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| Title | “Don’t overlook the emerging BoP market”--Daesung Group Chairman Younghoon David Kim | 2011.01.20 |
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FROM: Daesung Group Contribution to the Asia Economic Journal “Don’t overlook the emerging BoP market”-- Daesung Group Chairman Younghoon David Kim .jpg) Korea started off the New Year with dynamism and confidence as the KOSPI index reached a record high of 2000 points. However, the nation is facing hindrances on its long road to economic growth as oil prices hit a record high of $90 a barrel and the price of metals, grains and raw materials soared in the beginning of the year. Predictions are that the world economy will contract due to the waning effect of the fiscal expansion policies that went into effect immediately following the global financial crisis. As a result, during this time of global economic contraction, there is a market that Korea should set eyes on, the BoP (Bottom of Pyramid) market. The BoP market refers to the poorest socio-economic groups composed of people who live on less than $2.50 per day or annual incomes of up to $3000. Four billion low-income consumers worldwide including Asia, Africa, Central and South America constitute the base of the economic pyramid. There are few reasons why we should be interested in the BoP market. Newly industrialized countries including China and India have announced that they plan to invest a large sum of money to bridge the gap between rich and poor. As a result, there will be new formation and growth in the market as earnings of the low-income group increase and demand for basic amenities expands. In China’s case, it has invested $3.9 trillion to build infrastructure over the next three years. In efforts to actively lessen the gap between the rich and poor, a considerable amount of this budget will be used in the west where the low-income population is heavily concentrated. Similarly, India will invest over $300 billion in the construction of infrastructure within the same period, mainly focusing on energy, electricity, transportation and environment, with the intent to balance development and ameliorate differences between economic classes. Korea should take a step back and think about why newly emerging countries like China and India are targeting the BoP market. The BoP market did not emerge suddenly; it has existed but failed to receive attention as a target group. Historically, global companies have undergone full-scale marketing activities targeting the top 30% of the world population. However, high-ranking markets are considered ‘red oceans’ since they are already established and heavily contested. On the other hand, the remaining 70% of the population that comprises the BoP market can be seen as ‘Blue Ocean’ since it is untainted by competition and not yet explored. For the past several decades, Korean companies have successfully penetrated the international market by targeting developed nations with purchasing power. In order to increase shares in the international market, it is not only necessary to continue its effort in the ‘red oceans,’ but also strategic to jump forward by entering the newly emerging BoP market If we narrow the focus to the energy sector, 1.5 billion people still live without energy and when people residing in areas where energy supply is low are included, 45% of the global population live with very little or no energy. According to the International Energy Agency (IEA), 40% of the global population use firewood and animal excrement for heat and cooking fuel. . The energy poverty quandary is not simply one we can ignore. In the future, the problem with supply and demand for safe energy will become a hot potato issue. If income among low-income groups in China and India increase, then their use of energy will sharply rise, and as a result, the price of energy will hit new highs. The reason for organizations such as the International Energy Agency (IEA) or World Energy Council (WEC) constantly debate the energy poverty problem is that these organizations fear potential upheavals such as a sudden increase in price. In the past few years, Daesung Group’s SolaWin, a hybrid wind and solar power system, has been installed in countries such as Mongolia, Kazakhstan, Ethiopia and Bangladesh. This off-grid system provides renewable energy to areas without energy. With the help of SolaWin, Daesung Group has made it possible for many to pump ground water for drinking and agricultural use as part of the effort to simultaneously combat the FEW (food, energy, water) shortage problem. Daesung’s international energy business is merely one example. We need to be more active in our efforts to enter into the BoP market, covering all sectors. The BoP market could possibly be the last market left for us. |
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| NO | Title | Date |
|---|---|---|
| 222 | [World Energy Council] WEC selects ... | 2012.11.15 |
| 221 | “Don’t overlook the emerging BoP ma... | 2011.01.20 |
| 220 | [The Korea Herald] Hallyu website a... | 2010.12.30 |
| 219 | [The Korea Times] Daesung eyes vir... | 2010.11.10 |
| 218 | [Dong-a Ilbo Column] Asian Countrie... | 2010.06.16 |
