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New & Emerging Markets
Challenges

From Promising Export Location to Innovative Competitor
In the early days the countries of the emerging markets were especially favoured as promising outsourcing locations, and they developed profiles as export economies. In the interim they have since grown out of this role. The markets of the future are developing into competitive-competent movers and shakers on every level of economic and corporate relations. An army of engineers is battling for market shares, and highly qualified researchers are enthusiastically seeking out innovative new product concepts.

With this shift, analysts believe globalisation has now entered a new phase. Driven by growth and acquisitions, more and more companies from the emerging markets are stepping up to the global stage.

The New and Emerging Markets profit from these developments:

• Since China opened up its markets to foreign investment in 1978, internationally active corporations have invested over 500 billion US dollars in the country. China has since overtaken France and the UK and is now the fourth biggest economy and the country with the third highest trade figures in the world.
• With R&D investment of 21 billion US dollars India has moved up into the top ten countries for research, with its pharmaceutical and bio-technology sectors ranking among the best around the globe.
• Russia continues to strengthen its position in the strategically important raw materials and energy sectors.
• With its product exports in 2005, Brazil passed the 100 billion US dollar threshold for the first time and is now considered Latin America’s guiding light. Thanks to increased foreign exchange reserves, Brazil has paid off all of its IMF debts totalling some 15 billion US dollars – and ahead of time.

Opportunities and challenges for UK companies
For investors the big domestic markets are increasingly the centre of focus of their economic activities. Approx. 2.7 billion people, more than 40 percent of the world’s population, are united in the emerging markets, and a dynamic growing middle class is establishing itself in these countries. Several hundred million Chinese and Indians, for example, already have an income that can be compared with Western standards.

With the increasing complexity of their domestic economy systems, at the same these countries are, however, presented with the growing challenges of successfully managing the speed and impact of this economic development. Only then will it be clear if the path of the “three billion new capitalists” in the emerging markets expected by economic researchers will be permanently paved with success.

Find out how KPMG’s country specialists can support you with your commitment in a foreign country.

Read more about the Challenges in New and Emerging Markets.

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