests begin as stem cell success raises treatment hope
Human tests on a new technique that creates stem cells without destroying the embryo from which they are created have already
begun, offering the prospect of stocks of cells to tackle illnesses such as heart disease and diabetes.
Stem cells are believed to be able to grow into any of the hundreds of body tissues and, as such, many scientists think they will
lead to powerful new therapies for diseased and damaged body parts. If this works, children who grow up from donor embryos
could benefit from stocks of personalised stem cells. If they develop any health problems, be it heart disease, diabetes or
baldness, the cells will be there.
2.16 Key Global Trend 16: Science Fiction Becomes Science Fact – Genetic Modification and Cloning
Human cloning is now inevitable. It has already occurred with embryos and, based on achievements to date, there appears
little reason to doubt that fully developed human clones, whether legal or illegal, official or unofficial, will exist before 2015.
Despite continuing technological and cultural barriers, genetic modification will improve the engineering of organisms to increase
food production and improve quality, broaden the scale of bio-manufacturing, and provide cures for certain genetic diseases.
Cloning will probably be first widely used for such applications as livestock production.
Despite cultural and political concerns, the use of genetically modified crops has great potential to dramatically improve the
nutrition and health of many of the world's poorest people.
Recent achievements have re-ignited controversy over the ethics of human cloning, even for therapeutic purposes. Critics say
that the new research would assist efforts to produce a cloned baby, as the methods involved are virtually identical.
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Cloned human embryo in UK
British scientists have created a cloned human embryo for the first time, placing the country in the vanguard of a technology with
the potential to cure conditions such as Parkinson's disease, diabetes and paralysis. The Newcastle University team produced
three cloned embryos, one of which survived to the blastocyst stage of about 100 cells, at which stem cells can be collected. All
these cells are clones of patients with type 1 diabetes, spinal injuries or an immune system disease. Genetic testing has
confirmed that the cells would be immunologically compatible were they to be transplanted, but it is too early to attempt this
safely.
Dog cloning opens the gates wider to human cloning
The world's media and scientists are hailing Dr Hwang Woo-suk's cloning of a dog as a scientific breakthrough, but the
achievement has also proved controversial. Animal rights activists are criticising the experiment, fearing it could lead to mass
puppy production if the knowledge fell into the hands of profiteers, but the main fears concern human cloning, despite the fact
that Dr Hwang has been adamant that he is against human cloning, and claims that his technique cannot be used to create
humans. Snuppy the Afghan hound was created by a method called somatic cell nuclear transfer or SCNT, in which genetic
material was taken from the ear of an Afghan hound and placed into an empty egg cell that was transferred to Snuppy's labrador
surrogate mother. After 60 days of pregnancy, the pup was born by caesarean section.
However, experts have stated that Hwang is downplaying the possibility of human cloning to calm concerns and avoid an ethical
debate, and there have been many calls for a worldwide ban on human cloning.
2.17 Key Global Trend 17: Invisible Miracles – Nanotechnology

Discoveries in nanotechnology will lead to unprecedented understanding and control over the fundamental building blocks of
all physical things. Developments in this emerging field are likely to change the way almost everything is designed and made,
from vaccines to computers to automobile tyres to objects not yet imagined.
Nanotechnology involves the research and manipulation of molecules and atoms to create new materials, such as scratch-proof
paints and "intelligent" threads and fabrics that repel stains and moisture, and do not fade. The term comes from the prefix
"nano," used in the metric scale as a subdivision of the micron, which is in turn a subdivision of the millimetre.
Self-assembled nanomaterials, such as semiconductor "quantum dots", could by 2015 revolutionise chemical labelling and enable
rapid processing for drug discovery, blood content analysis, genetic analysis, and other biological applications.
Nanotechnology and 21st century industrial development
On 7 July 2005, at the International Congress of Nanotechnology, the president of the Federation of Industries of the State of São
Paulo (Fiesp), Paulo Skaf, officially presented the São Paulo Letter. In the document, Fiesp identified nanotechnology as a decisive
component of industrial development in the 21st century, and proposed joint efforts by companies, universities and the federal
government to develop this field in Brazil.
According to the document, the consequences for society and business competition will be "as or more intensive and extensive"
than those introduced by the surge of information and communication technologies.
The São Paulo Letter proposed several measures, including "the mapping of real nanotechnological opportunities in the short,
medium, and long run". Also recommended was the expansion, with company participation, of multidisciplinary technical and
managerial training, as well as of production infrastructure and knowledge acquisition. The document also suggested the
formation of strategic partnerships to work out effective cooperation between companies, universities and research institutes in
this field.
2.18 Key Global Trend 18: The World Moves East – China and India Outperform West
The global consumer dominance of India and China by the mid 21st century, ie the proportion of the world's population of
consumers with real purchasing power accounted for by those two countries, would seem to be almost inevitable.
According to the founder of the US Economic Strategy Institute, the economies of India and China will become larger than the US
in absolute terms due to population size, and global influence will inevitably shift in their favour. The economies of China and
India already comprise roughly one sixth of global GDP. As China implements the reforms required by its entry into the World
Trade Organization, its economy will become more efficient, enabling rapid growth to continue. China's economic development
will, however, be mainly in the dynamic coastal provinces. The agricultural provinces in northern and western China will lag
behind, causing social tensions that Beijing will be challenged to manage.
India's relatively strong educational system, democracy, and English language skills position it well to take advantage of gains
related to information technology. India nevertheless faces enormous challenges in spreading the benefits of growth to hundreds
of millions of impoverished, often illiterate citizens, particularly in the northern states.
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China has been riding the crest of a wave of economic growth for two decades. Many experts forecast that China can maintain a
growth rate of 7-10% or more for many years. China will be increasingly integrated into the world economy through foreign direct
investment, trade, and international capital markets. Energy markets will have drawn the region more closely together, despite
lingering issues of ownership of resources and territorial disputes.
On the risk side, both China and India face widening gaps between urban wealth and rural poverty, a mixed picture on natural
resources, and problems with internal governance. However, Indian democracy is likely to remain strong, albeit more factional
due to the secular-Hindu nationalist debate, growing differentials among regions and the increase in competitive party politics.
India's economy, long repressed by the heavy hand of regulation, is likely to achieve sustained growth to the degree that reforms
are implemented. High-technology companies will be the most dynamic agents, and will lead the thriving services sector in four
key urban centres: Mumbai, New Delhi, Bangalore and Chennai. Computer software services and customised applications will
continue to expand as India strengthens economic ties to key international markets. Industries such as pharmaceuticals and
agro-processing also will compete globally.
A number of factors provide India with a competitive advantage in the global economy:
It has the largest English-speaking population in the developing world;
Its education system produces millions of scientific and technical personnel;
It has a growing business-minded middle class eager to strengthen ties to the outside world;
The large Indian expatriate population provides strong links to key markets around the world.
However, despite rapid economic growth, more than half a billion Indians will remain in dire poverty. Harnessing technology to
improve agriculture will be India's main challenge in alleviating poverty in 2015. The widening gulf between "have" and "have-not"
regions, and disagreements over the pace and nature of reforms will be a source of domestic strife. Rapidly growing, poorer
northern states will continue to drain resources in subsidies and social welfare benefits.
In a decade, the middle class in China and India will be larger than the populations of the US and Western Europe combined.
India can become the world's knowledge engine
According to Prime Minister Manmohan Singh, India has the potential to become the knowledge engine of the world if it leverages
its vast youth power and attracts foreign investment to sharpen its knowledge base. He argues that, in the next few decades,
India will have the world's largest set of young people. As many other countries age, India will remain a country of young people.
A Knowledge Commission has been set up to devote its attention to a wide variety of areas to leverage India's knowledge
strength, including education, agriculture, science and technology, and e-commerce. The Knowledge Commission will advise on
how India can meet the knowledge challenges in this century, in education, scientific institutions, intellectual property and
agriculture.
2.19 Key Global Trend 19: Ethics in a Material World

Moral issues, when pursued at a national level, create an atmosphere and a consumer mindset where products perceived as
"honest" are more likely to find favour. Similarly, the corporate image of major companies also becomes of greater
importance, such as the records of companies in supporting local communities, their charitable contributions, and their
exploitation of or benefits to the developing world.
The Make Poverty History campaign had the objective of putting pressure on the leaders of the world's richest countries to cancel
the debts of the poorest countries, achieve trade justice and improve aid. Huge demonstrations took place on 2 July 2005, backed
by major pop concerts and media events in a number of locations. The campaign caught the public imagination in many countries,
and may be viewed as a symptom of a growing ethical voice in consumer behaviour. The raising of consumer consciousness of
the realities of global trade structures and the effects on the poor can lead to real changes.
The consumer effect of the campaign was to show people the difference between free trade and trade justice. This was where the
campaign connects with the consumer in establishing fair trade within the consumer mindset as a personal way of delivering trade
justice. Fairtrade organisations work to guarantee that producers in poor countries receive a fair price for their produce.
Environmental regulations offer the consumer the opportunity to do his or her part in saving the planet by buying one product
rather than another. This may mean a product which helps repair the hole in the ozone layer, a product which helps save future
generations from the mountains of non-degradable plastic waste, or a product which helps to save the rainforests by sensible
recycling of paper.
Health and environmental consciousness are inextricably entwined. Environmental regulations covering the preparation of foods
cause consumers to change what they eat and where they eat. Food scares drive massive changes in consumer behaviour. CJD
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caused some consumers in the UK to stop eating beef and the rest of Europe to stop importing British beef. A recent case of CJD
in Canada has damaged trade with the US, Canada's primary export market. McDonald's and other fast food chains suffered a
global downturn in their business due to fears regarding the beef used in their burgers.
Like abortion, euthanasia raises questions of sanctity of life, the extent of freedom of personal choice, the role of the state, the
judiciary and religion in controlling personal choice. Although these are not issues with which consumer products marketers would
become directly involved, with the exception of manufacturers of birth control products, there is a relevance to consumer
behaviour in the tone of the debate.
It is also generally the case in democracies that a government's legislation reflects prevalent consumer views, since the next
election is always an influencing factor in the creation of the legislation. It is also generally the case that, where moral issues are
concerned, the majority of consumers opt for people being allowed to make their own decisions without state or other
interference.
UK consumers buy more Fairtrade
In the UK, some 40% of UK shoppers now recognise the Fairtrade mark. In March 2005, the Fairtrade Foundation announced that
sales of Fairtrade goods in the UK reached £140 million in 2004 – a 51% rise since 2003. Edinburgh, the venue for the Gleneagles
G8 meeting, produced a directory of all shops, supermarkets, cafés and other organisations selling Fairtrade products across the
city.
Fairtrade can work because of the determination of growers and producers, and also because it is consumer-driven. The number
of high street retailers and catering businesses in the UK stocking Fairtrade products is now more than five times higher than it
was two years ago – from 150 in 2003 to 834 in 2005. Fairtrade staple items are coffee, bananas and chocolate, but a range of
newer products is also making an impact, such as wines, edible oils, flowers and footballs.
French approve right to die but not legalised euthanasia
In France, according to a bill, approved in Aril 2005, terminally ill patients have the right to ask doctors to stop their treatment
even if this would lead to death, and families of unconscious patients will have the right to request the termination of life support.
However, the bill stops short of euthanasia, as it does not allow doctors actively to end a patient's life.
Both right-wing and left-wing parties in France applauded the passage of the bill, especially in the light of the case of Vincent
Humbert, a 22 year-old fireman who was left blind, mute and paralysed after a road accident in 2000. In 2003, Humbert begged
President Jacques Chirac to let his mother end his life. His mother tried but failed to kill him with a lethal injection, but was then
put under a judicial investigation for "poisoning with intent".
This is an issue with which a major proportion of consumers identify. Following the Humbert case, polls showed that 80% of
French people wanted a change of the law relating to euthanasia.
2.20 Key Global Trend 20: Stealing the Family Silver – Counterfeiting Piracy and Copyright
The threat to the authenticity of brands strikes at the very heart of global commerce. A survey in 2001, by one of the world's
major accountancy companies, found that some 75% of the worth of the companies on the US and UK stock markets
consisted of goodwill and intangibles, ie brand values and intellectual property. This 75% is under threat from the
counterfeiting of brands, demonstrating the necessity of brand protection by means of sophisticated security measures.
Counterfeiting is a global problem being fought on a global scale, and one which is not generally publicised because of the
potential to destroy consumer confidence. A joint conference of the Economic Security Department of the Russian Interior Ministry
and representatives of the US Secret Service was recently held near Moscow. The conference considered the fight against the
production and sale of counterfeit money. The issue is growing in importance: 2004 saw the discovery of 32,000 crimes
connected with counterfeit money, including over 10,800 cases of dollar imitation. In addition, counterfeit euros to the sum of
nearly €700,000 were confiscated.
According to experts, worldwide losses of legitimate companies to counterfeiting run into hundreds of billions of dollars, with 10%
of global trade estimated to be in counterfeit products. The US-based International Anti-Counterfeiting Coalition has stated that
total losses to industry in the US in 2001 were US$200 billion. The UK-based Alliance against Counterfeiting and Piracy estimated
that counterfeiting and piracy cost UK businesses £9 billion in 2000, while the government lost £1.55 billion in tax.
Growth in counterfeiting may be attributed to a number of factors. Firstly, globalisation of commerce, driven by free trade
agreements, allows goods to pass freely across borders. Secondly, technological advances, including better computer technology,
make counterfeiting easier: computers can reproduce virtually any logo or mark. Thirdly, the Internet has created a global black
market for counterfeit goods. Fourthly, digital technology has helped pirates overcome anti-counterfeiting efforts, particularly in
the entertainment sector, with the recorded music market permanently changed as a result.
Anti-counterfeiting measures are a necessity in most consumer goods sectors, and these add to manufacturers' costs. However,
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there is no ultimate security solution to make branded goods completely safe. Only combinations of security devices, such as
watermarked board for packaging and micro-coding systems, will prove effective. Counterfeit-proof packaging might include film
and tear tape on a product such as a cigarette packet, offering both overt visual means of identification as well as a non-visual
means of authenticating a product.
The factors driving the future of counterfeiting are the globalisation of brands, the availability of advanced imaging and
manufacturing technologies, and the reward-risk balance, with the chances of being caught low and sentences lenient.
Brands and brand values under real threat
Statistics published by the European Commission in February 2005 show a significant increase in the amount of counterfeit and
pirated articles seized at the EU's external borders in 2003. Customs officials seized almost 100 million such articles in 2003,
compared with 85 million in 2002, with an estimated value of €1 billion. Of particular concern in terms of consumer health and
safety is an increase in the number of seizures of games and children's toys, with 12 million such instances EU-wide in 2003 –
representing a substantial increase over 2002. Seizures of food products and medicines increased in the same period by 77%.
Most of the production is Asian, and China alone is the source of more than 60% of fakes stopped by customs in Europe, although
China is strengthening its customs law and introducing anti-counterfeiting legislation similar to that in the EU.
However, with more than 5,000 sea freight containers arriving daily from China, and 1,000 flights a week coming to Europe from
Asia, Europe faces a difficult challenge. The negative effects of counterfeiting include a decline in sales of original branded
products and the fact that poor quality fakes may ruin the reputation of brands established by many years of good quality control
and marketing.

Fighting the rising tide of bootleg products in Eastern Europe
According to the Hungarian Brand Association, over the past few years there has been a significant increase in the amount of
counterfeit and pirated articles directed to Hungary from the Far East, mainly from China. This has resulted in serious revenue
losses for brand and rights holders in virtually all segments of the Hungarian economy. In Hungary, the bulk of fake products are
sold at the Four Tigers Market in Budapest's District 8. According to an unofficial survey conducted in 2004 on behalf of the
Hungarian Foundation for Trademark and Copyright Protection, goods worth some Ft300-600 million (€1.2-2.4 million) are sold on
the market every day, many of which carry fake brand logos, and/or are sold without receipts. The survey estimates the amount
of value-added tax the government loses every year on the market's transactions at Ft20-40 billion.
Recording industry gets tough with teenage downloaders
The recording industry has switched tactics in its fight against illegal downloading by planning to sue student downloaders. To this
end, hundreds of subpoenas were sent to universities and Internet service providers in September 2005. Meanwhile, the
Recording Industry Association of America (RIAA) has not only led the fight for these lawsuits, but also joined campus
administrators to educate students on the law and the consequences of violating it.
At first, the industry, wary of alienating the young people who were often its best buyers, made a strategic decision only to
pursue major players in court. That meant targeting Napster, and soon the industry won its fight. Nevertheless, the industry
continued to haemorrhage, losing approximately 8% in sales in 2004. The industry then had no choice but to go after users.
South Korea introduces new banknotes to combat counterfeiting
According to the central bank, South Korea will introduce new banknotes in 2006 which are more difficult to copy, as part of a
campaign against counterfeiting. According to the Bank of Korea, counterfeiting cases increased by 50% a year between 1998
and 2004, and, in the first quarter of 2005, there were 3,153 cases, more than quadruple the number in the first three months of
2004.
New 5,000 won (US$4.89; €3.80) bills will be introduced in the first half of 2006, with other notes to follow in 2007. The banknotes
will be smaller in size, to conform with currencies in other countries, and will incorporate anti-forgery technology such as
holograms and colour-shifting ink. The new bills will also use bright colours and graphics to be "artistically attractive".
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Forty Key Trends For The Next Decade

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Forty Key Trends for the Next Decade: 20 Key Global Trends and 20 Key Consumer Trends

2. TWENTY GLOBAL TRENDS – THE CONTEXT FOR THE CONSUMER OF 2015

2.1 Key Global Trend 1: Demographic Time Bombs

Table 1 World: Population Growth by Region 2005-2015

WORLD 6,413,644.0 7,170,578.0 11.8

Table 2 Population Growth by Selected Country 2005-2015

WORLD 6,413,644.0 7,170,578.0 11.8

Table 3 World: Change in Under-14s Population by Region 2005-2015

WORLD 1,775,021.0 1,815,739.0 2.3

Table 4 World: Regional Change in Over-65 Population 2005-2015

WORLD 472,740.3 556,041.1 17.6

Table 5 Over 65s Population Growth by Selected Country 2005-2015

WORLD 472,740.3 556,041.1 17.6

WORLD 27.7 25.3

Table 7 World: Change in Proportion of Population Accounted for by Over-65s by Region

WORLD 7.4 7.8

Table 8 Change in Proportion of Population Accounted for by Over-65s by Country 2005/2015

WORLD 7.4 7.8

Signposts to the future

Dearth of young people as birth rates fall in Germany

Low birth rate and falling immigration in Netherlands

Thailand faces growing burden of ageing population

Other features of economic growth

Signposts to the future

Wealth per capita in India to double in a decade

Private jets for time strapped businessmen

Signposts to the future

Rich poor gap expands in the all middle-class society of Japan

EU membership winners and losers

Mobile penetration in Europe versus Latin America

Signposts to the future

Civil liberties bow to fear in Europe

Is Mexico going to be the next Colombia?

Signposts to the future

Canadians blame global warming for hot summer

The "fear factor" and city centre depopulation trend

Signposts to the future

Chinese farmers remain marginalised economically

Rising property values drive consumer spend

Signposts to the future

Prepaid cards and 10 million Chinese

2.8 Key Global Trend 8: Bangalore on the Line – Outsourcing

Signposts to the future

Knowledge commission for India

Fears of Eastern dominance

Hungary sets up outsourcing association

A million jobs to be outsourced

Signposts to the future

Skill transfer to India

Whirlpool makes fridges for the US in Poland

Outsourcing threatens domestic workers

Signposts to the future

Polish students want to work abroad

German workers travel further afield

Workers in China begin to have choices

2.11 Key Global Trend 11: The Rising Tide – Immigration

Signposts to the future

Immigrants flow North, cash flows South

Spanish government tries to bring illegal immigrants in from the cold