Emerging markets optimistic of growth

The findings point to a new spirit of collaboration between domestic firms and foreign multinationals in order to share the scarce skills required to drive growth.  In total 60 per cent of respondents believe collaboration is vital to their future success. 

‘Ahead of the game: Succeeding  in Emerging Markets’, conducted by the Economist Intelligence Unit report sponsored by BT Global Services, is one of the biggest surveys of business in emerging markets ever conducted, covering more than 1,300 executives from major companies in 15 developing economies*.  Firms operating in these markets are seeking ambitious revenues and profit margins - for more than a quarter (27 per cent) of respondents, only a gross margin of 35 per cent or more is deemed ‘acceptable’.  

Executives believe the key to success lies in matching growing consumer demand for high quality goods and services.  Nearly six out of 10 firms (56 per cent) put this success factor ahead of price.  A significant proportion of respondents (24 per cent) point to the importance of a strong brand and some executives even argue that brand loyalty is now greater in emerging markets than ‘mature’ countries. 

Together, the findings suggest that Western firms entering these emerging markets must use their financial, brand and management strengths to achieve rapid growth.  On the other hand, domestic companies within these markets feel they hold a key advantage over foreign firms with their strong local knowledge and contacts.

The clear advantages enjoyed by both domestic and foreign firms lead to strong competitive confidence.  Both domestic firms (76 per cent) and foreign firms (81 per cent) believe they are effectively positioned to succeed in emerging markets.

Francois Barrault, CEO, BT Global Services, said: “Emerging markets are bullishly optimistic about their economic prospects, in contrast to much of the developed world.  Both domestic and multinational firms bring advantages to market and collaboration, rather than traditional cut-throat competition, could unlock value for both organisations.” 

The state of physical infrastructure such as roads, rail and electricity supply and communications infrastructure differs is no longer viewed as a major barrier to growth.  The majority of countries surveyed have made significant investments to improve business backbones.

Barrault added: “Successful firms know a high speed communications infrastructure is no longer about simple access.  It’s about bringing together rare and diverse skills in a collaborative environment to meet new consumer demand with innovation and service support.”