¨A lot has been written over the years about the benefits of doing business in emerging markets. As markets mature and multinational firms run out of room to grow in the developed world, most MNC’s have in a period of more that two decades, turned their attention to South America, Eastern Europe, China, India and Africa. Most MNC’s are drawn to emerging markets by two factors; firstly the possibility to reduce costs mainly because of low input costs found in emerging markets such as land, labor and materials and in some case benign tax regimes and other incentives.
The second big ocean current, that in my opinion, drives MNC’s to seek out emerging markets, is potential market sizes presented by individual countries and regions that make up the “emerging market mass.” The numbers are indeed staggering. Take population sizes as an example; 1.25 billion people in India, 1.35 billion in China, 1.1 billion in Africa, 250 million in Indonesia, 200 million in Brazil etc., For a detailed projection of potential population sizes by 2050, see Stephanie Garelli, Top Class Competitors, page 15 – 19. Whilst for some, the sheer absolute population sizes is enough, for others however, especially players in healthcare, packaged goods, etc., the size of the”consuming class” is by far the biggest lure. For some additional perspective on this, see Walmart’s acquisition of South Africa’s Massmart and Deloitte on Africa; The Rise and Rise of Africa’s Middle Class.¨
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