Why It Really Is Different This Timehttp://www.fool.com/investing/international/2008/06/14/why-it-really-is-different-this-time.aspx Chuck Saletta
June 14, 2008
America's economy is teetering on the bridge of a recession, yet the price of commodities -- oil in particular -- keeps climbing ever higher.
That would have seemed impossible just a few decades ago, when the United States dominated the global economy. In fact, so many other countries were so tethered to the American market that when America tripped, the rest of the world fell down.
In a world like that, if U.S. demand for a product dropped (as it has for oil recently), its price would plummet. Not this time. This time, as domestic demand weakens, China is continuing its thirst for the black gold, unabated.
China wants more of the stuff, in spite of America's slowdown -- and that should tell us something very important. China's economy isn't completely tied to America's anymore; part of what the country produces is going elsewhere -- or even staying at home.
Middle America, meet middle China
And that extra income brings additional spending on the small luxuries of life (which the Western world may take for granted). Or in other words: a real, domestic Chinese economy, rather than a Chinese economy completely dependent on exports to the United States and its established market of middle-class consumers.
I'd like to buy the world a Coke
What you're seeing in Coke's earnings report is evidence of the early stages of the true globalization of consumer tastes, spending power, and brand heft. Coca-Cola is no longer just an iconic American beverage with "some" exposure in other markets -- it's a worldwide powerhouse.
The sign of things to come
After all, why should American consumers be the only ones able to enjoy top-quality Italian suits, German automobiles, Japanese electronics, or French wines? And why should overseas consumers limit themselves to American consumer goods? As the rest of the world becomes more prosperous, the brands other countries know and love will grow in prominence. Already, there's plenty of overseas representation on BusinessWeek's annual list of top global brands: