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China, India not ready to fill US spending gap

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What country really even wants to try and fill those shoes? Even if they wanted to neither has the capacity at this time. In a few years, perhaps, but definitely not now. An acquaintance ran a Western Wal-Mart-like store in an emerging market and while the growth numbers were impressive, the individual checkout stats were horrid. Families would dress up the kids in their Sunday best to push a virtually empty cart around the air conditioned store and look at what was on offer. The average checkout was about the same as your average American might have at a 7-11 for a pack of cigarettes or a coffee and pack of gum. This particular emerging market was a few years behind India and China building a middle class spending machine on par with the US or even Europe takes decades.

They were supposed to keep the good times going: Prakash Shetty, caught recently thumbing through "Singh is King" DVDs at a mall in India, and Zhu Xiaolin, who enjoys cute Adidas sportswear and Body Shop cosmetics in China.

But how far can Shetty and Zhu, both 26, and other Asian consumers go to save the groaning global economy? Just how many Buicks, Barbie dolls, Wrangler jeans, waffle fries, kiwi lip balms and plastic thingamajigs are they willing or able to buy?

Not enough, it turns out.

Much has been made of the power and promise of Indian and Chinese consumers. Each country has a rapidly growing economy, rising incomes and more than a billion people -- many of whom have yet to burn through a single credit card or experience the joys a washing machine can bring.

China will be the world's third-largest consumer market by 2025 and India will be No. 5, ahead of Germany, McKinsey & Co has predicted. As U.S. sales swooned this year, emerging markets were the sole bright spot on many balance sheets.

But such heraldry obscures a painful bit of math: U.S. consumers still buy more than five times as much as Indian and Chinese shoppers combined. And despite rambunctious growth, revenues from India and China have barely softened the blow of declining sales in the developed world -- even for companies that have chased after rupees and yuan most aggressively.

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