Emerging market firms aim to grow

28 March 2012

NEW DELHI: Many brand owners from emerging markets are attempting to expand into other similar nations, with China and India their main target outlets.

Tata Communications and Vanson Bourne polled 1,600 executives from ten countries, including China, France, Germany, India, the Middle East, Singapore, South Africa, the UK and US.

Some 87% of companies were active in fast-growth economies. Moreover, 84% of corporations based in emerging markets had looked to other developing nations for useful "lessons and best practice".

Thus far, 55% of the featured firms from Singapore had already established a presence in developing countries, hitting 45% for their Middle Eastern peers and 40% for their South African counterparts.

However, such strategies are not perceived as being without risk, demonstrated by the fact 56% of all respondents associated emerging markets with "political instability".

When choosing the countries with the best growth prospects, China topped the charts on 51%, ahead of India on 46% and Brazil on 26%. Russia, the fourth member of the BRIC group, posted just 11%.

China also led the rankings among the nations that corporations are seeking to expand into, on 51%, again beating India on 39% and Brazil with 33%.

For 63% of organisations, the opportunity to drive revenues upwards was the primary motivator behind such moves. On average, the businesses assessed expect to boost their investment by 36%.

The most difficult challenge when pressing into fast-growth markets included government regulation on 18%, competition on 16%, finding staff on 14% and the nascent communication infrastructure on 11%.

More broadly, 57% of participants saw political instability as an issue preventing their entry into emerging markets and 37% pointed to locating talent.

"For companies to capitalise on that potential we need to see greater levels of investment in the infrastructure that is essential to support it," Vinod Kumar, CEO of Tata Communications, said.

"That will inevitably require more focus on developing talent and innovative thinking in markets that can have less educational investment in those areas."

Data sourced from CIO India/Tata Communications; additional content by Warc staff