Emerging markets: What you don't know can hurt you

As emerging markets continue to develop, so too do their need for the infrastructure, technology and know-how of the western world.

The most often talked about economies are those of the Briscam grouping – Brazil, India, China, South Africa, ASEAN states and Mexico. “[Emerging markets] are characterised by high rates of growth, rising incomes and discretionary income,” says Peter Enderwick, professor of international business at AUT, and the author of numerous books and journal articles on the nature of business in these regions.

He identifies four main opportunities for Kiwi businesses there: new markets to sell products and services to (the focus of the vast majority); lower costs, cheaper labour and land; a “massive” opportunity for learning to do business in new ways and with new models; and innovation in developing countries to take back to the rest of the world. Of course there are challenges too.

“There is a hell of a lot more competition than most firms realise. Businesses often find local competition, and much more of it, than they anticipated. And if they find the market attractive, so do other firms, so you get clustering – where a whole lot of foreign firms go in at the same time,” says Enderwick. “It’s kind of a wild west business scenario.” But emerging markets are also characterised by the growing needs of their middle class, and investment into infrastructure, health and education.

Jorge Forteza, NZTE Beachhead advisor in the Argentinian capital Buenos Aires, says somewhere in the order of $100 billion a year is expected to be invested in South and Central American roads, water, airports and energy over the coming years, for example.

And in emerging East Asian markets like Indonesia, Vietnam and the Philippines, NZTE trade commissioner Tony Martin says there are “huge opportunities” in the health sector. “Their health industries are only starting to get up to first world standards, and for New Zealand companies operating in those areas, the time is right to jump in.” ×