(FORTUNE Magazine) – DRIVING TOWARD Shekou, a throbbing port in southern China, is like a journey into a region hit by an earthquake. The ground seems to move under you. Mounds of red mud are piled everywhere as land is cleared to make way for another highway, factory, or housing complex surrounded by a spindly bamboo matrix. At one intersection, a giant billboard of Deng Xiaoping exhorts citizens to BUILD THE PROSPERITY OF CHINA FOR THE NEXT 100 YEARS. In nearby Shenzhen, where there were rice fields in the late Seventies, giant glass and steel modern-day pyramids dominate the landscape, an emphatic statement both of man's conditional triumph over the vagaries of nature and of commercial ambition. By 1997 the world's tallest building -- 14 meters higher than the Sears Tower in Chicago -- will be in Chongqing, China. Half the world away in Warsaw, a transformation of a different sort is under way. The drab city, full of crumbling concrete buildings and empty stores only a few years ago, now boasts gleaming shops stocked with everything from Valentino shoes to microwave ovens. Late into the night, workers hang shelves and paint away the residual gloom of more than four decades of communism. In Mexico City, every Saturday afternoon a line of cars waits to get into the parking lot of a local Sam's Club, a Wal-Mart Stores joint venture that opened in 1991. ''I have never seen anything like it,'' says Alberto Diaz Cayeros, an economist with a local research organization who returned to Mexico recently after several years in the U.S. ''I've been thinking about Michael Jackson too -- that he can come to Mexico and give four concerts and sell them out. Half a million people went, and they could pay for it.'' Tickets sold for $15 to $120. Horrid traffic jams, bustling bulldozers, and tireless ticket touts are unconventional economic indicators, but they are symbols of a movement of seismic proportions, a massive migration of millions of people into the ranks of the middle class. They will reshape the world. This global surge means more consumers who need diapers and detergents, power steering and power stations. But think also of this emerging middle class as filled with capable colleagues -- and competitors. Economic change inevitably spills into society: In many developing countries large numbers of women are entering the organized work force, changing their role in their own cultures but also altering the way families shop and what they buy. The most dramatic change is in East Asia, where the WEFA Group, an economic consulting firm, estimates that per capita incomes rose at an annual rate of 6.5% from 1983 to 1993. In China alone, incomes over that period grew 8.5% annually. The World Bank predicts that developing countries (excluding Eastern Europe and the former Soviet Union) could have average GDP growth of 4.8% annually over the next ten years, against 3.5% in the 1980s. Latin America enjoyed its third straight year of moderate growth, an average of 2.9% in 1993. In Latin America and Eastern Europe, government policies aimed at trimming inflation, deregulating business, and privatizing losing state-owned enterprises are setting the stage for a vigorous rebound of the middle class. The U.S. Department of Commerce recently named, without ranking them, the world's ten biggest emerging markets: China, Indonesia, India, South Korea, Turkey, South Africa, Poland, Argentina, Brazil, and Mexico. These countries are expected to double their share of global GDP to 20% by 2010; by then, their percentage of world imports probably will exceed that of Japan and the European Union combined. Today the developing world is the fastest-growing market for U.S. exports, increasing an average of $20 billion annually for the past five years. Personal consumption in many developing economies is outstripping brisk GDP growth rates as millions of consumers move upward and start buying -- so- called magic moments -- entirely different categories of goods: washing machines, for example, instead of just detergents. DRI/McGraw-Hill, the economic research firm, says Latin American auto sales increased 19% last year, while global sales declined 4%. With new opportunities come new challenges. These countries will require fresh marketing insights. MANY MULTINATIONALS are nicely positioned to take advantage of this growth. Citicorp has earned more money in the developing world in the past few years than it has in the industrialized world. Gillette last year made $178 million in operating profits in Latin America, vs. $256 million in the U.S. Says executive vice president Michael Hawley: ''We are going to see a stability in Latin America we have not seen in decades. In Argentina we had our best year ever. Gillette is seeing double-digit growth across the region.'' As Central Europe's middle class grows, Whirlpool expects industry sales of washing machines, microwaves, and refrigerators to expand there at an annual rate of 6% between 1994 and 1998. Many huge trends have converged to produce this spreading middle class. The growth and reach of multinationals, combined with the enormous increase in world trade, have been major factors. So has the improvement in global communications, particularly TV, which has shown the masses in developing countries what they've been missing, whetting appetites for political and economic change. One crucial factor has been the widespread shift from command to market- driven economies, accompanied by privatization of state-owned companies. Says Waldermar Kuczynski, a former privatization minister in Poland: ''We have created a middle class almost overnight. Hundreds of thousands of small businesses have opened since 1989.'' Some 60% of Poland's population works in the private sector. But the picture is not so bright everywhere. In much of Africa, to take the most striking example, the continuing debt crisis, sharp declines in commodity prices, and the failure to reduce bloated government payrolls have stunted the middle class.

-- Middle class, but not Westchester County. Just what is middle class in these countries, anyway? It isn't usually the middle class of the West, with two cars in the driveway. A car is out of reach for most of these people -- for now. McKinsey & Co. estimates that in China the middle class means household incomes of more than $1,000 per annum. In Poland, Kuczynski figures a middle-class income is $3,000 annually. Survey Research Indonesia, a market research firm in Jakarta, estimates that in Indonesia, middle class is a family with shopping bills of more than $140 a month. WHAT MAKES these estimates more difficult is that people often underreport income in household surveys. Says David Sparkes of Survey Research Indonesia: ''Measuring income levels is something of a nightmare.'' His firm also uses electricity bills as an indicator of household consumption. Sparkes defines the middle class in these countries as people who are able to plan financially to the extent that they can buy consumer durables. Money goes far in developing economies. Says Peter Kennedy, a director of the Futures Group: ''Companies are always astonished by the levels of consumption these incomes support.'' His company, like many others, emphasizes per capita incomes based on their relative purchasing power to give a more realistic picture of disposable income. The Futures Group estimates that the number of middle-class workers earning between $10,000 and $40,000, based on purchasing-power parity, is 83 million in China, 17 million in Brazil, and six million in South Africa (see chart). These outsize estimates are easily explained. Although food is relatively more expensive, living costs are substantially lower outside the industrialized world. Chinese consumers, in particular, spend less than 5% of their total outlays on rent, transportation, health, and education because state subsidies are so high. In Asian countries other than Japan, the figures range from 20% to 40%. A typical American household spends 45% to 50%. McKinsey estimates that household income in Beijing, Shanghai, and Guangzhou averages $1,837 annually. In Shanghai, for example, those income levels support hefty purchasing power: 85% of the households own washing machines, and 93% own color TVs, up from 72% and 81% in 1991.

In the quiet, tree-lined Jakarta neighborhood of Slipi, where only vegetable hawkers with bicycle carts disturb the mid-morning lull, visit the gabled and tile-roofed home of housewife Unsat Pakpahan, 55. In her large living room, she seems nonplussed by the question of how her life has changed in the past ten years. Then she allows herself a big, rich laugh at the absurdity of the question. Looking around the room, she points at various objects. Today she takes them for granted, yet her recollection of not having them seems to infuse them with a momentary Midas-like luster. She and her husband and three children had possessed neither the large color TV at the far end of the room nor the piano. Nor did they own a car; now they have a Toyota. They even added an extra floor to the house so that her three children can each have their own bedrooms. They can afford holidays at beaches outside Jakarta. Unsat Pakpahan's household expenditure is about $240 to $350 a month, which puts her family in the upper tier of the middle class in Indonesia. According to Survey Research Indonesia, 94% of such households own color TVs and two-thirds own cars. Large households can also translate into higher disposable incomes. Young working people in Asia and Latin America usually live at home until they marry. With no rent to pay, they have more discretionary income and tend to be heavy spenders. A grandmother or an elderly relative is almost always around to look after young children. Says Robert Avila, chief economist of the Futures Group: ''What does day care cost for them? It's free.'' In a four-bedroom apartment in Shenzhen, a retired Chinese municipal official (who did not wish to be named) lives with his working wife, 30-year-old son, daughter-in-law, and grandson. ''Westerners may find it strange that we all live together. We like to live as a family even though my son earns enough to live on his own. My grandson keeps me young,'' says the spry 64-year-old. ''Another advantage of living together is we can buy what we want, even if it costs, say, 10,000 Hong Kong dollars (($1,300)).'' Affluence is apparent: Crammed into the living room are a 29-inch Sony TV, a VCR, giant speakers with a Kenwood music system, and a black faux leather couch. On a dusty shelf in a corner stands a bottle of Hennessy cognac, the liquor of choice in China and a major status symbol. Though the government limits imports of cognac, growing quantities are smuggled from Hong Kong. Asia already accounts for about 40% of the world's cognac consumption -- a share that is expected to keep growing as the middle class explodes. Asia leads the world in steel consumption too. The Pacific Rim Consulting Group estimates that by the turn of the century Asia will have 259 million people, or 73 million households, with incomes approaching $18,000 annually, based on purchasing power parity. China will account for 150 million, India for 75 million, and East Asia for the remainder. The growing power of the middle class is much on the minds of mandarins and ministers in these countries. The size of the middle class in the developing world makes it politically unwise to draft economic policy according to the whims of the elite. In many countries, tariffs on consumer goods are coming down, as are income taxes. The bruising ideological battles over economic policy in the developing world are mostly behind us. With some arm twisting from the World Bank and the International Monetary Fund, more and more countries are learning the benefits of imitating the market-driven economies of, say, Chile in Latin America or Singapore in Asia. Such policies, which include deregulation, privatization, and opening domestic markets to foreign trade, create a virtuous circle that spins out more opportunities for the middle class with every turn. Says Hewlett-Packard senior vice president Alan Bickell: ''You get this flywheel effect from all the new businesses getting started and all the privatization.'' The company's sales rose 45% in Mexico in 1993, and 58% in Argentina. In Poland, Marek Zabrzecki, 42, is president of the country's largest food and beverage distributor and store chain, a state-owned enterprise that is being privatized. He already sounds well versed in the art of restructuring. Many of the company's 1,200 stores, he says, are losing money and will have to be sold. He earns three times what he did in his previous position but makes little of the four-bedroom house, the two cars, and the camper the family owns. Says Zabrzecki: ''The things we can afford are normal in the West.''

SMALL BUSINESSES prosper when governments get out of the way. In Bombay, Kiran and Archana Ajmera quit well-paid jobs at Modi Xerox, the Indian affiliate of Xerox, to go to work at half what they had been making for two firms exporting and importing pharmaceuticals and chemicals. Their aim was to learn the business, and early in 1991 the twenty-something couple started marketing on commission for domestic and international companies. They had to wait eight months for their first customer. When India lifted import restrictions on many products and began reducing tariffs, business took off. They now earn some nine times what they did at Modi Xerox. They still live in a cramped, cream-colored one-bedroom apartment with Kiran's parents. But their new affluence may soon enable them to buy a two- bedroom apartment an hour from central Bombay for all of them for about $85,000 to $100,000. The growth of what is today a $3-million-a-year business has given them an appreciation of the opportunities their parents never had. Says Kiran matter-of-factly of his father, who works in a store that sells raisins and other dried fruits: ''I often make more in a single deal than he makes all year.''

-- Professionals and women ride the growth. Growing economies demand professionals. In Asia, accountants, stock analysts, bankers, and even middle managers are in short supply. Bangkok Bank chief economist Nimit Nontapunthawat says that the shortage in much of East Asia is driving up salaries, which is giving a nice fillip to consumption. At Swiss Bank in Bangkok, Sombat Sornuwan, 41, handles securities settlements for foreign and local institutional investors. (The Thai stock market rose nearly 100% last year.) His salary has increased more than 1 1/2 times since he joined the bank a couple of years ago. His wife, Krisana, is an accountant. They save 15% to 20% of their salaries for their children's college education, which Sombat estimates will cost $40,000. The market value of their house has almost tripled in four years. Says Sombat: ''It's crazy. This is speculation.'' In Jakarta, J.A. Ryanto Susilo, 46, is riding the wave too. His salary jumped 40% when he switched jobs in April to head a local $40-million-a-year animal feed company. This year he is planning a family vacation in Australia. Says Susilo, whose wife works part time selling Tupperware: ''Ten years ago we were not even thinking of a trip like this. We were still concentrating on the struggle of life. Now, it's hard to get reservations.'' WOMEN are entering the work force in record numbers -- as bankers, marketing managers, and even Avon reps (there are more than 25,000 yafang, or elegant and fragrant ladies, in China). As aspirations and living costs rise, a single income often isn't enough to live on comfortably. Says Judith Yannini, the president of a group of women who are small-business owners in Mexico City: ''Economic circumstances have forced us to work. We can't continue with the old idea that a man can earn enough for the family.'' Two incomes can make distant dreams affordable. Ramesh Jayaraman, 28, a product manager with a biscuit manufacturer in Bangalore that is part of the French food group BSN, says he and his wife, Ujwala Prabhu, 29, a group product manager at India's largest beer and liquor producer, were able to buy their two-bedroom apartment only because they both work. She earns a little more than he does, Jayaraman proudly volunteers. Their combined annual income is $10,000, which buys them, in addition to the apartment, a part-time cook and an array of electronic gadgets. The jury is split on whether working women have an easier time juggling work and home than do their Western counterparts. Says Singaporean Catherine Lim, 52, a deliciously satirical writer in a country that takes itself very seriously: ''We have become Superwomen because our men don't share the housework, unlike American men.'' (American women may take issue with that statement.) Says Bombay newspaper columnist Bachi Karkaria, a birdlike figure nestled in a black and cream silk sari: ''We tend to talk of consumerism in a flip and frivolous fashion. Household appliances and convenience foods have had a liberating influence on women. The trouble is, they haven't yet liberated men.'' Tight-knit families and affordable household help do make things easier on middle-class working women in much of the developing world. Says Enny Hardjanto, 45, a vice president at Citibank in Jakarta: ''I always count my blessings. Compared with my friends in the West, I find it easy to manage a family and a job.'' Her parents, who live nearby, are only too happy to have her children over. Four servants and two drivers make running a house easier. The job's a cinch, too, according to this remarkably relaxed woman, whose career began in a typing pool. Hardjanto started Citi's credit card business in 1988; today it has 350,000 cards and a leading share of the market. ''We're just piggy-backing on the growth of the market,'' says the former Unilever executive. ''You know there's a bright future, so you can dream. Five years ago I was dreaming of 100,000 cards. Now I dream of one million by the year 2000.'' That optimism seems infectious. To hear the new middle class tell it, the pot of gold isn't at the end of the rainbow, it's almost certainly at the next street corner. Most of those interviewed for this story believe they will live better than their parents. These are model consumers from a marketer's perspective. Weaned on poorly made local products, they are willing to pay more for foreign brands that deliver quality. Says Bob Smith, a vice president of Rama & Grey, an advertising agency in Jakarta: ''There is the trust element. Foreign brands are seen to be what they say they are. Consumers here are willing to pay for that.'' And another thing: ''If there are two competing products, they'll usually take the more expensive one. The lower-priced product is suspect.''

-- Keeping customers as they clamber up the consumption ladder. Affordability is a major issue for members of a middle class whose buying power still falls short of that of similar groups in industrialized countries. Companies like Procter & Gamble and Gillette offer an array of products at different price points to woo consumers and keep them as they move up the income scale. Says Gillette's Michael Hawley: ''If you conceive of it as a ladder, you'll see different levels of activity on each rung, depending on the distribution of income and the rural-urban population base.'' You could call it segmentation, but it's as much a springboard, propelling consumers from one level to the next as their incomes rise. In many developing countries, Gillette sells its entire range of razors and blades, from old-fashioned double-edged blades to the Sensor, its most advanced product in the U.S. Whirlpool is acutely aware that the new middle class is quite unlike its Western counterpart. Han Arets, the company's managing director for Eastern Europe and the Middle East, points out that a consumer has to work 40 to 45 days to buy a washing machine in Poland, 35 days in the Czech Republic, and 30 days in Hungary, vs. about five days in Western Europe. The solution: consumer financing, something of a novelty in these countries. Financing works for automakers too. Clara Luz Rodriguez, 37, is a Mexico City dentist who lives with her aunt and uncle. After paying off loans for education and the establishment of her practice, she has money to buy her first car and has spent the afternoon looking them over. Rodriguez seems impressed by the affordability of a Chevrolet: Monthly payments will be 717 new pesos ($217). LIKE younger siblings, consumers in the developing world are deeply suspicious of anything that looks like a hand-me-down. Whirlpool takes special care to ensure that products it sells in Central Europe look like what it sells in Western Europe. Microwaves, meanwhile, are benefiting from the rub- off appeal of being the latest gizmo -- compared to refrigerators and washing machines -- in the West. Says Arets: ''It is unheard of for microwave sales to grow so quickly in countries where incomes are so low.'' His explanation? ''Microwaves are much more of a status symbol, so buying one becomes an emotional issue.'' Whirlpool is especially sensitive to the peculiarities of the Asian market because it starts from a position way behind its Japanese competitors and sees research as its leg up. Noticing that for reasons of status and space many Asian consumers put their refrigerators in their living rooms, Whirlpool makes < refrigerators fire-engine red and blue.

-- Think of them as competitors, not just consumers. The voracious demands of the emerging middle class provide a powerful launching pad for a lot of home- grown competitors. George Baeder, who heads the Pacific Rim Consulting Group in Hong Kong, observes that the U.S. seized its leadership of the world economy by riding the largest domestic market in the world after World War II. Today, corporations in the developing world are leveraging the size of regional markets and harnessing aggressive managers from the ranks of their middle classes to become world-class competitors. True, Western multinationals are comfortably ahead in many of these markets, but they should still take into account powerful companies within the region when plotting strategy. Says Baeder: ''As Asia emerges as the largest market in many businesses, I think it's fair to ask whether the local companies that dominate the region will become world leaders.'' Companies like Taiwan's President Enterprises or Thailand's Charoen Pokphand or Korea's Daewoo, which is building a toll road from Rawalpindi to Lahore in Pakistan, are looming as tough competitors in Asia. Members of the older -- well, not by much -- middle class in places like Hong Kong, Taiwan, and Singapore are eager to take advantage of the rapid growth spreading across Asia. In part, this is by playing the role of modern- day compradors in the best sense of the term. Today Eddy Li, 40, runs a company with revenues of $60 million out of a small office in Hong Kong, but he grew up sleeping on the floor of a windowless room in an apartment his family shared with four other families when Hong Kong was still poor. In a watch factory in Shenzhen, Li employs 150 women workers, who look as painfully young and eager to please as Singapore Airlines stewardesses. Their average age is 19. He pays them $75 to $100 a month, plus housing and food. His only complaint is that the women get upset if they don't make overtime. The watches they make are sold mostly in the U.S. and Japan. Says Li: ''We have a duty and we have the international business know-how to introduce China's products to the world.'' Hong Kong's per capita income, meanwhile, has surpassed Britain's. Lawyer Ada Wong, stylish and self-assured as so many Asian professional women are, is playing a more subtle role, helping build the institutional and intellectual framework that is moving China closer to a market economy. She is a partner in her family's Hong Kong law firm advising Chinese state companies on, among other things, the procedures required for listing a company on the Hong Kong exchange. This isn't easy. Says Wong, 34, who studied in the U.S. and Britain: ''Sometimes the notion of fiduciary responsibility is not understood.'' WHAT SEEMS novel today may be the norm tomorrow. As centers of growth shift to Asia and Latin America, senior management will inevitably begin to reflect that. Says General Electric's elegant vice chairman Paolo Fresco, an Italian: ''The best way to approach a large regional market is to develop human resources there. That's just being smart. The global company will have multiple citizenship, which will include a management structure that is multicultural.'' Four of 28 of Citicorp's worldwide senior management team are from developing countries, including a Pakistani and an Argentine. A joke making the rounds in Warsaw cafes expresses nicely how this new middle class is poised between two worlds. It tells of two travelers, one from Paris and the other from Moscow, who both arrive by train in Warsaw. The traveler from Paris looks at the Stalinesque skyscraper across the street from the station and is convinced that he has arrived in the Russian capital. The traveler from Moscow notices the new cars, the busy restaurants, and the well- stocked shops and is convinced that he has arrived -- in Paris. True, the emerging middle class isn't quite there yet. Granted, in a perfect world more would have a chance to get on board. But the important, even momentous, fact is that millions of people all over the world have at least gotten on a train headed in the right direction.

CHART: NOT AVAILABLE CREDIT: FORTUNE CHART/SOURCE: THE FUTURES GROUP CAPTION: NUMBER OF MIDDLE-CLASS WORKERS