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21 recent months. Onion prices have been known to bring governments down in India. In Brazil tomatoes are the driver of social protests. In China its pork and in Egypt its wheat. So we can see that different places have different vulnerabilities and we dont tend to give enough credit to the fact that individual food prices can make an enormous difference. An emerging market worker spends 40-70 of his income on food and energy alone. Because of these price hikes the workers are asking for wage increases. The wage demands in China are running at 70 per annum for skilled workers. This means that they have priced themselves out of competitiveness. This is why Apple is moving its production line back to the US and why Brooks Brothers has moved its clothing production back to the US. Tiffanys is also manufacturing in Kentucky again. This is a really significant shift and I would go further and say its no longer only manufacturing. Its mining agriculture and energy production that are all shifting back to North America as well. This means that the business model in China has broken. This is not just a temporary phenomenon this is a very profound question. How will they generate income going forward if they are no longer the cheapest producer The dockyards in Liverpool are unable to hire fast enough because they are winning so much ship repair business back from China and South Korea and there arent enough skilled workers. This is a big shift and I have argued that the luxury goods companies are going to find that their sales to the US are going to exceed their expectations while their sales to China are going to underwhelm as a result. The corporate results we are seeing are reflecting that already. The Chinese are building 10 new cities and people in China are moving West again. This is going to cause the figures in the luxury goods companies to go down. China needs to build all these urban areas in China because they are losing the export model. They hope to replace it with a domestic demand led business model. The question is can they build it fast enough to keep the population placated. The social protests in China are already pretty severe and the question is can the population wait for five six or seven years for domestic demand to come to life I think the answer is no and so they are going to have a hard time managing their population. If I am a Luxury brand where do I start getting my revenue from. It has dropped in China and its a little dodgy in the Middle East. Do I go to Russia What do I do Where do we go Your question is so interesting because I get the same question from people in the financial markets. I think we are no longer in this binary world where you pick a geographical location. You have to believe that there will always be a group of wealthy people that have an interest in spending their money on these kinds of things but they will no longer be just in one place. It will be a new generation of people who are profiting from the incredible innovation thats happening in the world economy. Young people all have this notion that they should go to China but if you look at the world economy today where do you see the most on fire booming economy in the world The answer is Texas. If I were 18 now I would go to Texas. Texas is booming Dont pick a geographical location pick innovation. What is the effect of the crisis in the emerging markets on London In London alone the price of properties that luxury brands sell from is exploding and it will continue because of inflation in emerging markets. Everybody in emerging markets understands this. If I see inflation then I need a safe haven. I need to get out of here because social unrest follows inflation. The two most reliable rule of law locations that they can choose from are the US and the UK. And its a lot easier in the UK. The UK has become the new tax haven Property is now attracting pension funds and big institutional investors. The UK benefits from the Queen and trusted courts both of which imply stability. This is why emerging market investors are flocking to the UK and buying assets here. This is going to lift the price of the properties they are operating from and the assets they are selling are on upward price pressure. Diamond prices are rocketing upwards as are the prices for leather fabrics and textiles. After all these are hard assets too. Investors can move large sums of value across borders in the form of diamonds without setting off a metal detector. So costs and prices are both rising for most luxury goods. Dr Pippa Malmgrens most recent book Signals the Breakdown of the Social Contract and the Rise of Geopolitics is out now and available from Amazon or Pippas website