Seemingly out of nowhere, Etihad Airways, Emirates, and Qatar Airways, collectively called the ME3, have captured a significant portion of the air travel market in recent years. According to Fortune Magazine, in 2002 the ME3 only accounted for 2 percent all international travel. But by 2011, that number jumped to 11 percent, whereas American carriers’ market share dropped from 14 percent to 11 percent in the same period.

During the last two decades, the ME3 have made an aggressive push into the international market with the help of their respective governments. The governments not only subsidize and invest in the airlines themselves, but also in projects that are beneficial to their growth. For instance, according to the Wall Street Journal, Dubai announced it would invest a staggering $32 billion into their airport, solely to meet the rapid growth of Emirates Airlines, which had seen a 13 percent increase in traffic the year prior. According to reporting by the Wall Street Journal, Etihad received a $2.5 billion dollar injection from Abu Dhabi while according to The Economist, Qatar Airways has allegedly received over $7.7 billion in interest-free loans. It is within the realm of possibility that government-provided capital injections are being used to gain more control of foreign markets by buying other airlines’ stocks – for instance, Etihad has acquired major shares in airlines around the world, its largest share being 49 percent in the Italian flag-carrier Alitalia. Having government support, which American and European airlines lack, is a huge advantage in an industry where many companies struggle to break even.

While focusing on their infrastructure and assets, the ME3 have also been heavily investing in their products. Specifically, the ME3 have focused on the business traveler, a sector whose revenue percentage is often much higher than its physical percentage, compared to other travelers. Emirates pioneered the suite-style first class seat and sleeper business class seat way before American carriers could design their own. Along with superior hard products such as seats, ME3 airlines have heavily invested in new aircraft and have some of the youngest fleets in the industry. Having a younger fleet means lower maintenance costs and less money spent on delayed or canceled flights. Newer aircraft also burn less fuel on average. The increased efficiency along with government capital injections allow the ME3 to pass the savings onto their passengers in the form of much lower fares. Prices on routes from the United States to India are often much cheaper through the Middle East than through Europe or East Asia.

These advantages have had a major impact on airlines outside of the region. According to The Telegraph, Air France cut 2,900 jobs in 2015 citing increasing competition from ME3 as one of the major reasons. Germany’s Lufthansa is in the process of restructuring operations to increase efficiency. American carriers are now looking to renegotiate “Open Skies” agreements with Qatar and the United Arab Emirates to ensure better protection of their routes. These agreements open up the United States to foreign competition with less protectionist intervention. American carriers have consolidated efforts to stop ME3 expansion in the US by forming the Partnership for Open and Fair Skies coalition. According to Business Traveler, American carriers believe the current agreements do not maintain a fair market playing field. Delta’s CEO Richard Anderson published a statement on the Delta website saying “when the playing field is so far tilted, it is difficult in any industry to be able to compete against governments.”

The main debate in the industry is how other carriers will compete. The ME3 already have well established global networks and have cultivated a better reputation among business travelers. Skytrax, one of the leading aviation consultancies, rates each ME3 in the top ten in the world, far ahead of their American and European counterparts. Any attempt from American or European carriers to block them from markets through flight restrictions or trade barriers may anger business travelers, the market niche so many major airlines rely on to make profit.

Instead, American and North American airlines should join forces with the ME3. Trial and error in the aviation industry has shown that working together and consolidating resources often works better than trying to compete head on. According to earnings reports, United and Delta both raked in record profits of around $1 billion after merging with Continental and Northwest, respectively.  While it would be nearly impossible for any American or European airline to merge with their Middle Eastern counterpart, they could form strategic partnerships in which airlines on both sides would feed into each other’s network.

Qantas of Australia, for example, has already set up such a relationship with Emirates. For years they operated the iconic “Kangaroo Route” from London to Australia through South Asia, the traditional route of all airlines flying from England to Australia. As the ME3 expanded, yield rates on the route dropped. Qantas then decided to reroute flights through Dubai to improve profits. Emirates and Qantas added each other’s flights to their inventories and readjusted soft products such as mileage programs to be inline with each other. According to Gulf News, the partnership is performing well enough that Qantas has hinted it may launch new European routes from Dubai once it acquires new aircraft.

Partnerships such as the one between Qantas and Emirates would also be beneficial to American and European airlines. Both groups would be able to move large amounts of people to the ME3’s hubs. Conversely, the ME3s would have a large network to feed people into the networks of airlines outside the region. This type of relationship has worked well on a much larger scale with airline alliances in which a large group of airlines coordinate operations globally in order to feed into one another. It benefits the traveler by offering efficient travel options and consistency in service while allowing airlines to have full planes and therefore higher profits. Until such partnerships actualize, American and European will continue to feel their current woes.

This article was co-published by Seeking Alpha on Jun. 15, 2015.

Last year, the International Monetary Fund (IMF), the most prestigious international financial institution in the world, ranked China as the largest economic superpower in the world (IMF, 2014). With a 2014 GDP estimate of $17.6 trillion dollars ($300 billion higher than the United States), China has witnessed recent economic growth that has placed it in the center of global economic conversation (IMF, 2014). Companies and businesses around the world have suddenly redirected their energy to cracking Chinese markets, opening up branches and boutiques all around China’s modernized cities. In the 1950’s, American consumerism transformed the global economy. Now, it appears it is China’s turn. Reaching $3.3 trillion dollars, China’s private consumption currently makes about eight percent of the world’s total (Economist, 2014). Walk the streets of Hong Kong at 10 A.M on a Saturday and you’ll see lines of Chinese shoppers eagerly waiting outside luxury boutiques to splurge on goods. Luxury car sales in China have risen 450 percent in the last year and Chinese consumption of expensive Swiss watches now equals more than the United States, U.K and Japan combined (Raconteur, 2015).

Income by age in the United States and China (O'Brien, 2014).
Income by age in the United States and China (O’Brien, 2014).

The unique dynamic of Chinese consumerism has made the Chinese market even more enticing to foreign companies. Not only do the youngest age bracket of the Chinese population make the most money, but they are also the most willing to spend it. Many Chinese migrant workers are engaging in a growing trend called “buying up,” in which they use some of their savings to buy similar luxury goods that the upper class buys. Research by the IDEO, a consultancy, found that many young migrant workers earning less than $830 a month would spend a entire month’s wage on an Apple IPhone (Economist, 2014). This phenomenon has triggered huge growth in companies catering to the lower class’s demand for luxury goods. Alibaba, a Chinese company centered in providing “budget smartphones” to China’s mobile users, is now the fourth largest tech company in the world with a net worth of $215 billion dollars (WSJ, 2014). The future of consumerism and the global economy, it would seem, rests in cracking the market of the new Chinese generation.

Yet, many economists are overlooking a growing trend in the Chinese population that could stalwart private consumption and diminish China’s future influence in the global economy. Despite their recent explosion of wealth, the new Chinese generation is saving more than ever. In the last 15 years, China’s average rate of urban household savings has risen 11 percent (Business spectator). At a current 51.5 percent of net income, China’s saving rate is ranked second in the world, only under oil-rich Qatar (World Bank, 2015). To put that in perspective, the average Chinese citizen saves more than three times as much as the average American. This growing savings rate is, without a doubt, a result of a feeling of instability trigged by the recent political and economic events in China. In an effort to defuse this feeling, the Chinese government has tried to enhance education, healthcare, and other public sectors etc., in hopes of loosening the wallets of Chinese consumers. Yet, savings as a percentage of GDP has continued to rise as spending’s percentage continues to fall.  The inescapable reality is that this trend in savings will only get worse. The wind steering the direction of this course has nothing to do with any of these mentioned public sectors, but rather, one of China’s defining initiatives: the one child policy.

Chinese consumer spending and savings as shares of GDP (Ritholtz, 2009).
Chinese consumer spending and savings as shares of GDP (Ritholtz, 2009).

In the next few decades, China will undergo the world’s largest demographic shits. To begin, China’s population growth has already begun to slow. From 2001-10, China’s population inched up at just 0.57 percent annually—only about half the level of the previous decade, and only one-fifth of the level in 1970, when controlling population growth first became a priority (Wang, 2012). The driving force of China’s slowing population growth rate is its low fertility rate, which has languished well below the replacement level of 2.1 births per 100 citizens for two decades. China’s fertility rate is only 1.4 births per 100 citizens, one of the lowest in the world and well below the developed country’s average of 1.7 (Wang, 2012). In the past few decades, China has repeatedly failed to reach population targets put in place to control growth. For the 10th Five-Year Plan, the National Population and Family Planning Commission set a population growth target of 62.6 million, but China recorded an actual population gain of just 40.1 million. For the 11th Five Year Plan, the population gain of 34.2 million was far below the 52.4 million target (Wang, 2012). This sustained low population growth will cause the number of young workers to decline tremendously.

By 2020, the number of people aged 20-24 is expected to fall 20 percent in China (Wang, 2012). Not only that, but the labor participation rate in this age group will also fall due to rising participation in higher education. Annual higher-education enrollments tripled from 2.2 million to 6.6 million in 2001-10, while the number of college students (mostly aged 18 to 21) rose from 5.6 million to 22.3 million (Wang, 2012). In short, China’s labor force, the foundation of its profound economic growth, is disappearing. At the same time, China will see a surge in the rise of older aged citizens. By 2030, China is expected to see its percentage of people over 60 in total population double (Economist, 2011). China’s ratio of workers to retirees will change dramatically, dropping from roughly 5:1 to just 2:1 (Wang, 2012). This huge shift in demographic will have far reaching effects beyond just labor supply. For example, tax burdens for each working-age person will have to increase more than 150 percent (Wang, 2012).

Estimated net changes in Chinese labor force (The Economist).
Estimated net changes in Chinese labor force (The Economist).

Most members of the new Chinese generation are actually saving in response to this problem. The population is getting older, and the one-child policy places huge economic strain on the new generation. Commonly referred to as the “4-2-1,” the members of the new generation will have to save enough money to singlehandedly look after themselves, their two parents, and their four grandparents (China Outlook, 2014). The most common, and expensive, purchase of the new generation will not be designer handbags and luxury cares, but rather, healthcare to help aid their family. The effect of this profound economic pressure is visible all around China. A decade ago, impoverished migrants gathered outside factories in cities like Dongguan, desperately searching for work. Now, Dongguan’s streets are full of banners and notices advertising jobs as workers protest in demand for higher wages  (Economist, 2014). As diminishing labor supply and increase in labor activism continue to pressure employers, wage rates in China are actually beginning to increase. Yet, this increase in wages represents only half of the new generation’s woes.

Factory workers protest for higher wages outside the Yue Yuen Shoe factory in Dongguan (The Guardian).
Factory workers protest for higher wages outside the Yue Yuen Shoe factory in Dongguan (The Guardian).

The price of healthcare in China has remained inaccessibly high. At the same time, China’s poor living conditions, high rates of pollution, and general crowdedness have caused it to have one of the world’s highest rates of chronic diseases among high-income countries (Strong, 2005). Specifically, China has seen a rise in the rate of cancer as a result of intensive air pollution, now estimated at an index 20 times higher than the maximum safety limit (Nelson, 2014; ABC, 2013). In a recent statistical analysis by Lancet, one of the world’s leading medical journals, China now contributes to 25 percent of cancer deaths globally (Strong, 2005). As a result, China’s expenditure on health care has increased by more than 600 percent since 2000 (BBC, 2014). The Chinese government, to little avail, has attempted to lower the cost of public health care through pledging more funds. In 2009, Beijing allotted $173 billion dollars to help alleviate the cost of public healthcare (Time, 2014).

Yet, to most of the general population, health care prices still remain too high and most health insurances may only reimburse up to 40 percent of the cost for treatment (Time, 2014). While Chinese health care spending has jumped up two percent of total GDP, China’s health care expenditure by GDP has yet to surpass many developing countries like Afghanistan (Time, 2014). As much of the population continues to wait for health care prices to fall, there are those who have simply run out of time.  Zheng Yanliang, a local of the town of Dongzang, for example, took to performing his surgical amputation himself, sawing off his own limb with a hacksaw (Time, 2014). A testament to the inaccessible prices of health care, Yanliang’s story also speaks to why so many Chinese citizens have begun to fear the uptake of sickness and have consequently raised their rate of savings. In a time of increasingly inaccessible healthcare, illness entails death for many of those who cannot afford to treat it.

Chinese citizens in Beijing wearing facemasks to prevent sickness and the inhalation of smog (ABC).
Chinese citizens in Beijing wearing facemasks to prevent sickness and the inhalation of smog (ABC).

In the next few decades, China could lose all of its key advantages that make it “the world’s next superpower.” If the population growth rate continues decrease, China’s cheap labor supply will disappear. Manufacturing companies, one of the greatest contributors to GDP in China, will find themselves scrambling to find workers and forced to raise wages even higher. Those who do work will be forced to save more to not only purchase healthcare, but also to pay off the incredibly high tax burdens. As a result, private consumption will drop, and the consumption of healthcare will increase even more dramatically then it already has. Foreign companies that invested their assets in exploiting Chinese markets will begin to find themselves stuck in slowly crumbling private market and China will find itself in the economic chokehold of a dwindling population that is become ever more frugal.

Yet, the solution to all of these problems couldn’t be clearer. A modification of the one-child policy, more affordable and accessible public healthcare, and an initiative to reduce tax burdens on future workers sprung by the huge increase in retirees would alleviate the effects of this demographic shift. But, it is the execution and implementation of these changes that will pose the greatest challenge to the Chinese government. If the health care crisis in China isn’t effectively solved, then the future of Chinese consumerism lies in the sector of global healthcare. Therefore, the future course of Chinese consumerism, and the many economies reliant on it, rests not in the hands of the new Chinese generation, but rather, the Chinese government.

Earth’s population is growing at a rate of almost 75 million people per year. This means that by around 2050, the world will have nine billion appetites to satisfy every day. One of the top concerns surrounding this highly populated future surrounds dietary protein sources and their environmental costs.

When we think of protein in the United States, the first thing that comes to mind is inevitably the holy trinity: beef, pork and chicken. Other popular protein sources include seafood, nuts and eggs. Worrying evidence, however, shows that the environmental costs of supporting hordes of livestock for rapidly increasing human consumption are too high for us to rely indefinitely on these protein sources. These impending risks have motivated scientists around the world to work on finding new sources of protein that are equally nutritious but gentler on the environment.

In searching for more sustainable protein sources, scientists have landed upon the idea of entomophagy: eating insects. Crickets, in particular, are the bug du jour, and entrepreneurs and scientists alike have begun to view them as exactly the sustainable, nutritious protein source we need.

Chapul cricket bar.
Chapul cricket bar.

The consumption of crickets is not novel. Humans have been eating insects for thousands of years and even today 80 percent of the world’s population regularly eats insects. Tortillas stuffed with grasshoppers are a delicacy in Mexico, Cambodian stir-fry commonly features red tree ants, and in Japan, one can find anything from fried cicada or silk moth pupae, to boiled wasp or aquatic insect larvae. Like Mexicans, Cambodians and Japanese consumers, Americans too eat bugs. In the United States, however, insect consumption is usually inadvertent. The U.S. Food and Drug Administration has established laws about what percentage of our food can contain insects. For example, Hershey’s Bars are allowed to have 8 insect parts each while cinnamon sticks can be 5 percent insects by weight according to science writer Brooke Borel. As a result, it is estimated that the average American inadvertently eats 500 grams of insects per year.

Eating roughly 18 ounces of bugs in a year is not necessarily a bad thing. While eating the insects you come across in everyday life, like houseflies and spiders, is not recommended, farm-raised crickets are safe to eat and apparently quite nutritious. Because eating these crickets involves consuming the entire body, including bones and organs, a single bite out of a cricket bar contains all the essential amino acids that constitute a complete protein. Crickets are so protein-packed that they contain twice the protein of beef by volume, 15 percent more iron than spinach and as much vitamin B12 as salmon according to cricket bar company Chapul.

But even with so many nutritional benefits, crickets still evoke strong cognitive dissonance in Americans, especially those who cannot possibly imagine wanting to eat the same things they hire exterminators to eliminate. Upon finding a cricket in their food, most Americans’ would probably immediately file a lawsuit. To get past this psychological obstacle, companies grind up their winged herds into a powder called “cricket flour,” which is either sold in its original form or used as an ingredient in a processed foods like cookies, health bars and breads.

More than 30 startups launched in North America since 2012 specialize in cricket-based products and currently sell cookies, protein bars and even mixed drinks – most of which look no different from their insect-less counterparts. These products have even gained some traction as they have been modified to fit some of America’s more common dietary preferences, like organic, gluten-free and paleo.

Chocolate cardamom cookies.
Chocolate cardamom cookies.

In addition to being versatile and nutritionally sound, crickets are much more environmentally friendly than traditional American protein sources. Today, 92 percent of the world’s fresh water is consumed by agriculture according to Arjen Hoekstra and Mesfin Mekonnen’s global water use analysis published in the Proceedings of the National Academy of Sciences, while livestock takes up 70 percent of America’s agricultural land. Countless environmentalist groups have publicized the reality that the planet is barely sustaining its current livestock-induced environmental strains much less the expected needs of a magnified population. Crickets are an appealing answer to these problems of limited space and natural resources. They require only minimal water, feed and space, and they produce basically no methane according to cricket food manufacturer Exo. Also, while cattle take two to three years to mature and reach slaughter weight, crickets grow to adult size in seven weeks, making them a much more efficient source of protein for feeding larger populations. Crickets’ sustainability also puts them leaps and bounds ahead of other alternative protein sources like soy and whey protein because while those sources are less harmful to the planet than livestock raising, they still require substantial amounts of agricultural land and fresh water in order to be produced.

With an impeccable record for nutrition and sustainability, one may start to wonder why crickets aren’t already a widespread protein source in the United States? North America even has some industrial cricket infrastructure already in place, since crickets have been sold for decades as feed for pet fish and reptiles. But as of right now the Department of Agriculture does not inspect edible cricket farms, and the cricket food companies and the relevant government agencies have been cooperating to devise new standards of production and regulation as they progress. Besides the issue of Americans being unaccustomed to seeing bugs on their plates and on ingredient labels, much more research on the nutritional benefits, environmental impacts and possible health risks of edible insects is necessary in order to make crickets a popular food item.

In April 2015, a study from the University of California, Davis cast doubt upon cricket’s sustainability as compared to other forms of livestock. The study found that only crickets raised on high-quality feed grew to attain the nutritional value professed by past research, indicating that they might be more resource-intensive or less nutritionally-valuable than previously thought. This is only one study among a collection of academic literature on the subject of edible crickets, and the continued consumption of crickets and other insects throughout human history lends some support to the idea that they must have significant nutritional value. But the claims in the Davis study are worth exploring, and may be the necessary catalyst for more research, as well as for increased interaction between government, industry and academia.

Thai Peanut Crickets on Rice Balls.
Thai Peanut Crickets on Rice Balls.

Producers of edible crickets are going to need to prove the value of their product to consumers and regulatory government agencies alike if crickets are ever going to become a staple in American supermarkets. Popularizing crickets is going to require careful regulation at every stage of production and distribution, as well as innovative advertising to convince consumers to replace burgers with bugs. Crickets are being heralded as a “gateway bug,” but currently their prospects in the American market do not look promising. Cricket-based food companies’ marketing campaigns have not found enough success thus far to break into mainstream supermarkets. Until knowledge about the nutritional and environmental benefits of crickets as a protein source becomes widespread and supported by both academia and the government, cricket-based foods will most likely not be much more than a novelty item eaten on a dare.