Many companies today are penning strategies for expanding to different geographies especially the emerging markets- Brazil, Russia, China, India, Indonesia, S.Africa, Mexico etc.
This is further to views expressed in http://www.drshrutibhat.com/2/post/2013/10/-planning-market-expansions-bric-emerging-markets-risk-is-shattering-into-biits.html
A prime thought though is that, emerging market scenario can’t be compared to those prevalent in the developed nations- be it corruption, political stability, logistics or intellectual property.
Despite knowing the difference, I’ve (and I’m sure many of you too) have come across executive meetings getting heated up on this vary point- because, we tend to compare emerging markets from where we come from and not with other developing markets and like socioeconomic conditions.
It’s been increasingly noticed that investors have typically been found less inclined to favor Russia over China. Few of deciding factors cited about (un)suitability of both these markets are- higher corruption rates and lack of intellectual property (IP) protection offered by these nations.
I agree that a critical point of consideration is the legal protection a country offers its own businesses as well as foreign investors.
Besides the ever important political stability, a critical factor governing decision making is intellectual property protection. Brazil, Russia, India, China (BRIC), have similar offerings with respect to intellectual property laws, what differs is their interpretation and implementation. Therefore, a company planning on investing in BRIC countries need to develop a solid and resilient IP strategy towards protecting their intellectual property. Easier said than done and without sounding patronizing, companies have got to have a better understanding for the fact that just because they do business one way in one country does not mean they must do business that same way in every country.
Coming to the issue about corruption, some published statistics cited include the following- Transparency International ranks China 80 out of 177 countries. Russia is 127, right between Pakistan and Bangladesh (Reference: http://cpi.transparency.org/cpi2013/results/). World Audit ranks China 61 out of 150 in corruption, with Russia at 110.
My recommendations on this issue is the following- Corruption exists in every nation although its magnitude differs. What should matter to an enterprise strategizing expansion portfolio is not how prevalent is the corruption, rather how much it impacts foreign businesses seeking to do business in that territory.
Additionally, degree of risks differs in each emerging markets. To reach a go-no go decision, it really comes down to- the company’s products/ services, corporate governance, risk tolerance and the staying power to cut through the difficulties and most importantly, an effective market expansion strategy and its expert implementation.
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This is further to views expressed in http://www.drshrutibhat.com/2/post/2013/10/-planning-market-expansions-bric-emerging-markets-risk-is-shattering-into-biits.html
A prime thought though is that, emerging market scenario can’t be compared to those prevalent in the developed nations- be it corruption, political stability, logistics or intellectual property.
Despite knowing the difference, I’ve (and I’m sure many of you too) have come across executive meetings getting heated up on this vary point- because, we tend to compare emerging markets from where we come from and not with other developing markets and like socioeconomic conditions.
It’s been increasingly noticed that investors have typically been found less inclined to favor Russia over China. Few of deciding factors cited about (un)suitability of both these markets are- higher corruption rates and lack of intellectual property (IP) protection offered by these nations.
I agree that a critical point of consideration is the legal protection a country offers its own businesses as well as foreign investors.
Besides the ever important political stability, a critical factor governing decision making is intellectual property protection. Brazil, Russia, India, China (BRIC), have similar offerings with respect to intellectual property laws, what differs is their interpretation and implementation. Therefore, a company planning on investing in BRIC countries need to develop a solid and resilient IP strategy towards protecting their intellectual property. Easier said than done and without sounding patronizing, companies have got to have a better understanding for the fact that just because they do business one way in one country does not mean they must do business that same way in every country.
Coming to the issue about corruption, some published statistics cited include the following- Transparency International ranks China 80 out of 177 countries. Russia is 127, right between Pakistan and Bangladesh (Reference: http://cpi.transparency.org/cpi2013/results/). World Audit ranks China 61 out of 150 in corruption, with Russia at 110.
My recommendations on this issue is the following- Corruption exists in every nation although its magnitude differs. What should matter to an enterprise strategizing expansion portfolio is not how prevalent is the corruption, rather how much it impacts foreign businesses seeking to do business in that territory.
Additionally, degree of risks differs in each emerging markets. To reach a go-no go decision, it really comes down to- the company’s products/ services, corporate governance, risk tolerance and the staying power to cut through the difficulties and most importantly, an effective market expansion strategy and its expert implementation.
Follow Shruti on Twitter, Facebook, YouTube, LinkedIn
#ProcessExcellence #ContinuousImprovement #BusinessProcessManagement #BusinessExpansion
