The Challenge of Mongolia
The world is in crisis... again. Most of the important economies will have just a symbolic GDP growth this year, like the USA (+1.7%), the United Kingdom (+0.8%), while the Eurozone and Japan are immersed in a long recession. For some other states the crisis is not so evident, but their growth is dramatically slowing down. That is the case of China (9.5%), Russia (+4.3%) or India (+8.5%).
Despite the financial storm that is sweeping the world, the Mongolian economy has never been so healthy. In fact, last year the national GDP grew by about 17%, one of the fastest growth rates in the world.
The architect of this miracle has been, as expected, mining, and Mongolia's best partner, China. The important export of coal and copper to our southern neighbour have put Mongolia in an advantageous situation. Actually, Travis Hamilton from Khan Investment Management declared that Mongolia was likely to carry on attracting plenty of foreign interest, BBC informs.
However, these positive circumstances must be followed by some other actions that would imply hard work by all Mongolians, including companies, customers and Government. Mongolia cannot keep on living as it used to do in the Middle Ages. Although this country ought to preserve the national traditions and way of life, there must be a deep change of mentality too. The model that served for years must be substituted by a modern system that assures a high quality of life to all Mongolians and a green future for the country.
It is a fact that even prior to the days of Genghis Khan, Mongolia had been living thanks to a subsistence economy. Most people produced just what they needed and, in times of need, they bought products from China or Russia.
Now, the time is different but the circumstances are dangerously similar. Mongolians want to have the latest technical devices, such as iPads, fast computers, good telephones or 3D TVs. They also love good clothes, and in every supermarket it is possible to find even the most exotic products.
However, the Mongolian mentality is the very same that ancient and not so ancient nomadic shepherds had: “If I want/need something, I shall sell one of my cows to get the money.” Mongolia is extracting coal, iron, copper and some other minerals as shepherds rear cattle, and Mongolia is selling that “new cattle” to buy even the most basic items.
At this point, Mongolia, richer than years ago, must start to produce, instead of just extract. That production must accomplish both, firstly, satisfying the local demand, not just as a complement of foreign products, and secondly, exporting to other countries. This will not be possible without the collaboration of the Government and the trust of local customers.
Mongolian products must include everything from food to technical devices. Nowadays, that production is mainly concentrated in expensive clothes, traditional items and some food. On the other hand, the whole country prefers to buy any product with its label written in Russian, Korean, English or Japanese because they 'are supposed' to have good quality. This situation is perpetuating a vicious circle that prevents local companies to produce and local customers to buy.
Mongolia cannot trust mining forever. Unfortunately, the black clouds of recession are arriving to China. If our best partner decides that is not going to buy more Mongolian coal, our economy would be in serious jeopardy. Mongolians must start to back and buy local products right now, and producers must start to make more and better products.
In this world, nobody gives anything to anybody. Chinese products are sold everywhere because they are cheap and useful, European products are more expensive but very good. With an established and relatively strong industrial sector, Mongolia must offer its own products, according to the quality standards of the developed countries and at a reasonable price. It ought to be done now, taking profit of the good results of the economy.
Despite the financial storm that is sweeping the world, the Mongolian economy has never been so healthy. In fact, last year the national GDP grew by about 17%, one of the fastest growth rates in the world.
The architect of this miracle has been, as expected, mining, and Mongolia's best partner, China. The important export of coal and copper to our southern neighbour have put Mongolia in an advantageous situation. Actually, Travis Hamilton from Khan Investment Management declared that Mongolia was likely to carry on attracting plenty of foreign interest, BBC informs.
However, these positive circumstances must be followed by some other actions that would imply hard work by all Mongolians, including companies, customers and Government. Mongolia cannot keep on living as it used to do in the Middle Ages. Although this country ought to preserve the national traditions and way of life, there must be a deep change of mentality too. The model that served for years must be substituted by a modern system that assures a high quality of life to all Mongolians and a green future for the country.
It is a fact that even prior to the days of Genghis Khan, Mongolia had been living thanks to a subsistence economy. Most people produced just what they needed and, in times of need, they bought products from China or Russia.
Now, the time is different but the circumstances are dangerously similar. Mongolians want to have the latest technical devices, such as iPads, fast computers, good telephones or 3D TVs. They also love good clothes, and in every supermarket it is possible to find even the most exotic products.
However, the Mongolian mentality is the very same that ancient and not so ancient nomadic shepherds had: “If I want/need something, I shall sell one of my cows to get the money.” Mongolia is extracting coal, iron, copper and some other minerals as shepherds rear cattle, and Mongolia is selling that “new cattle” to buy even the most basic items.
At this point, Mongolia, richer than years ago, must start to produce, instead of just extract. That production must accomplish both, firstly, satisfying the local demand, not just as a complement of foreign products, and secondly, exporting to other countries. This will not be possible without the collaboration of the Government and the trust of local customers.
Mongolian products must include everything from food to technical devices. Nowadays, that production is mainly concentrated in expensive clothes, traditional items and some food. On the other hand, the whole country prefers to buy any product with its label written in Russian, Korean, English or Japanese because they 'are supposed' to have good quality. This situation is perpetuating a vicious circle that prevents local companies to produce and local customers to buy.
Mongolia cannot trust mining forever. Unfortunately, the black clouds of recession are arriving to China. If our best partner decides that is not going to buy more Mongolian coal, our economy would be in serious jeopardy. Mongolians must start to back and buy local products right now, and producers must start to make more and better products.
In this world, nobody gives anything to anybody. Chinese products are sold everywhere because they are cheap and useful, European products are more expensive but very good. With an established and relatively strong industrial sector, Mongolia must offer its own products, according to the quality standards of the developed countries and at a reasonable price. It ought to be done now, taking profit of the good results of the economy.
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