Wednesday, June 10, 2009

The Debts of the Lenders: What China Can Learn From India to Improve Domestic Consumption

Both nations have large rural populations. However, instead of brutalizing their peasantry into the labor camps of Shenzhen and other sweatshop zones, Chinese leaders can encourage them to increase domestic consumption.

Higher consumption is critical if the Lender states are to re-balance their flow of funds in order to encourage US export growth. While this runs contrary to standard Beijing policy, the time seems ripe to encourage such a shift in thinking.

WSJ(6/10) The Infomercial Comes To Life In India


BENIPUR VILLAGE, India -- Advertisers in India can't rely on TV, radio or even newspapers to reach the country's 700 million rural consumers. So they use Sandeep Sharma.

On dirt roads across the subcontinent, the former wedding singer cracks jokes, gives demonstrations and stages game shows to spread global consumerism, one village at a time.
He is one of thousands of traveling performers who bring the world's biggest brands to audiences of a handful in the remotest reaches of the nation. He offers free Castrol oil changes for tractors. He dishes out bowls of Nestle noodles in village schools. He pushes Unilever soaps and creams. He promotes tooth powder and condoms.

"Stick to the countryside if you want to be successful," the 34-year-old says, beaming after a recent performance before a small crowd of villagers in stifling heat. "When we arrive, the whole village comes out."

It's a good time to be a traveling salesman in India, relatively speaking. Insulated from the worst of the global recession, India's rural consumers are spending as never before. International brands -- eager for ways to offset contracting markets elsewhere -- are sending out armies of salesmen like Mr. Sharma. Overall advertising spending climbed about 10% in India last year. Rural advertising grew at more than four times that rate.

The standard procedure for Mr. Sharma starts with kowtowing to village elders in order to get permission to set up his mobile stage and to try to find out who in the village has money. He then rouses the villagers. He used to walk around with a megaphone announcing the show, but dogs chased him. Now he drives around in his truck with the music turned up or hands out candy to children, asking them to bring out their neighbors.

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