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Last Updated: Tuesday, 11 October 2005, 14:13 GMT 15:13 UK
New muscles in the marketplace
Brazil, Russia, India and China, the so-called Brics, are predicted to emerge as major world players by 2050. In this, the third of a four-part World Service series called Brics: The Changing Face of Global Power, the BBC's Peter Day examines what a world dominated by Brazil, Russia, India and China would be like to live in.

Eugen von Keller, head of the Beijing office of the German management consultancy Roland Berger, has concerns - he believes the West should be more alarmed than it is by the rise of the Brics.

Chinese tourists in London at the British Museum
Some see Europe becoming a tourist playground for Brics citizens
"If you look today into South East Asia, you do not see only the Chinese tourists flooding the places," he says.

"You see Chinese investment not only in the tourist industry - buying up hotels, and so forth - but also in companies. And it's not only there: it's also in South America. I wonder whether the Americans have really understood what is happening there."

Mr Keller points out that essentially, we are seeing the emergence of a new manufacturing powerhouse for the world - 70% of all clothing will eventually come from China, with consumer electronics now establishing itself and the automotive industry also setting up there.

He said that while he was not "too much worried" about these industries moving into China, he was concerned about the amount of R&D (research and development investment) going there.

"What will happen if China one day sets the standards for mobile phones?" he said.

"Companies like Siemens, for example, are already not only manufacturing all their standard phones in China, but have as well put all R&D into China. The standards will be set there, and the consumers will decide on what applications they want to have - the Chinese consumers, not the Germans."

Playground Europe

Jim O'Neill, the Goldman Sachs economist who first publicised the Brics theory, said Europe's political leaders are worried by the rise of these countries - but are reacting by "trying to block any of these things from influencing policy or developments in their countries.

"And all that will do is make [the Bric] economies more efficient - and, if anything, accelerate the decline."

Luiz Fernando Furlan (right) with EU trade minister Peter Mandelson
Trade is like a marriage: when you date, you don't have frictions, but when you get married, some frictions appear
Luiz Fernando Furlan, Brazil's minister of development, industry and foreign trade, right, with EU trade commissioner Peter Mandelson
He argues that what Western countries need to do is "open their minds up and open their borders up," and move on to other industries.

"That's what they're going to have to do, whether they like it or not - or otherwise the Europe of the future will become a tourist destination for wealthy Chinese and Indians and others," he added.

"And it won't have anything else going for it other than being some great historic place to visit for a vacation."

The global trend of outsourcing is exporting more and more jobs out of the rich and expensive countries and into poor and cheap ones.

One of the famous global pioneers of this process is the Indian information and technology giant, Infosys, working for hundreds of huge overseas companies doing jobs which used to be done in-house.

Last year Infosys - based in Bangalore in southern India - received one million job applications - and not all of them came from Indians.

"Previously, people used to migrate from developing countries to developed countries in search of work," said Infosys co-founder and Chief Operating Officer Kris Gopalakrishnan.

"We are seeing some reversal of that. We are seeing now college graduates around the world applying for jobs and moving to locations like Bangalore. So I think a lot of interesting opportunities and interesting times are ahead."

Frictions

Sir Martin Sorrell, chief executive of London-based ad agency WPP - which has many of the world's biggest corporations as clients - points out that American industry is already being forced to make way for rivals from Bric nations, indicated by the sale of IBM's PC division to the Chinese computer firm Lenovo.

"[The Chinese fridge maker] Haier is expanding in domestic appliances - they sponsor the Worcestershire county cricket team, would you believe.

CHANGING FACE OF POWER
"And who would have thought the [US's] RCA brand would be controlled by a Chinese company?"

Forklift trucks, trundling from warehouse to loading bay in the big Brazilian port of Santos, make visible the new trade routes that will define the 21st century.

The Chinese want to build new railways to get food to the ports of Brazil more easily, and then more quickly to Chinese mouths.

Perhaps this excitement has happened before - Brazilians remember the saying that "Brazil's brilliant future is always in the future" - but Luiz Fernando Furlan, the minister of development, industry and foreign trade, insists that this time it is different.

And because of that difference, the world as a whole is going to be a different place.

"During the next decade, we will be the country of the present," he said.

He admitted that there may be frictions as the post-World War II landscape is disturbed, but said that this was "normal" when trade and business increase.

"It's like a marriage: when you date, you don't have frictions, but when you get married, some frictions appear," he said.

"And the ability to manage the frictions and to get the benefits of the relationship, that is the challenge. And I would say to increase trade and prosperity all over the world is the only way to get a peaceful scenario."

Certainly, the competition is going to be relentless.

But this will even be true for the Brics themselves, as poorer countries further down the economic food chain learn from them how to claim a piece of the global marketplace and do it for a bargain price.



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