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Local Distribution Key to Success in Emerging Markets

One out of every four manufacturing and industrial companies is investing in emerging markets for 2012-2017 in order to gain a foothold in future large markets, according to research by Global Intelligence Alliance (GIA). The reason is clear; manufacturers say they expect about 40% of their global revenues to come from emerging markets by 2017, according to GIA’s Business Perspectives on Emerging Markets 2012-2017 Report (Manufacturing & Industrial Results).

Yet the majority stumbles when they enter emerging markets, the report adds. Nine out of ten respondents in the research say they would like to have planned and executed their emerging markets strategy differently.

In April-May 2012, GIA conducted an online survey amongst business managers at 80 manufacturing and industrial companies. Highlights of their findings include:

• Some of the most important key success factors listed by manufacturers were the [local] distribution and access to customers (41%), localization of products and services (26%) and adapting to local culture (25%).

• Over the next few years to 2017, manufacturers will continue their focus on BRIC markets, with equal emphasis on Brazil, China and India (27%) and with Russia lagging behind as the fourth highest ranking target emerging market at 19 percent.

• South Africa, Indonesia, Turkey, and Vietnam follow the BRIC countries as secondary emerging markets that manufacturers will focus their investment efforts on.

• As for the top threats in emerging markets to 2017, manufacturers listed competition with local players (38%) as number one, followed by competition by foreign players (33%).

• About 40% of those surveyed said that decisions on emerging markets in their organizations were delayed due to lack of information; while over 70% of the respondents doubt the accuracy and completeness of their emerging markets intelligence.

"Emerging markets are more complex than ever,” said Pete Read, head of strategic analysis and advisory for Global Intelligence Alliance. “Indeed, there are an increasing number of metrics to consider as the manufacturing industry’s complexity grows. In the future, manufacturing networks won’t be geographically divided into high tech versus low cost, but will reflect far greater diversity. In short, global manufacturers may need to alter their business models—and their strategic approaches to supply chain management, market intelligence and location selection.”

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