Latin America: The China of 2020 and its Growing Middle Class

May 13, 14 Latin America: The China of 2020 and its Growing Middle Class

Allow me to elaborate on the last post.

According to a United Nations estimate, Latin America’s 21 countries will have about 670 million people by 2020, with some of its countries representing a .83% compounded annual population growth rate. As a point of reference, the figure would nearly double the North American population at that time, estimated to be 352 million people representing a .58% growth rate. China, on the other hand, would likely report a population compound growth rate of .55% (down from 1.31% in the ’90s), yet maintain a population size that will be more than twice that of either Latin America or North America.

A finer analysis of the markets suggests that the largest segment of consumers in both markets–the middle class–would shift the attention from population size to buying power. While the Chinese middle class (estimated to be 630 million in the 2020s) currently has an annual disposable income of $4,000 per household, Latin American consumers eclipse this at $5,700. The region’s demographic, labor and spending characteristics (among others) allow me to predict that by 2020 Latin American consumers would resemble U.S. consumers during the middle class explosion of the 1960s. Like the enormous growth many of the most-respected American brands experienced at that time by tapping into the increasing needs of the surging classes, those who recognize the Latin American opportunity early may thrive in the coming decade and obtain greater return on investment than they would investing in other opportunities. A word of caution, leave your conquering helmets behind; there is a way to do business in Latin America, and it is different than ours. If you learn the intricacies, it works just as well as in the U.S.

Stay tuned the next installment of our China 2020 series.

Sources:
Nygaard, D. World Population Projections, 2020. IFPRI. 
Minority Language Policy and Practice in China: The Need for Multicultural Education. International Journal of Multicultural Education, 2009.
CNN Money. 
RTT News.
Euromonitor International (Countries and Consumers) from national statistics.
China Business Handbook, 2013.

Cover Photo Source: Andresr

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