Mainstream economists tell us that falling aggregate demand from developed economies will cause global deflation. Hence they justify government intervention via various kinds of stimulus to replace "lost demand".
Unfortunately, such oversimplified concept mistakenly infers that markets trades based on one type of product with single class of producer and buyer, and operates on similar level of price sensitivity.
In the real world, markets are complex and respond or adjust to reflect on where the consumers are.
As marketing guru Seth Godin aptly writes, ``Your customers define what you make, how you make it, where you sell it, what you charge, who you hire and even how you fund your business. If your customer base changes over time but you fail to make changes in the rest of your organization, stress and failure will follow." (emphasis added)
That's the reality of business.
Proof?
While it may be true that consumption in developed economies have been slowing, Japan's export producers have reportedly been devising or adopting new marketing strategies that would instead cater to emerging markets and deal with "volume" than stick to old unprofitable models (based on the dynamics of the previous bubble cycle).
This from the Japan Times, (bold highlights mine)
``Although Japanese electronics enjoy a widespread reputation for high quality and stylish design, electronics makers no longer seem able to maintain their presence in the global market by simply relying on these elements.
``Until recently, many makers focused on targeting wealthy overseas consumers who were willing to pay for high quality and expensive Japanese products.
``But given the shrinking domestic market and lackluster consumption in developed countries, they have begun switching their attention to middle-class consumers in emerging nations. Accordingly, they have started making efforts to produce simpler and more affordable products for middle-class workers in those countries.
``Such consumers are often referred to as the "volume zone," and it is believed that about 1 billion people worldwide fall into this category.
``While it won't be easy due to the fierce competition from other Asian electronics makers, analysts agree that winning a leading share of emerging markets is key to the growth of Japan Inc. in the coming years."
Rediscovering the market or "seeking the money trail" is the key to any entrepreneurs or any nation's economic success.
In the Philippines, based on empirical evidence one would be astounded by packed malls last Christmas, considering that we host 4 of the 11 largest mall of the world [see A Nation Of Shoppers??!!] in defiance of the economic assumptions of experts and of self-righteous politicians that the Philippines is "poor".
Businesses or entrepreneurs more than professional economists or politicians dictate on the economic path of a nation.
As Ludwig von Mises once wrote, ``The direction of all economic affairs is in the market society a task of the entrepreneurs. Theirs is the control of production. They are at the helm and steer the ship. A superficial observer would believe that they are supreme. But they are not. They are bound to obey unconditionally the captain's orders. The captain is the consumer. Neither the entrepreneurs nor the farmers nor the capitalists determine what has to be produced. The consumers do that. If a businessman does not strictly obey the orders of the public as they are conveyed to him by the structure of market prices, he suffers losses, he goes bankrupt, and is thus removed from his eminent position at the helm. Other men who did better in satisfying the demand of the consumers replace him."
Unfortunately, such oversimplified concept mistakenly infers that markets trades based on one type of product with single class of producer and buyer, and operates on similar level of price sensitivity.
In the real world, markets are complex and respond or adjust to reflect on where the consumers are.
As marketing guru Seth Godin aptly writes, ``Your customers define what you make, how you make it, where you sell it, what you charge, who you hire and even how you fund your business. If your customer base changes over time but you fail to make changes in the rest of your organization, stress and failure will follow." (emphasis added)
That's the reality of business.
Proof?
While it may be true that consumption in developed economies have been slowing, Japan's export producers have reportedly been devising or adopting new marketing strategies that would instead cater to emerging markets and deal with "volume" than stick to old unprofitable models (based on the dynamics of the previous bubble cycle).
This from the Japan Times, (bold highlights mine)
``Although Japanese electronics enjoy a widespread reputation for high quality and stylish design, electronics makers no longer seem able to maintain their presence in the global market by simply relying on these elements.
``Until recently, many makers focused on targeting wealthy overseas consumers who were willing to pay for high quality and expensive Japanese products.
``But given the shrinking domestic market and lackluster consumption in developed countries, they have begun switching their attention to middle-class consumers in emerging nations. Accordingly, they have started making efforts to produce simpler and more affordable products for middle-class workers in those countries.
``Such consumers are often referred to as the "volume zone," and it is believed that about 1 billion people worldwide fall into this category.
``While it won't be easy due to the fierce competition from other Asian electronics makers, analysts agree that winning a leading share of emerging markets is key to the growth of Japan Inc. in the coming years."
Rediscovering the market or "seeking the money trail" is the key to any entrepreneurs or any nation's economic success.
In the Philippines, based on empirical evidence one would be astounded by packed malls last Christmas, considering that we host 4 of the 11 largest mall of the world [see A Nation Of Shoppers??!!] in defiance of the economic assumptions of experts and of self-righteous politicians that the Philippines is "poor".
Businesses or entrepreneurs more than professional economists or politicians dictate on the economic path of a nation.
As Ludwig von Mises once wrote, ``The direction of all economic affairs is in the market society a task of the entrepreneurs. Theirs is the control of production. They are at the helm and steer the ship. A superficial observer would believe that they are supreme. But they are not. They are bound to obey unconditionally the captain's orders. The captain is the consumer. Neither the entrepreneurs nor the farmers nor the capitalists determine what has to be produced. The consumers do that. If a businessman does not strictly obey the orders of the public as they are conveyed to him by the structure of market prices, he suffers losses, he goes bankrupt, and is thus removed from his eminent position at the helm. Other men who did better in satisfying the demand of the consumers replace him."
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