KPMG SPECIAL REPORT
America, which have proven themselves to be more resistant to the economic crisis than many had assumed.
With China emerging as the new world economic power after the United States, we are witnessing a major shift in economic power as emerging countries account for an increasingly higher share of global GDP. For UK businesses the opportunity lies mainly in gaining advantages through leading technologies and and providing high quality products and services at affordable prices. Many companies from traditional industrial nations have understood this: they are reinforcing their sales and service networks in emerging markets, shifting production as well as research and development to be closer to the customer and enhancing their product portfolios for new target markets.
In the process, foreign operations have reached a new level of development. Second-tier emerging markets, like the African continent, are rapidly becoming a driving force as they mimic the larger BRIC economies in many respects. Sustainable success in these markets requires a roll-out of products and services which appeal to a mass of consumers with small wallets.
A changing world order
While the economies in the West remain fragile, with limited growth potential on offer, aspirational businesses of all sizes are considering overseas opportunities as a critical part of their strategy, both in terms of attempting to minimise the effects of the economic downturn and building a strong platform for future growth. Ian Gomes, Chairman of KPMG’s High Growth Markets Practice in the UK reports.
now supported by smaller countries in Africa, Asia and South 40 // JULY/AUGUST 2011
O
ne of the things that became clear from the global economic crisis is that global growth is dependent on major emerging countries like China and India continuing to grow at a significant rate. However, much of the global growth happening today is
While many western companies are still trying to redefine their market strategies, the wheel of globalisation continues to turn: up and coming emerging markets contest the role of big players like China as cost and price leaders. Cheap producers increasingly shift to neighbouring countries. Higher salaries and increasing inflation in China are endangering the cost leadership it currently enjoys. India too has challenges arising from poor logistics and inadequate infrastructure. Will these act as a brake on growth and per capita income and consumption?
Whilst the West continues to have the edge in innovation and technology, advances are now also being incubated in major emerging economies. Emerging-markets multinationals are making headway in new markets. At the same time, Western companies are in the process of learning
from emerging- market
companies and integrating their cost and sales structures into their supply chains.
These
developments will ensure the survival of market
dynamism and competition.
World's ten fastest growing economies
IMF forecast for 2011–15 Average annual GDP growth, % 1. China 2. India
3. Ethiopia
4. Mozambique 5. Tanzania 6. Vietnam 7. Congo 8. Ghana 9. Zambia 10. Nigeria
9.5 8.2 8.1 7.7 7.2 7.2 7.0 7.0 6.9 6.8
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