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Why is the world so flat?

By Tim Wright

Published January 15, 2008
Related Searches: Powder Coatings
It seems just about every article in every issue of Coatings World deals with to some degree the impact of emerging markets. Having returned from ChinaCoat, which was held in Shanghai Nov. 21-23, the issue is fresh in my mind. Witnessing first hand over the past several years the tremendous growth of that exposition along with its increasing level of sophistication, it is a clear reflection of the overall status of China's paint and coatings industry.

China's coatings output has been expanding rapidly, rising from 2.98 million tons in 2004 to 3.82 million tons in 2005, while sales revenue rose by 21.84% to $9.14 billion in 2005. Understandably, the world's top ten coatings companies all now have at least one manufacturing base in China, and many leading raw material suppliers have also set up operations or joint ventures in China.

As we go to press, in an interview with Forbes.com, PPG's chairman and CEO, Charles Bunch discussed the company's focus on trying to get better positioned in Asia. "There are smaller to midsize companies in Asia that we would hope to be able to look at in the coming years," he said. "So I think you're going to see our focus shift a little more, in terms of our merger and acquisition strategy, to Asia."

This is a common theme for many of the major paint and coatings makers.

Currently the third largest chemical producer, China ranks first as an importer of chemicals globally. By 2010 China is set to become the world's second largest consumer of polymers after the U.S.

China today is also the world's second largest paint producer. China is also the largest producer of powder coatings in the world, representing more than 20% of the estimated global market of 1,200,000 tons.

In addition to China and the broader Asia Pacific region, Eastern Europe-led by Russia-is another area that continues to gain in importance. TIME Magazine recently named Russian President Vladimir Putin its Person of the Year, which is an important sign of Russia's reemergence on the global stage.

"We all grew up with Russia as this great superpower and rival to the U.S.," said TIME's managing editor, Richard Stengel. "But in the '90s, Russia was a basket case."

Putin changed that, restoring political order-at the cost of civil liberties, his critics say-and world influence. With vast oil wealth and a 2,000-mile border with China, Stengel said, "Russia is really critical to the future of the 21st century."

I was curious. What set this "emerging market" trend in motion?

In the book, The World is Flat, Thomas Friedman describes the "unplanned cascade of technological and social shifts that effectively leveled the economic world." Friedman's list of "flatteners" includes the fall of the Berlin Wall; the rise of Netscape and the dotcom boom; the emergence of common software platforms and open source code enabling global collaboration; and the rise of outsourcing, offshoring, supply chaining and insourcing. Friedman says these flatteners converged around the year 2000, and "created a flat world: a global, web-enabled platform for multiple forms of sharing knowledge and work, irrespective of time, distance, geography and increasingly, language."

As a result, Friedman says three huge economies materialized-those of India, China and the former Soviet Union-"and three billion people who were out of the game, walked onto the playing field."

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