Wednesday, 15 Sep 2010
PN126/2010
Published: Wednesday, 15 September 2010
Global investors have great expectations for emerging markets
Vietnam has held its place for the third year running at the top of a list of emerging markets, outside of the BRICs, where UK firms should be looking to do business, according to global investors surveyed by UK Trade & Investment and the Economist Intelligence Unit.
The ‘Great Expectations: Doing business in emerging markets’ report offers new insights from international investors about which markets they see as being the global growth engines of the future.
The report is based on a survey of more than 520 global executives from every sector. All respondents are already doing business in emerging markets or plan to do so in the next two years.
Launching the new research this morning, the UK Business Secretary Vince Cable said:
“By 2030, 93 per cent of the world’s middle class will live in what is currently termed emerging markets. The global economy is being hugely altered and British business has to adapt.
High growth markets
Visit the high growth markets page on the UKTI website to view the report.
“The phenomenon of emerging markets isn’t just isolated to one region. British companies should look further afield to diversify their export base. As UK Trade & Investment’s research shows, markets in Asia, Africa, the Middle East and Latin American can offer new business opportunities for UK firms.”
Key findings include:
Emerging markets are now viewed as sources of new consumer demand, ahead of simply being low-cost production hubs. 76% of investors see emerging markets as a source of new business growth. This is compared with just 23 per cent looking for a low-cost manufacturing base.
Only one quarter of companies intend to rely on their existing products and services in emerging markets. Most companies intend to customise their offerings for new markets.
Vietnam has been selected as the number one investment destination, beyond the BRICs, for the third consecutive year.
The top three markets for investors in the next two years are China (20%), Vietnam (19%), India (18%).
71% of respondents agreed that emerging markets beyond the BRIC countries collectively offer an opportunity too big to ignore.
Companies are now prioritising a range of "second-tier” countries alongside their well-established operations in the BRIC countries.
For many, emerging markets are increasingly familiar places. Nearly half of the respondents have been operating in one or more emerging markets for at least a decade and two-thirds have been there for six years or more. Institutional knowledge of these countries is far higher than it was at the turn of the century.
Far more executives believe that the potential rewards far outstrip the risks within both the BRIC countries and other emerging markets. 52% expect growth prospects for their once-risky emerging markets business to be "significantly better" over the next two years.
Local companies in emerging markets are sought after for partnerships and alliances. Despite a greater ease with the risks of new places, the need to tap into local knowledge and contacts quickly remains strong.
Emerging markets are not just for big business. One in three SMEs polled plan to expand into one new emerging market over the next two years through joint ventures or partnerships with local companies.
Where to next?
Aside from the BRIC countries, which emerging markets will be your company’s main targets for new and/or increased investment over the next two years?
Top 10 investment targets 2010:
1. Vietnam (2009 ranking: 1; 2008 ranking: 1)
2. Indonesia (2009 ranking: 6; 2008 ranking: 5)
3. Mexico (2009 ranking: 3; 2008 ranking: 5)
4. Argentina (2009 ranking: 12; 2008 ranking: 8)
4. Saudi Arabia (2009 ranking: 10; 2008 ranking: 10)
6. South Africa (2009 ranking: 4; 2008 ranking: 8)
7. Nigeria (2009 ranking: 2; 2008 ranking: 12)
8. Malaysia (2009 ranking: 5; 2008 ranking: 12)
8. United Arab Emirates (2009 ranking: 2; 2008 ranking: 3)
8. Turkey (2009 ranking: 8; 2008 ranking: 9)
Sources: Economist intelligence Unit survey, July- August 2010; Survive & Prosper: emerging markets in the global recession (2009); Tomorrow’s Markets (2008)
Emerging markets fact files:
By 2030, 93 per cent of the world’s middle class will live in what is currently termed emerging markets.
According to an IMF report, Asia’s economy will grow by 50% in the next 5 years.
In 2009, the Indian middle class consisted of 50 million people. By 2050, the figure is estimated to be over half a billion people.
There are 1.2 billion internet users in Brazil, Russia, India, China and Indonesia.
Asia accounts for 35% of all car sales and 43% of all mobile phone sales.
China is currently building 57 new airports.
Over the next 15 years, China will build 5 million buildings and 50,000 skyscrapers.
By 2025, more Chinese people will speak English than the number of native English speakers worldwide.
Between 2008 – 2025, the 30 fastest growing cities will be in emerging markets.
Media contact
For more information please contact Susan Grieve in the UK Trade & Investment press office on +44 207 215 4644 or susan.grieve@ukti.gsi.gov.uk.
Notes to editors
"Great Expectations: Doing business in emerging markets" is a UK Trade & Investment (UKTI) report, written in cooperation with the Economist Intelligence Unit. The report explores the changing outlook for businesses already operating in emerging markets—or planning to expand into these markets—both in terms of which markets are presenting the best opportunities and the primary rationale for operating in these countries.
It is the third in a series of annual reports from UKTI on emerging markets, after Survive and Prosper: emerging markets in the global recession (2009) and Tomorrow's Markets (2008). The report is based on a wide-ranging global survey of 523 companies, representing all major industries, conducted by the Economist Intelligence Unit during July and August 2010.
Visit the high growth markets page on the UKTI website to view the reports.
UK Trade & Investment (UKTI) is the government department that helps UK-based companies succeed in the global economy. We also help overseas companies bring their high quality investment to the UK’s economy – acknowledged as Europe’s best place from which to succeed in global business. UKTI offers expertise and contacts through its extensive network of specialists in the UK, and in British embassies and other diplomatic offices around the world. We provide companies with the tools they require to be competitive on the world stage.
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