Basics for business: partnership, relationship, trust, friendship. These values are important in emerging markets. 2011 figures: pharmaceuticals, B2B is relatively good. Consumer products are struggling with single digits.
4 main problems:
– Banking sector not functioning properly. Big companies have no financing problems, but their partners have, in all major countries. Only in BRIC bank lending is rising. Growth in Turkey was higher than in India. China and Turkey are trying to ask their banking sector to reduce growth…
– Global consumer. Exports are doing well, but the internal markets are not. Unemployment is still high (9 to 10 % in major western countries). People don’t work so hard: in the US, 32.5 hours. People have jobs, but they are not happy consumers anymore.
– Business has a problem with business. Companies are not investing anymore, not hiring workers. Even paying less and less taxes. Every $ increase in price oil means 2 billion $ more in the budget of Russia. When it comes to corruption, only the Greeks can make the Italians look like Norwegians.
– People think emerging markets work like traditional markets: it’s wrong! Speed of competition is increased, you need more flexibility and adaptability. You need to change. Compliance is a weakness. Expatriates are good for mentoring and projects, but give more authority to local staff. The biggest mistake of western companies in emerging markets: short-termism. Emerging markets rule #1: think long-term, avoid KPIs and quarterly reports.
Organic growth is now in emerging markets, not in western countries anymore.
Premium consumers are coming back, but they have changed mentalities. They don’t want to pay for bullshit.
Innovation: you must pay attention to affordable innovation. Less quality, reduce prices, but increase sales.
Inflation is one of the major topics: on food, on population, etc.
Impact on IT: be more efficient. IT business is doing well because everybody is concerned.
One final thought: to succeed in business, you need honesty and fair dealing, and if you can fake them both you’ll be a big success.