Why Are Businesses Shifting Focus to Emerging Markets?

In 2013, McKinsey & Company predicted that by 2025 almost 230 Fortune Global 500 companies would be based in cities in the emerging markets. Whilst I can't yet comment on whether this prediction is likely to come true, it is interesting to look at how companies are shifting their focus to these developing countries.

As the economies of underdeveloped countries evolve, businesses have reason to be extremely enthusiastic. A number of these developing markets are recognized in the newly designated economic groupings of increased interest, including the PINE economies (the Philippines, Indonesia, Nigeria and Ethiopia) and the MINTs - Mexico, Indonesia, Nigeria and Turkey. Nigeria and Indonesia, included in both groupings, are predicted to be bigger than the UK and France by 2030 (when measuring GDP in PPP terms).

Geographically and socioeconomically, these countries can't be ignored! They cover a vast area, often in direct proximity to some of the world's most advanced countries; and what's more, they account for well over half of the world's population. Fuelled by growing middle classes and strong economic performance, as well as advances in technology, improved healthcare, infrastructural developments and education, these countries are experiencing their own business boom.

As these countries open up to foreign investment, companies have access to new capital. This gives businesses of all sizes the opportunity to grow in emerging markets. This is an appealing opportunity for smaller companies that have less chance of success in the more competitive, developed economies. Smaller businesses have the opportunity to become part of a developing economy, to provide consumers with new services on a more personal level and to work with local companies to expand alongside the country's economic infrastructure.

And what's really exciting is that by setting up in the emerging markets, instead of the United States or central Europe, companies can be the first of their kind to enter a country. This presents an opportunity to become a recognized brand in a growing market, cementing yourself in an economy that is only just getting started.

Having expanded a startup into over 30 emerging markets across the world, I would say from experience that the key to development is research and strategy. Whilst there are challenges that must be taken into account when strategizing a move into an emerging country, there are so many huge opportunities being created. As Internet penetration in these countries grows, and their economies become more open, we are only going to see more opportunities emerge.

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