Old Europe.  Young Asia.

Can Paris – Turin – Munich compete with Hanoi – Kuala Lumpur – Singapore?

These are some of the cities that I have visited in Europe and Asia in the last 2 months.   The contrast is sharp.  Asia will lead the world tomorrow.  No doubt about that.  Not only 60% of the world’s population lives there, but people are young, motivated and keen to make a better life for themselves.

Actually this has been my first return to Asia after 10 years of absence for me.  10 years ago, Asia was booming.  Today, it still is.

OK, growing when you come from a lower level is easier.   Whereas in a saturated market, creating growth is a different kind of challenge.  Maybe you can call this the “99th floor syndrome”.  When your office is already on the 99th floor and used to be on the 100th, it is hard to rebound.  Whereas anybody on the 1st floor will do what it takes to move up.

In our open and interconnected world, you would have thought that European companies can create a lot more value-added than is currently reported in our GDP statistics.  I have not checked on GNP, but knowing our politicians, if GNP were growing significantly faster than GDP, they would use GNP instead of GDP as the prime measure of economic performance – which is not the case.

So who benefits from European firms manufacturing goods in low cost countries and expanding fast by serving the needs of the middle class in emerging markets?

Certainly not European workers (blue and white collar alike).  If they had to make a choice between the loss of their jobs on one hand, or giving back most of the household items “made in this low cost country“ on the other, I am sure they would prefer to keep their jobs.

Shareholders are much better off.  If you think that Europe has not grown substantially in the last 30 years – annual real term growth has rarely exceeded more than few percent – then stock markets have grown a lot more in comparison, even in real terms.   Take the DAX Total Return index for example, which started with a base value of 1000 on 30th December 1987.   For most of the year 2010, the DAX has oscillated around 6000 points.   This gives an average growth rate of 8.1% over the period 1987-2010.  In real terms, the growth has been lower, maybe 5-6% only. Not bad either.  At 7% growth per annum, you double your wealth in 10 years.

What are the implications for workers?  Either go to Asia to get your share of the growth there, or stay at home and invest in the stock market.  Or both.

Don’t wait for politicians to help you.  They can’t.  Don’t believe that politicians have much influence on the course of events.  They don’t – they only have influence on the course of their career.  So take your future in your hands, and get your share of the Asian cake.  Help yourself, and god will help you.

Asia is where the music is playing now, and you need to be there.  While a wealth transfer between the developed and the developing world is silently taking place in the background, being active and putting some of your stakes in Asia will help you get some of the wealth back.

If you are (still) employed and work for someone else, make sure you make enough money to become a shareholder.  If your salary is not high enough, then save money and put it in the stock market.  Investing in a couple of stock indices is your best bet, as you will pay close to no fee and get decent returns over a period of 10 years and more.

If you can’t put money aside to invest in the stock market, you have a problem.  Then stop being an employee.  Think about setting up your own business.  Start small and grow it over time.  If you survive the first 3 years, then you are on the good track and can be confident that you will make more money in the long-term than before.  Even if you have to give up and get back to an employee position, your short-term entrepreneur experience will turn out to be life-changing none-the-less.  Your will see things with new eyes and be able to find opportunities that you did not see before.  Create your own luck.

So will Europe ever rebound?  In the short-term it won’t.  Because we need a mind-set change in society, and this is a slow moving process.

It probably gets down to you and your willingness to make a better life for yourself.   When enough people get the message, then Europe will be on the right track again.

Go to Asia:  spend a couple of days in Singapore, KL and Hanoi.  The experience will open your eyes.  It might scare you – for the better.  Your politicians have been there, and they have seen it, but they are scared to tell you the truth.  So wake-up and go there yourself!

And by the way: the food is cheap … and excellent.