Emerging markets are top choices

Dubai: About 71 per cent of business leaders in the Middle East look to other emerging markets for growth lessons and best practice, highlighting the growing influence of developing markets, rather than developed markets, in the global economy, according to a new report.

The report, carried out by independent research company Vanson Bourne in collaboration with Tata Communications Limted (TCL), surveyed 1,600 business leaders from ten emerging and developed markets.

According to the survey, companies in the region expect to increase their investment in emerging markets, including the Middle East, by 34 per cent in the next year.

"The survey showed that China was rated the strongest market, at 51 per cent, that offered [the] most opportunity for rapid growth, followed by India at 41 per cent and Brazil at 26 per cent," Vinod Kumar, managing director and chief executive officer of Tata Communications, said at the Third Tata Global Media and Analyst Summit in Dubai.

"The UAE was selected by 11 per cent of respondents and Egypt by 4 per cent."

He said there were only 20 Fortune companies in emerging markets in 2005, but now there are 100 companies.

The report said: "Respondents from the Middle East identified India as offering the most growth opportunity to them, with 32 per cent of the survey selecting this option. 29 per cent of respondents from the region chose the UAE as offering most growth. 18 per cent of Middle East business leaders believe Turkey offers rapid growth opportunities with 10 per cent choosing Egypt as the market with most potential."

Kumar said that many companies have already have a presence in emerging markets and are keen to focus more on these markets as they offered more growth opportunities than the United States and Europe.

"Eighty-seven per cent of business leaders from both developed and emerging markets [China, India, South Africa, France, Germany, Hong Kong, Singapore, the Middle East, the US and the UK] are actively engaging in emerging markets, despite 56 per cent acknowledging that they associate emerging markets with political instability," he said.

"Thirty-seven per cent of companies in the Middle East are currently looking at operating in emerging markets, compared with 61 per cent of Chinese and Indian companies."

Furthermore, when asked which of the FTSE Emerging Market Index countries they considered to be most progressive, 42 per cent of respondents from China, India, South Africa and the Middle East selected China.

This compares with the 27 per cent who selected India and just 1 per cent who indicated that they believed Russia to be most progressive. Five per cent of the survey believes the UAE to be most progressive, with 20 per cent of Middle East respondents selecting it.

Popular choice

Kumar said the most popular choice of a target market expansion is China and many organisations are looking at expanding there.

Srinivasa Addepalli, senior vice-president of Corporate Strategy and Marketing at TCL, said emerging markets are not without their challenges.

While established markets have infrastructure in place, all too often emerging markets do not.

Less than 30 per cent of the world was online by the end of 2011, according to International Telecommunication Union (ITU), with developing countries paying over the odds for their connectivity. This will only change when the necessary infrastructure is in place.