How Brazil and the BRICS are saving industry!

The past few posts were fairly negative, so here's a more positive aspect of economics in Brazil.  The BRICS - Brazil, Russia, India, China, and South Africa - have the potential to save industry.  Indeed, China's already doing so, and India's catching up.

Here's what I mean: the European vehicle brands - BMW, VW, Renault, and all the supercar firms like Ferrari, Aston Martin, Koenigsegg, etc. - are all largely luxury brands.  Sure, a car made by the VW or Renault groups can be fairly affordable for Europeans, but it's still a major purchase.  Parts are also becoming ever more expensive; 30 years ago cars could have wing mirrors that were just metal and glass, sold for maybe $50; now they all have circuits and motors and wires, and are a major cost to replace.  Skoda used to be the butt of jokes; now it's a high-end brand.  The true value-for-money car purchases are Japanese (the unending stream of Toyota Corollas), and the truly cheap brands are Korean (Kia, Hyundai, etc.), Malaysian (Proton), or from other places in Asia.  Many of these cars aren't even available in the Western world (don't recall ever seeing a Tata, Proton, or JAC in Europe).

In terms of motorcycles, it's worse.  Harley-Davidson, BMW, and Ducati are niche brands; almost everybody drives Japanese bikes.

Royal Enfield Classic Chrome.  Great classic styling, 500cc engine.  Image by Royal Enfield.

The BRICS have the opportunity to bridge the gap between affordability and quality, and finally take over a large segment of the market if they play their cards right.  Royal Enfield used to be one of the great British motorcycle brands; it's now an Indian company, and a factory is set to open in Brazil in 2014. Triumph is setting up in Brazil too.  I drive a Kasinski; this is a Brazilian brand that was bought up by the Chinese Zongshen group, and is able to serve all segments of motorcycle types: "Factory customs"/cruisers (Mirage); naked bikes (Comet); Street racers (Comet R series); dirtbikes (CRZ); and scooters, including electric scooters (Win, Prima, Soft).  There's another Chinese brand of motorcycles available here, Dafra, although apparently they're crap.

Kasinski Comet GT 650R.  Great-looking sports bike at a competitive price by Brazilian standards. Image by Kasinski.

The thing is, these are all fairly great bikes, except apparently Dafra.  Sure, even in Brazil the preference is still to drive Japanese, as the tendency is for people to think that Yamahas and Hondas never break down.  However, Kasinskis are cheaper, seem to get rave reviews by users (I love mine too - by far the best of the bikes I've ridden so far), have great styling in my opinion, and are built here, which is nice (domestic investment and employment is a good thing).  I also suspect that their motorcycles (not scooters) are all based around only 3 engine designs, which is great for ease of production and for getting spare parts and service.  Therefore, while Asian mass production of vehicles for export will continue to make a flood of fairly cheap vehicles available, Brazilian - indeed, BRICS in general - vehicles have the ability to be competitive on the domestic markets already (import tariffs help them, to be fair), and with a ramping up of production, could be competitive in Western markets too.  I know that if I was back in the EU and looking for a bike, if I was sure of having access to parts and mechanics, I'd rather have a Royal Enfield for example than a Yamaha, and the price could well be competitive.

Kasinski Mirage 250.  Probably my next bike.  Image by Kasinski.

My point is this: industry in the Western world largely produces expensive luxury items now, because of high labour costs, taxes, and so on.  Cheap stuff is almost all made in China (though Indian Tata make very cheap cars too, for example).  Good value-for-money is generally Japanese - not necessarily cheap, but generally affordable - because of high-tech automated mass production.  The rest of the BRICS have the opportunity to fill the niche of cheap-but-good or niches like cheap-but-great-looking-good-quality-bike (Kasinski Mirage, Kasinski Comet 650R, everything by Royal Enfield) with investment in modernisation of industry and infrastructure.  Funnily enough, in the case of Kasinski it's Chinese cooperation in technology and mass production that gave them a solid boost up; BRICS helping each other without Western involvement.  With this investment - in which I do think Brazil is ahead of India, Russia, and South Africa - and with fairly low production and labour costs, BRICS industrial goods could fill up an ever larger segment of Western markets, and could even supplant established brands.  It also means that industry is doing well in Brazil, India, and China at least, while the Western world continues to suffer from the economic crisis.  ("Brazil: What recession?")

Kasinski Mirage 650.  A "factory custom" for the 21st century.  Wouldn't look out of place in sci-fi games like Deus Ex.  Image by Kasinski.

That's aside from the domestic BRICS effects: a virtuous cycle of production driving up living standards, employment, and wages, which in turn promote more production; more choice for the consumer; more affordable vehicles for BRICS citizens; and the opportunity for Indians to take bitchin' café racers up the Himalayas on holiday while Brazilians take badass bikes racing down Copacabana. Certainly, for me, life is good.

Me parked in Copacabana :-)