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Emerging Markets

Emerging Markets. What is an “emerging market”?. “Emerging market” is used to describe a country in the process of rapid growth and industrialisation. Developed or developing?. Developed Economies. Economic & political stability. Reliable legal infrastructure. Emerging Markets.

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Emerging Markets

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  1. Emerging Markets

  2. What is an “emerging market”? “Emerging market” is used to describe a country in the process of rapid growth and industrialisation

  3. Developed or developing? Developed Economies Economic & political stability Reliable legal infrastructure Emerging Markets Developing Economies

  4. Features of emerging markets • Economies making a transition • Rapid industrialisation (i.e. development of secondary & tertiary sectors) • Have potential to become developed economies • Faster long-term economic growth than most developed economies • Many inhabitants still in poverty • Businesses struggle to access global markets (e.g. trade barriers)

  5. Advanced Emerging Markets (AEMs) Mexico Brazil Hungary Taiwan Poland South Africa

  6. Secondary Emerging Markets (SEMs) Argentina Chile China Columbia Czech Republic Egypt India Indonesia

  7. Secondary Emerging Markets (SEMs) Malaysia Morocco Pakistan Peru Philippines Russia Thailand Turkey

  8. Threats from emerging markets • Increasingly large pool of skilled, but low-cost labour • Undervalued currencies make their exports cheaper • Inadequate protection of brand and other intellectual property • State subsidy of industries to make them more competitive globally

  9. Opportunities in emerging markets • Growing numbers of educated middle class consumers - = growing consumer spending • Cultural shifts – e.g. higher demand for personal products, private education & healthcare • Demand for infrastructure and other products & services from developed economies • Source of high-skilled but low-cost labour (outsourcing / offshoring) • Great potential for joint ventures and acquisitions

  10. The opportunity for export Since 2002, UK exports to China have grown by 20% p.a. Source: BERR 2008

  11. Key risks and threat of emerging markets • Political instability • Cultural differences / sensitivities • Variable approaches to financial & legal dealings (e.g. contractual law) • Corruption and bureaucracy still an issue • Emerging markets becoming major exporters • Low-cost production makes developed economies uncompetitive in some markets

  12. Example – Indian IT “exports” India now dominates the global market for offshoring of IT-enabled services

  13. Example – the impact of lower costs "This is another shameless example of British workers being dumped in favour of low-wage exploitation in Poland," said Jeff Morland, Unite regional officer http://www.guardian.co.uk/business/2007/dec/14/manufacturing.ireland

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