Few people took Chery Automobile seriously when it was established, a little more than a decade ago, in the city of Wuhu, in Anhui Province, China. Chery was a newcomer in a small area that had little tradition of manufacturing and was far from the country’s traditional centers of auto production, in Beijing, Changchun, Shanghai, and Wuhan. When the start-up failed to find buyers for a motor engine it had developed, there was little choice but to manufacture a car of its own so that the engine could find a home. After this first car had been built, bureaucratic obstacles prevented the company from selling it. As chairman and chief executive officer Yin Tongyao puts it, “Chery kept hitting the wall over the past decade. Every time we hit a wall, we just reoriented and moved on.”

Niti Bhan and Dave Tait, having just returned from exploratory research in Africa to understand the mindset and consumer behavior at the bottom of the pyramid, share their insights for designers hoping to serve this population. This research was part of a larger study conducted by Experientia, an Italy-based international experience design consultancy.

"Design has a social function and its true purpose is to improve people's lives."
--Nokia Design Manifesto

This theme shows up, in one form or another, on most of the application essays made to design schools. Young designers aspire to improve people's lives by creating products that matter. They dream of Eames, timeless designs and creating products that get called 'Classic.' But the real world soon starts putting commercial demands on the designer's time and talent, and the dream gets slowly wrapped up in dust, to be tucked away, as focus shifts to styling trendy products that catch the fickle consumer's eye. Planned obsolescence influence the very consumerism and market forces that now demand 'New!'

At the recent annual World Economic Forum, Davos, the redoubtable Bill Gates spoke of “creative capitalism”—an approach where governments, businesses, and nonprofits work together to stretch the reach of market forces so that more people can make a profit, or gain recognition, doing work that eases the world's inequities. There is an increasing recognition and acceptance of this new and more complex definition of business. And at a different level, it could be the harbinger of a new way of building sustainable brands and corporations.

Unilever group has a tool called ‘Brand Imprint’ that essentially requires the company to qualify and quantify the impact that its brands have – emotionally, socially, physically, spiritually, intellectually and environmentally. It’s like a tool to figure out if there is a holistic contribution towards bettering of the communities being served. This recognition is not based on a sense of charity alone, it could actually mean reaching out to a new market that was largely untapped, but has much potential. More often than not, market forces fail to make an impact in many segments not because there's no demand, or because money is lacking, but because not enough time, effort and resources, are spent studying the needs and limits of those markets.

 

Economies are prospering but political stability is fragile

Some hedge funds, brokerages and offshore investors believe that the time is ripe to "buy Africa". It is certainly the case that price-earnings ratios for many African stockmarkets were above their sectoral equivalents in mature markets in 2007, but the ongoing fallout from the subprime mortgage crisis in the US should act as a reminder that what goes up eventually comes down.

The markets can turn very quickly-and very substantially. In Africa 1.01: Unlocking Investment Potential, published before subprime realism had begun to set in, emerging-market investment bank Renaissance Capital concludes that the continent "has probably turned the corner on its relative economic decline," thanks to "a supportive global backdrop for commodity exporters", hugely improved national balance sheets and "a political commitment to better economic policies".

When a consumer-goods company casts around for the best growth prospects, rarely does anything look more promising than emerging economies. These markets are growing so rapidly that within just two years they will account for half of all the world's consumer spending, estimates Harish Manwani, head of the Asian and African businesses of Unilever, a giant of the world's consumer-goods industries. But even with more than a century of experience in some of these countries, Unilever tripped up.

Few companies have had the head start in places like Africa, China, India and Latin America that Unilever enjoyed. Yet despite the Anglo-Dutch giant's formidable range of products and unprecedented depth of local knowledge, when rivals began to push harder its empire came under threat. Unilever was forced to re-examine its legacy and to act on what it found. Now the results are coming through.

C.K. Prahalad, author of The Fortune at the Bottom of the Pyramid; Eradicating Poverty through Profit (Wharton School Publishing, 2004), has long championed the notion that business -- rather than government handouts -- represents the most effective solution to poverty. In a keynote speech at the recent TiE Entrepreneurship Summit in New Delhi, he noted that India must pay more attention to entrepreneurship, which he described as "the essence of development."

"We need to connect the poor through entrepreneurship, which enables wealth creation through transparent and legitimate means," Prahalad said. He emphasized that businesses could create wealth for themselves, too, through poverty alleviation. "The poor deserve world class products and services."

Bill Gates’s bold Davos challenge to the world’s capitalists last week should have come with equally bold footnotes. "There are billions of people who need the great inventions of the computer age," he asserted. "Breakthroughs change lives only where people can afford to buy them."

With any luck it will mean that the emerging nations will finally complete the promise of a failed computing experiment played out by a team of French and American computer scientists in Senegal a quarter of a century ago. The original idea was that computing technology would make it possible to skip a stage of economic development, with people in developing nations quickly joining the information society without having to undergo industrialization.

If you go to the official Tata Nano website and check out the bottom left corner, it says "inclusive innovation." Click on that and you get to a discussion on the kinds of innovations that Nano represents.

One is called "frugal engineering" by Renault-Nissans’s chief Carlos Ghosen, referring to the simple and inexpensive way the car was developed. It is a methodology you see all over India—in health care, telecom, drug development and now car manufacturing. I prefer to call it "Frugal Innovation." And I expect India to be exporting this form of process innovation all around the world, just as the Japanese exported Quality Manufacturing.

The other is called "inclusive innovation" because the inexpensive process produces an inexpensive product that people, even at the Bottom of the Pyramid, can afford. Again, products sold as sachets, mobile communication service sold by the minute, cataract operations that cost a fraction of those in the West--all these are Indian business model innovations.

(Click for here English translation)

В этом месяце АФК "Система" наконец прорвалась в страну, знаменитую своими нищими. Холдинг получил контроль над индийским телекоммуникационным оператором Shyam Telelink Ltd и вскоре сможет работать на рынке, где впроголодь живут 680 млн человек. Ясно, что инвестора интересуют не они, а те 200 млн, которые составляют высший и средний класс Индии. Но заработать можно и на прослойке, которая худо-бедно сводит концы с концами, а это еще почти 250 млн потенциальных клиентов. Нужно только найти к ним подход.

Людей, занимающих на социальной лестнице ступеньку между откровенно бедствующими и благополучными, аналитики обозначают выражением "следующий миллиард". Этот термин появился четыре года назад, и сегодня им пользуются не только американское и британское агентства международного развития USAID и British Department for International Development, но и частные корпорации. "Несколько крупнейших транснациональных компаний используют понятие "следующего миллиарда" в составлении своих 3-5-летних планов по вхождению на рынки развивающихся стран, - говорит ведущий специалист вашингтонского World Resources Institute (WRI) Роберт Кац. - Например, Visa International, Intel, Microsoft, Shell, Vodafone, Amway".

"Следующий" - потому что до недавнего времени большинство крупных компаний "затачивали" свои товары и услуги под покупателей с доходами среднего и высшего уровней. Таких в мире, по данным The Boston Consulting Group (BCG), 2,5 млрд человек. Но исследователи утверждают, что бизнес может дотянуться и до кошельков группы населения, совокупный доход которой в мире составляет $2,55 трлн в год по паритету покупательной способности (ППС). На самом деле их немного больше миллиарда - 1,11 млрд, по данным WRI. И если уверить их в глубочайшем к ним почтении, они с удовольствием обеспечат доходность не ниже той, что приносит торговля в более высоких сегментах.

By Chuck Bartels

A $42.8 million grant from the Bill & Melinda Gates Foundation that was announced Friday will enable Heifer International to expand a program designed to reduce poverty among 1 million people living on rural dairy farms in three East African countries.

An important focus of the effort will be bringing more women into positions of responsibility, both on family farms and at regional milk chilling plants.

The grant is for parts of Kenya, Rwanda and Uganda, where 179,000 families are to receive assistance.

Heifer intends to provide 169,000 head of cattle - better livestock than the cows now on the small family farms - and get another 10,000 families able to provide forage for the animals, said Sahr Lebbie, Heifer vice president for its Africa Program.

Lebbie said that the program has already succeeded on a smaller scale, and that women are a key part of managing the farms.

"The cow goes to the family unit. The man and the woman sign the contract," Lebbie said. "We have found out women-led cooperatives are led better than the men."

The quantity of milk that farmers in the region can now sell is small because of spoilage, Lebbie said.

Heifer will develop 30 collection points where farmers will be able to bring their milk, where it can be chilled before being sold. Farmer associations will own the chilling plants, as organized by Heifer. The project will be carried out with two other organizations: U.S.-based TechnoServe, which encourages business development as a way out of poverty, and the International Livestock Research Institute, an animal research group based in Nairobi, Kenya.

The project will help the farmers produce and sell their milk in a manner that is more profitable.

By Nicholas D. Kristof

With the American presidential campaign in full swing, the obvious way to change the world might seem to be through politics.

But growing numbers of young people are leaping into the fray and doing the job themselves. These are the social entrepreneurs, the 21st-century answer to the student protesters of the 1960s, and they are some of the most interesting people here at the World Economic Forum (not only because they’re half the age of everyone else).

Andrew Klaber, a 26-year-old playing hooky from Harvard Business School to come here (don’t tell his professors!), is an example of the social entrepreneur. He spent the summer after his sophomore year in college in Thailand and was aghast to see teenage girls being forced into prostitution after their parents had died of AIDS.

So he started Orphans Against AIDS (www.orphansagainstaids.org), which pays school-related expenses for hundreds of children who have been orphaned or otherwise affected by AIDS in poor countries. He and his friends volunteer their time and pay administrative costs out of their own pockets so that every penny goes to the children.

Mr. Klaber was able to expand the nonprofit organization in Africa through introductions made by Jennifer Staple, who was a year ahead of him when they were in college. When she was a sophomore, Ms. Staple founded an organization in her dorm room to collect old reading glasses in the United States and ship them to poor countries. That group, Unite for Sight, has ballooned, and last year it provided eye care to 200,000 people (www.uniteforsight.org).

In the ’60s, perhaps the most remarkable Americans were the civil rights workers and antiwar protesters who started movements that transformed the country. In the 1980s, the most fascinating people were entrepreneurs like Steve Jobs and Bill Gates, who started companies and ended up revolutionizing the way we use technology.

Today the most remarkable young people are the social entrepreneurs, those who see a problem in society and roll up their sleeves to address it in new ways. Bill Drayton, the chief executive of an organization called Ashoka that supports social entrepreneurs, likes to say that such people neither hand out fish nor teach people to fish; their aim is to revolutionize the fishing industry. If that sounds insanely ambitious, it is. John Elkington and Pamela Hartigan title their new book on social entrepreneurs "The Power of Unreasonable People."

By Keith Bradsher

Rising prices for cooking oil are forcing residents of Asia’s largest slum, in Mumbai, India, to ration every drop. Bakeries in the United States are fretting over higher shortening costs. And here in Malaysia, brand-new factories built to convert vegetable oil into diesel sit idle, their owners unable to afford the raw material.

This is the other oil shock. From India to Indiana, shortages and soaring prices for palm oil, soybean oil and many other types of vegetable oils are the latest, most striking example of a developing global problem: costly food.

The food price index of the Food and Agriculture Organization of the United Nations, based on export prices for 60 internationally traded foodstuffs, climbed 37 percent last year. That was on top of a 14 percent increase in 2006, and the trend has accelerated this winter.

In some poor countries, desperation is taking hold. Just in the last week, protests have erupted in Pakistan over wheat shortages, and in Indonesia over soybean shortages. Egypt has banned rice exports to keep food at home, and China has put price controls on cooking oil, grain, meat, milk and eggs.

According to the F.A.O., food riots have erupted in recent months in Guinea, Mauritania, Mexico, Morocco, Senegal, Uzbekistan and Yemen.

"The urban poor, the rural landless and small and marginal farmers stand to lose," said He Changchui, the agency’s chief representative for Asia and the Pacific.

A startling change is unfolding in the world’s food markets. Soaring fuel prices have altered the equation for growing food and transporting it across the globe. Huge demand for biofuels has created tension between using land to produce fuel and using it for food.

A growing middle class in the developing world is demanding more protein, from pork and hamburgers to chicken and ice cream. And all this is happening even as global climate change may be starting to make it harder to grow food in some of the places best equipped to do so, like Australia.