These countries were described as having a similar and potentially collective atmosphere favorable for sustainable growth and, if a certain level of growth were continued through 2050, the BRICS could represent a global economic powerhouse. The intention was not meant to describe a trading bloc, formal political pact or free trade agreement. Instead, it was presented as four emerging countries that shared a common group of characteristics and together represented a unique economic model.
During 2010, South Africa began discussions with the four BRIC countries about joining the alliance. A formal invitation was made by China and agreed by the others. South Africa officially became the fifth member on April 14, 2011, and the acronym was changed to BRICS.
This group collectively represents 40% of the world population, 25% of the global land area and nearly 30% of the total GDP. BRICS’ 2010 demographic data is provided in Table 1.
Building An AllianceThe BRIC example started out as a selection of four countries with similar characteristics. The countries were simply listed as examples in an exercise that defined groups of countries that exhibit certain economic potentials for growth. The four countries took this grouping seriously. Their representatives eventually met and formed a more formal alliance a few years later, even going so far as to hold regular annual meetings. The group has evolved one step further by establishing trade agreements among themselves.
Each country has an agenda, and this alliance solves many issues facing each of them in different ways. Russia gains access to new export markets for its oil and gas, as well as new sources for raw material and agriculture imports. Brazil can export its food products to China and others, and has land available to set up manufacturing bases to get closer to markets in North America. China gains easier access to India markets, has a built-in market for its exports and can import agricultural products. India has well-developed information technology expertise and can readily market its services to the other members while also serving as a manufacturing technology base. Though South Africa doesn’t quite fit the model, it could stand to gain the most. It is a gateway to Africa and has become a model for other African countries. It also has large mineral reserves that are useful to China.
Influencing Adhesives and SealantsThe BRICS country members are in the early stage of expansion in the adhesives and sealants market. A key indicator of the industry size and growth potential is measured as pounds (or kilograms) of adhesive consumption per capita. The market for each of the BRICS countries is shown in the 2010 market data in Table 2. For comparative purposes, per capita consumption in the U.S. is 21.4 lbs (9.7 kg).
Figure 3 illustrates a possible scenario for demand growth of adhesives and sealants by the BRICS from 2010 to 2050. This represents a conservative approach by keeping the demand within the projected GDP growth levels for 2025 and beyond.
The FutureSince South Africa was invited by China to join as a BRIC country, the other three original members have expressed interest to also invite a candidate of their choosing. A possible list of potential candidates being considered is shown in Table 3.
The multi-national members of the adhesives and sealants industry have an opportunity to further establish a presence while the economies are open to investment. When planning market entrance strategies, the BRICS’ growth in established markets could be significant. If a formulator or raw material supplier is not already in place, it may be too late in the near future. The BRICS countries are working toward developing a new order of business methodology. BRICS’ market participation can be a good hedge against future market downturns.
Interestingly, Goldman Sachs has identified another set of countries, the N-11, that also share sustainability growth factors similar to the BRICS, but in an earlier stage of development (see sidebar). This group may become the next “new order” to supplement the BRICS.
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