Emerging Services By Humberto Ribeiro, Visiting Scholar at the Emerging Markets Institute
Mr. Humberto Ribeiro,
former Brazilian Secretary of Commerce and Services, believes that services
will offer the largest entrepreneurial opportunities worldwide, as the market
should expand by $50 trillion.
by Chen Chen, Visiting Scholar at the Emerging Markets Institute
Mr. Humberto Ribeiro is the former Secretary of Commerce and Services for the Brazilian Ministry of Development and Trade from 2011-2014.
Mr. Ribeiro is a Brazilian entrepreneur, who has started and operated ventures in the information technology, business process and biotechnology sectors. In 2011, Mr. Ribeiro was invited by the Brazilian government to draft and implement their first services industry policy. In 2012, the policy was launched, helping to achieve record results in entrepreneurship, employment and investment in Brazil's history.
Supervised by Professor Lourdes Casanova in his research at Cornell University on “Emerging Services”, Mr. Ribeiro stated that services will account for over 80% of the global growth in the forthcoming decade. “We expect a 50 trillion dollar expansion in the services market worldwide by 2025. The largest entrepreneurial opportunities are, and will continue to be, arising in services. Success for both start-ups and existing businesses will be defined by their strategic embracing of Services principles” explained Humberto.
Services are intangible products/commodities that satisfy wants or needs; economic activities that produce time, place, form, or psychological utilities; and economic activities that transform goods and talent into well-being. Services have characteristics, such as being intangible, perishable, variable and customer driven, but not inseparable. Mr. Ribeiro reinforced that a client and service provider can be geographically separated in all tradable services nowadays, supported by an improved telecom infrastructure (Internet), and the business environment (trade agreements, WTO, etc).
According to Mr. Ribeiro’s research, services are both important and good for an economy. His research indicates higher GDP per capita growth rates correspond with higher service growth rates, with examples coming from China and Nigeria in the last decade. In 2013, the Third Plenary Session of the 18th Communist Party of China Central Committee approved strong government policies to develop a focus on the services industry, including the lifting of price controls; a change in tax incentives on the services industry; and a removal of barriers on telecommunication and finance. Those measures represent not only improved conditions for services itself, but also shall result in more competitive supply chains for traditional sectors, like mining, agriculture and manufacturing, due to the resulting improvements in infrastructural and embedded services. Mr. Ribeiro thought these policies, coming from a manufacturing superpower like China, signaled to Brazil and also to the world, the importance of services industry.
Another relevant example came recently from Japan, when Tokyo’s successful candidacy to host the 2020 Olympic Games relied on the word Omotenashi (Hospitality) as the single most important differentiation pitch. That devotion to the customer coming from Japan will certainly provide a new global benchmark for the planet on Tourism and other personal services.
When it came to the concept of “Emerging Services”, Mr. Ribeiro provided three pillars: Innovative Services, Growing Services and Services Trade. He thought that innovation, although mainly coming from developed markets, still has a key role in the developing world, and emerging markets will provide a large amount of opportunities. China and Indonesia for instance, hold a relatively high rank of GDP versus other countries, but lag in the percentage of services to their total GDP, which means opportunities and markets are there. As to services trade, Mr. Ribeiro pointed out that there is still significant growth potential. Since Goods Trade accounted 82.5% of total Goods GDP worldwide in 2013, the Services Trade only represented 8.9% of total Service GDP around the world. Humberto foresees that the 5 Trillion Dollars currently spent on global trade in services will more than double in the forthcoming decade.
Either as a private citizen, or as a professional in the public or private sectors, your well-being and success will be greatly dependent on your adoption of services principles.