Business Perspectives on Emerging Markets 2012-2017
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Business Perspectives on Emerging Markets 2012-2017

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In the Business Perspectives for Emerging Markets 2012-2017 Report from GIA, 431 large and mid-sized companies reveal their true goals and intentions. This presentation shows selected slides from a ...

In the Business Perspectives for Emerging Markets 2012-2017 Report from GIA, 431 large and mid-sized companies reveal their true goals and intentions. This presentation shows selected slides from a GIA white paper. To download the entire white paper that you are interested in, please visit http://bit.ly/GIAinsightWP

1. 70% say they want to gain a foothold for long term success
2. 51% say they were keen to gain global market share
3. 4 out of 10 have followed their customers to Emerging Markets
4. A third are looking for growth outside established markets with lackluster growth and profits
5. 1 out of 4 are keen to diversify their risks, as well as tap into short to medium term profits and growth
6. Only 17% said it was to lower supply costs

Many still favor BRIC countries as their top focus between 2012 and 2017, with similar emphasis on individual markets across 10 industries.

However, 91% admit to wanting to have done things differently in their Emerging Market strategies. The main regrets are not adapting more to local conditions, not entering sooner and not acquiring better market intelligence.

Over half say that information on Emerging Markets is not readily available in their organizations, with three out of four doubting the accuracy and completeness of the information that they do have.

Download the Business Perspectives for Emerging Markets 2012-2017 Report (Global Results) from GIA, to find out how companies say they will tackle Emerging Markets and what they see as the success factors and threats for their individual industries. The wide ranging Emerging Markets survey covered questions such as:

- How do you define Emerging Markets in your company?
- Which are the top Emerging Markets for your industry over the next five years?
- What key factors will determine whether foreign companies succeed in Emerging Markets?
- What are the biggest threats to succeeding in Emerging Markets?
- What are your company’s main reasons for investing in Emerging Markets?
- What share of your company’s global revenue do you expect to come from Emerging Markets?
- Which one aspect of your Emerging Markets strategy would you go back and change if you could?

Industries covered include: Manufacturing & Industrial; Telecommunication, Technology & Media; Professional & Business Services; Financial Services; Consumer & Retail; Pharmaceuticals & Healthcare; Energy, Resources & Environment; Automotive; Chemicals; Logistics & Transportation.

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    Business Perspectives on Emerging Markets 2012-2017 Business Perspectives on Emerging Markets 2012-2017 Presentation Transcript

    • Business Perspectives on Emerging Markets 2012-2017 Findings from global survey, June 2012All Rights Reserved ©2012 www.globalintelligence.com
    • Business Perspectives on Emerging Markets 2012-2017 Why this study is important Everyone is talking about Emerging Markets. But what is the reality behind the scenes? In April-May 2012, GIA sought to find out how global companies are thinking about Emerging Markets. What do they view as success factors or threats? What mistakes have been made, and should be avoided? Do companies have the information to capture fast moving market opportunities? This study is important. Half the respondents say at least 30% of their global revenuesMarkko Vaarnas will come from Emerging Markets by 2017. As a market intelligence partner toCEO companies around the world, we are positioned at the forefront of our clients’Global Intelligence Alliance international plans, particularly for Emerging Markets. With this study, we share the strategic ambitions, concerns and challenges facing companies in fast growing markets. We trust this will prove enlightening for your Emerging Markets strategy. I welcome you to share your thoughts with any of my colleagues, as our mission is to help companies understand, compete and grow in global markets. www.globalintelligence.com | info@globalintelligence.com
    • Executive Summary: Brazil, China and India dominateEmerging MarketsIndonesia gaining as companies seek market shareEmerging Markets focus and expectations Motivations and concerns•  Most companies define Emerging Markets as BRIC •  Most companies see a presence in Emerging or BRIICS, or based on stage or growth of economic Markets as necessary to their future success, and development, but other factors such as market size, are investing now to gain a foothold and build location and industry-specific opportunities come into global market share. play when prioritizing countries. •  It has become less about lower production costs,•  BRIC countries are still seen as the top four though this is still a driver for some. Emerging Markets for 2012-2017. Interest in Russia is lagging behind the other three countries. •  Almost all companies (91%) say they could have done something better in their Emerging Market•  Most of the non-BRIC Emerging Markets that strategy. international companies plan to target in 2012-2017 are in Asia or Latin America. Indonesia is the next •  The main regrets are not adapting more to local upcoming Emerging Market, with over a quarter of conditions, not entering sooner and not acquiring companies naming it fifth after the BRICs. South better market intelligence. Africa, Vietnam, Mexico and Turkey follow. •  Over half say that information on Emerging•  Asian, European and Latin American companies are Markets is not readily available in their all bullish about expected revenues from organizations, with three out of four doubting the Emerging Markets (38%, 37% and 36% of total accuracy and completeness of the information that revenues by 2017, respectively), followed by US they do have. companies (34%). www.globalintelligence.com 3
    • How can global companies succeedin Emerging Markets in 2012-2017? www.globalintelligence.com
    • 430 managers told us what drives their strategyHow do companies perceive Emerging Markets; what are their plans; what do they want to achieve?•  In April-May 2012, GIA conducted an online survey amongst business managers at 431 large and mid-sized companies around the world.•  We asked them questions such as: •  How do you define Emerging Markets in your company? •  Which are the top Emerging Markets for your industry over the next five years? •  What key factors will determine whether foreign companies succeed in Emerging Markets? •  What are the biggest threats to succeeding in Emerging Markets? •  What are your company’s main reasons for investing in Emerging Markets? •  What share of your company’s global revenue do you expect to come from Emerging Markets? •  Which one aspect of your Emerging Markets strategy would you go back and change if you could?•  The respondents’ job functions included strategic planning/business development (26%), market/competitive intelligence (23%), senior management (19%), sales and marketing (13%), research and development/product management (9%), among others.•  Nearly half (42%) of the companies in the survey earned more than $1.3 billion (1 billion Euro) in annual revenue and more than 50% (58%) have more than 1,000 employees.•  See Appendix for more details about the survey sample. www.globalintelligence.com 5
    • 10 industries are represented in this reportThe industries are represented by the following symbols•  Manufacturing & Industrial•  Telecommunication, Technology & Media•  Professional & Business Services•  Financial Services•  Consumer & Retail•  Pharmaceuticals & Healthcare•  Energy, Resources & Environment•  Automotive•  Chemicals•  Logistics & Transportation www.globalintelligence.com 6
    • This study also helped people living in Emerging MarketsDonations from this study went to four charities assisting poor communities in Emerging Markets•  GIA took the opportunity to donate $6.50 / 5 Euros for every completed survey response.•  The total donation came close to $2,800 / 2,200 Euros, distributed across the following local charities:•  Cambodia: Tabitha (NGO that runs self-help programs •  Russia: Gift of Life/Podari Zhizn (charity that funds on personal and financial development for the poorest vital medicine for leukemia treatment and searches for people) potential bone marrow donors for children)•  Brazil: VidaBela (NGO that awards university •  South Africa: CANSA (NGO that provides holistic scholarships to talented candidates from highly cancer care and support to those affected by the disadvantaged socio-economic backgrounds) disease) www.globalintelligence.com 7
    • Emerging Markets focus to 2017 www.globalintelligence.com
    • Emerging Markets focus to 2017Most companies think of Emerging Markets as BRIC,BRIICS, or based on stage of economic developmentMarket growth rate is also important and a quarter of companies classify by region How Global Companies Define Emerging Markets Stage of economic development 39% Market growth rate 31% BRIC (Brazil, Russia, India, China) 28% 55% BRIC or BRIICS BRIICS (BRIC, Indonesia, S. Africa) 27% By geography (eg. in region X) 23% Penetration level of product/service 20% Market not in US, W. Europe, Japan 16% Penetration level by my company 10% Penetration level by multinationals 8% Proprietary listings eg. FTSE, S&P 3% Question: How do you define Emerging Markets in your company? N=411. Source: Global Intelligence Alliance, Business Perspectives on Emerging Markets 2012-2017 Survey. Respondents were allowed to select more than one. www.globalintelligence.com 9
    • Emerging Markets focus to 2017Emerging Markets in Asia and Latin America aregenerating the most interestRussia, South Africa and Turkey are the other top targets for the next five years Top 10 Emerging Markets (2012-2017) by % all companies Question: Which are the top 5 Emerging Markets for your industry over the next 5 years? N=427. Source: Global Intelligence Alliance, Business Perspectives on Emerging Markets 2012-2017 Survey. www.globalintelligence.com 10
    • Emerging Markets focus to 2017Brazil, China and India seen as equally important inthe next five yearsRussia is also still significant but the level of interest is well behind the top three Top Four Emerging Markets (2012-2017) •  Brazil, Russia, India and China are still the top four most important Emerging Markets for 2012-2017. India 66.4% •  Russia is least favored amongst the BRIC countries, with the majority (~65%) focusing more on India, Brazil and China with equal Brazil 65.7% levels of interest. •  According to the IMF, average GDP growth China 65.4% rates for 2012-2017* will be 7.4% for India, 3.7% for Brazil, 8.5% for China and 3.9% for Russia. Russia 39.7% •  Brazil and Russia seem to be finding favor for reasons other than their growth rates, such as their potentially huge domestic markets, natural Question: Which are the top 5 Emerging Markets for your industry resources and dominance within their regions. over the next 5 years? N=427. Source: Global Intelligence Alliance, Business Perspectives on Emerging Markets 2012-2017 Survey. Respondents were allowed to select more than one. * Figures based on 2012, 2013 and 2017 average from IMF World Economy Outlook: Growth Resuming, Dangers Remain 11 www.globalintelligence.com
    • Emerging Markets focus to 2017European companies are prioritizing Asia and LatinAmerica despite their proximity to RussiaLatin American companies are less adventurous when it comes to looking outside their home region Top Four Emerging Markets by Location of Headquarters (2012-2017) 22% 13% Asian headquarters 32% 33% 40% 15% Latin American headquarters 24% 21% 28% Brazil 19% European headquarters Russia 25% 28% India 28% China 17% US headquarters 29% 26% Question: Which are the top 5 Emerging Markets for your industry over the next 5 years? (To 2017) N=395 (Total): N=95 (US), N=161(Europe), N=44 (Latin America), N=95 (Asia). Source: Global Intelligence Alliance, Business Perspectives on Emerging Markets 2012-2017 Survey. Respondents were allowed to select more than one. www.globalintelligence.com 12
    • Emerging Markets focus to 2017 China’s economy outweighs the other BRIC countries but Brazil and Russia have highest GDP per capita Different BRIC countries are attracting interest and investment for different reasons Brazil India China RussiaPopulation 205.72 1,205.10 1,343.24 138.08Persons (millions)GDP 2,518 1,843 6,989 1,791USD (Billions)GDP (PPP) per Capita 11,600 3,700 8,400 16,700Current international dollar 8.2% 6.9% 3.0%GDP growth rate 2012 (e) 4.0%Land 8,514,877 3,287,263 9,596,961 17,098,242Km2 Source: Global Intelligence Alliance; IMF; CIA www.globalintelligence.com 13
    • Emerging Markets focus to 2017 China is the easiest to do business in and Brazil is becoming more competitive in the global context Levels of development and the opportunities vary across the different BRIC countries Brazil India China RussiaMobile subscribersQ1, 2012 250 million 919 million 1.01 billion 227 million 126% 160%Teledensity (wireless) 76% 74%Q1, 2012No. of millionairehouseholds 303 286 1,312 3752011, thousandsEase of doing businessIndex (World Bank) 126 132 91 1202011, ranking 53 51 26 63Global CompetitivenessIndex (WEO)2010/11 to 2011/12, ranking 58 56 27 66 Source: Global Intelligence Alliance; MIIT China, TRAI India, Anatel Brazil, Deloitte www.globalintelligence.com 14
    • Emerging Markets focus to 2017China, India and Brazil look good to most industrysectors; Russia has less widespread appealHealthcare sector is least positive on China, Automotive on India, Energy & Resources on Brazil, andConsumer & Retail on Russia Top Four Emerging Markets by Industry (2012-2017) 27% 28% 27% 29% 25% 27% 26% 29% 30% 31% 15% 13% 12% 17% 16% 19% 16% 21% 21% 21% Brazil Russia 30% 29% 29% 27% 32% 28% 23% 31% India 21% 24% China 27% 26% 30% 30% 29% 29% 27% 29% 25% 24% Question: Which are the top 5 Emerging Markets for your industry over the next 5 years? (To 2017) N=427. Source: Global Intelligence Alliance, Business Perspectives on Emerging Markets 2012-2017 Survey. Respondents were allowed to select more than one. www.globalintelligence.com 15
    • Emerging Markets focus to 2017Second tier Emerging Markets span the globe, led byIndonesia and South Africa No Middle Eastern countries named amongst top 10 Emerging Markets in the next 5 years after BRICTop 10 Emerging Markets after BRICs (2012-2017) •  Half of the 10 non-BRIC Emerging Markets that Rank Country % international companies plan to target in 2012-2017 are in Asia or Latin America. 5 Indonesia 27.4% 6 South Africa 22.2% •  Indonesia is the next upcoming Emerging 7 Vietnam Market, with over a quarter of companies 20.1% naming it fifth after the BRICs. 8 Mexico 18.5% 9 Turkey 17.8% •  South Africa, Vietnam, Mexico and Turkey 10 Argentina follow with approximately one fifth of 10.3% companies including one of them in their top 11 Chile 9.6% five. 12 Thailand 9.6% 13 Malaysia •  Turkey is the only country in Europe to make it 8.7% into the top 10 Emerging Markets after BRIC. 14 South Korea 8.7% Africa Asia Europe Latin America Question: Which are the top 5 Emerging Markets for your industry over the next 5 years (to 2017)? N=427 Source: Global Intelligence Alliance, Business Perspectives on Emerging Markets 2012-2017 Survey. 16 www.globalintelligence.com
    • Emerging Markets focus to 2017After Indonesia and South Africa, Turkey and Mexicointerest US and European companies mostLatin American companies focus more on their own home region; Asian companies favor Vietnam Top 10 Secondary Emerging Markets by Location of Headquarters (2012-2017) 1% 4% 7% 4% 8% 6% 6% 6% Malaysia 6% 3% 20% 3% 5% 7% South Korea 10% 10% 4% 1% 2% Chile 6% 17% 20% Thailand 14% 6% Argentina 10% 7% 15% 22% Turkey 11% 10% Mexico 29% 11% 17% Vietnam 15% 3% South Africa 26% 15% 18% 11% Indonesia 4% US HQ European HQ Latin American HQ Asian HQ Question: Which are the top 5 Emerging Markets for your industry over the next 5 years (to 2017)? N=395; N=95 (US); N=161 (Europe); N=44 (Latin America); N=95 (Asia). Source: Global Intelligence Alliance, Business Perspectives on Emerging Markets 2012-2017 Survey. www.globalintelligence.com 17
    • Emerging Markets focus to 2017Vietnam stands out for Consumer, Logistics andResources sectors, Mexico for HealthcareChemical sector very focused on Indonesia and South Africa, Consumer & Retail on SE Asia Top 10 Secondary Emerging Markets by industry (2012-2017) 5% 2% 6% 4% 4% 6% 5% 4% 6% 10% 7% 3% 1% 6% 5% 4% 6% 9% 12% 4% 6% 8% 3% 6% 5% 8% 4% 2% 6% 8% 9% 5% 5% 8% 8% South Korea 5% 9% 6% 8% 6% 8% 14% 3% 14% 6% Malaysia 14% 8% 6% 3% 3% 4% 8% 6% 8% Thailand 12% 11% 10% 16% 14% 10% 17% 12% 8% Chile 15% 10% 12% 4% Argentina 14% 13% 14% Turkey 7% 18% 15% 20% 27% 21% 20% 6% Mexico 14% 18% 20% Vietnam 15% 3% 19% 6% 18% 8% 12% South Africa 14% 27% Indonesia 21% 18% 20% 21% 21% 16% 12% 16% 16% Question: Which are the top 5 Emerging Markets for your industry over the next 5 years (TO 2017)? N=427 Source: Global Intelligence Alliance, Business Perspectives on Emerging Markets 2012-2017 Survey. www.globalintelligence.com 18
    • Emerging Markets aspirations to 2017 www.globalintelligence.com
    • Emerging Markets aspirations to 2017Most companies are investing to establish a presencein future major markets for long term gainLess than one fifth look to Emerging Markets as a low cost supply baseMotivations for investing in Emerging Markets •  The aim behind global companies’ 2012-2017 emerging markets strategy is to build markets70 70% Gain foothold for long term success in large future market and gain global market share – it is now less about capturing lower production costs (17%).60 •  Most companies want to gain a foothold for long term success. Half are looking for greater50 51% Gain global market share global market share.40 •  Four out of ten have followed their customers 39% Our customers are there to Emerging Markets. 34% Lack of growth/profit in established markets30 •  A third are being pushed into Emerging 25% Diversify risks 24% Tap into short/medium term growth/profit Markets by lack of growth or profit in more20 established markets. 17% Establish low cost supply base •  A quarter are going into Emerging Markets to10 14% CEO/board directive / Competitors are there diversify risks, and the same number to tap intoQuestion: What are the main reasons for investing in Emerging Markets short to medium term profits and growth.for your company? N=428.Source: Global Intelligence Alliance, Business Perspectives on Emerging Markets 2012-2017 Survey. 20 www.globalintelligence.comRespondents were allowed to select more than one.
    • Emerging Markets aspirations to 2017Half of the companies say at least 30% of globalrevenues will come from Emerging Markets by 2017One fifth say Emerging Markets will account for 50% of revenues within five years % Global Revenue from Emerging Markets (2012-2017) Zero revenue from Emerging Markets 1% (2012-2017) 2012 53% 18% 14% 7% 3% 4% 7% 2014 29% 23% 22% 14% 3% 5% 4% 1% 2017 15% 19% 15% 31% 7% 8% 5% 1% 0%-10% 11%-20% 21%-30% 31%-50% 51%-60% 61%-80% 81%-100% Question: What % of your companys global revenue do you expect to come from Emerging Markets? N=277 (2012), N=268 (2014), N=263 (2017). Source: Global Intelligence Alliance, Business Perspectives on Emerging Markets 2012-2017 Survey. www.globalintelligence.com 21
    • Emerging Markets aspirations to 2017Technology sector expects the most growth inEmerging Markets, followed by Logistics and ChemicalThe Resources sector will source the most revenue from Emerging markets; Consumer, Finance andHealthcare the least % Average Global Revenue from Emerging Markets by Industry (2012-2017) 41% 30% 24% 48% 32% 20% 37% 27% 18% 2017 27% 2014 19% 13% 28% 2012 21% 15% 26% 18% 15% 53% 45% 35% 37% 25% 19% 38% 29% 19% 36% 24% 17% Question: What share of your companys global revenue do you expect to come from Emerging Markets? N=277 (2012), N=268 (2014), N=263 (2017). Source: Global Intelligence Alliance, Business Perspectives on Emerging Markets 2012-2017 www.globalintelligence.com 22
    • Emerging Markets aspirations to 2017US companies are slightly behind the curve on tappinginto Emerging Markets revenuesSmaller companies are expecting a greater share of revenue from Emerging Markets than larger ones % Average Expected Global Revenue from Emerging Markets (2017) By size of annual revenue By location of headquarters Asian HQ 38% <0.1 bil Euro 42% European HQ 37% 0.1 bil - < 1bil Euro 38% Latin American HQ 36% =/> 1bil Euro 33% US HQ 34%Question: What share of your companys global revenue do you Question: What share of your companys global revenue do you expectexpect to come from Emerging Markets? N=256 (Total of 2017): to come from Emerging Markets? N=245 (Total of 2017): N=63 (US),N=86(<0.1 bil Euro), N=62 (0.1 bil-<1 bil Euro), N=108 (=/>1 bil Euro). N=94 (Europe), N=27 (Latin America), N=61 (Asia).. Source: Global Intelligence Alliance, Business Perspectives on Emerging Markets 2012-2017 www.globalintelligence.com 23
    • For the rest of this free report andmore like it, please visithttp://bit.ly/GIA2012 www.globalintelligence.com
    • GIA is a strategic market intelligence and advisory groupGlobal Intelligence Alliance (GIA) is the preferredpartner for organizations seeking to understand,compete and grow in international markets.Our industry expertise and coverage of over 100countries enables our customers to make betterinformed decisions worldwide.GIA Group has 11 offices on 4 continents.Together with affiliated GIA Member companies,certified GIA Research Partners and consultants,GIA provides access to local knowledge in over100 countries.All GIA Network companies adhere to GIA’s Research and Analysis Quality System as well as the SCIPCode of Ethics.www.globalintelligence.com | info@globalintelligence.com www.globalintelligence.com 25
    • We help you make better informed decisions Customized market monitoring solution to boost awareness and collaboration in your organization Analytical insight and advisory, enabling you to compete more effectively and grow into new opportunities Valuable information about your markets and industry, on-demand around the world High-quality intelligence software that enables full control of the intelligence process A suite of consulting services, events and online resources that help you set up and develop world class intelligence programs www.globalintelligence.com 26
    • International Global Intelligence Alliance Group info@globalintelligence.comBrazil Global Intelligence Alliance Latin America brazil@globalintelligence.comCanada Global Intelligence Alliance Canada canada@globalintelligence.comCzech Republic EasyLink Business Services cee@globalintelligence.comChina Global Intelligence Alliance China china@globalintelligence.comFinland Global Intelligence Alliance Finland finland@globalintelligence.comFrance RV Conseil france@globalintelligence.comGermany Global Intelligence Alliance Germany germany@globalintelligence.comHong Kong Global Intelligence Alliance Hong Kong hongkong@globalintelligence.comIndia Global Intelligence Alliance India india@globalintelligence.comJapan McRBC japan@globalintelligence.comKorea 3mecca korea@globalintelligence.comLatvia Gateway Baltic baltics@globalintelligence.comMexico Americas Market Intelligence Mexico mexico@globalintelligence.comNetherlands Global Intelligence Alliance Netherlands netherlands@globalintelligence.comPortugal Growth Setting portugal@globalintelligence.comRussia ALT R&C russia@globalintelligence.comSingapore Global Intelligence Alliance Singapore singapore@globalintelligence.comSouth Africa Butterfly Effect Intelligence southafrica@globalintelligence.comTunisia RV Conseil Tunisie tunisia@globalintelligence.comUK Global Intelligence Alliance UK uk@globalintelligence.comUnited Arab Emirates GCC Consulting uae@globalintelligence.comUSA East Coast Global Intelligence Alliance USA East Coast usaeast@globalintelligence.comUSA Florida Americas Market Intelligence Miami usaflorida@globalintelligence.comUSA Midwest Global Intelligence Alliance USA Midwest usamidwest@globalintelligence.com www.globalintelligence.com 27