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Video Transcript: Doing business in High Growth Markets 

Voiceover: The world is fundamentally changing. Globalization is creating opportunities for new business, in and from high-growth emerging markets.

Alan Buckle, KPMG: If you’re not out there it’s difficult to get the sheer scale of the opportunities.  It’s the entrepreneurship you’d find in India, for example, the determination you’d find in Russia, the creativity you’d find in Brazil. The opportunity to partner with these organizations and link up with them is phenomenal for the West. These markets are growing at seven, eight, nine, ten per cent plus. Western markets have a default level of say two, two and a half, three per cent.

 

[Text] Where do you stand? New to the market? Expanding? Revisiting strategy? Need help navigating complex challenges?

 

Alan Buckle, KPMG: There’s a huge opportunity for Western products. You have a great appetite for Western Brands.  People who charge in too quickly without doing the ground work can get very badly burnt, and have done. You think you’ve understood China, or you think you’ve understood India, or Brazil.  Whereas you have to understand your specific market geographically, within that country.

 

[China]

 

Dr Joerg Mull, VW Group China: Here you have probably the strongest history of growth ever.  And what fascinates me is to work in an environment where the people just work hard to improve their living conditions. I would argue China is the most competitive automotive market in the world right now and to find your way here now takes a lot of commitment and knowledge of the market.”

People like brands and more and more people have money to spend on brands.  Don’t go in with false hopes- sound out what you are in for, know also your regulatory environment and then go in for the long haul and not for the quick benefits.

 

[Text] BRIC countries comprise 40% of the world’s population and 25% of global GDP.
China filed more patents than the US for the first time in 2010
India will have up to 25% of the world’s workers in the next three years
Brazil’s ‘Ilha do Funaeo’ will be the largest technology, oil, gas and energy site in the world
Russia has an upper middle class of 10m households with income greater than US $50,000

 

Alan Buckle, KPMG: It’s incredibly important to have people working with you who know these markets inside out, and typically they have to be people who have grown up, lived, worked, breathed these markets.

 

[India]

 

Neil Laird, Roamware: We’ve got over 400 employees world-wide and about, almost 300 of them are in India.

 

Avnish Chauhan, Roamware: The government out there is very supportive.  They have set up special economic zones, what they call export zones.  And they give you a lot of tax breaks.  You know the spaces, at a heavily discounted price and you’re allowed to import duty free against your exports.  So all those things have been actually put in place by the government to make it easier for the foreign companies to go there.

 

Bishal Bisht, Roamware: What you need is to partner with the right folks to help you out where you selling yourself.  We made sure that we interacted on a personal basis, travelling a lot, and made things happen that way.

 

Avnish Chauhan, Roamware: I would recommend that people start looking at these markets because they allow you to manage your budgets, especially in these difficult times. They allow you to embrace a global culture and a different viewpoint and those kind of things.  But purely just running services out there in India, I think it’s the right time to do that.

 

[Text] Low cost ‘reverse innovation’ from emerging markets is disrupting global industries.

In the next 15 years, 40% of global growth will come from 400 ‘Tier Two’ cities.

By 2030, the E7 (BRIC, Indonesia, Mexico, Turkey) will be 25% larger than the G7

 

[Brazil]

 

David Bunce, KPMG: Well some of the challenges in South America are not dissimilar to challenges in other parts of the world. Brazil today has the same demographics that the US had coming out of the second World War.

 

Dr Joerg Mull, VW Group China: Well, the first contact will be easy because Brazilians like foreigners.  But then if you go to the next level you must find the right partner in Brazil.

 

Jose Soares, Highland Group Brazil: The people are very, very, very focused on results, very quickly.  Now we have a very strong middle class people making money and hungry to buy.

 

Dr Joerg Mull, VW Group China: Brazil will be one of the top five, six economies in the world soon.  So if you want to be in a growth market you must be here.

 

Jose Soares, Highland Group Brazil: South America is a very bureaucratic continent and I believe we have a lot of laws. We need to have people who work here, have the same culture and understand each part of the process.

 

Jens Graefe, Celesio: When we came over we contracted KPMG and I would say for the first year they were as important as the four wheels on your car.  Without them we would never have managed basically to be at the stage that we are.

 

Dr Joerg Mull, VW Group China:  You must spend quite some time in research and setting up the right people-structure to be successful.

 

[Text] Companies must have a clear strategy for emerging market growth.

 

Alan Buckle: I think I have two key messages.  Firstly, don’t follow fashion.  Research, learn, listen.  Do the right thing for your business.  And secondly, understanding and relationships. You have to show real cultural sensitivity.  Build relationships on the ground.  That’s the formula to getting things done in the new markets.

 

[Text] High Growth Market Considerations

-        - Market entry

-       - Political risk

-       - Bribery & corruption

-       - Government role and bureaucracy

-       - Tax and regulatory compliance

-       - Intellectual property

-       - Credit risks

-       - Cost management

-       - Supply chain

-       - Cultural difference

 

Alan Buckle: I think KPMG brings obvious deep deep knowledge in these markets

 

[Text] KPMG firms can help companies clarify and navigate the unique, complex challenges and risks of doing business in high growth emerging markets

Companies can realize their growth objectives in this changing global landscape

 

Voiceover: KPMG firms can help with the solution.  Our firms can guide you through the complexity and the risk to help your company grow. 

 

Doing business in High Growth Markets