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guide to emerging markets

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guide to emerging marketsThe business outlook, opportunities and obstacles

Edited by aidan manktelow


THE ECONOMIST IN ASSOCIATION WITH PROFILE BOOKS LTD

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Contributors and sources vii Introduction 1

Part 1 Opportunities and challenges in emerging markets1 The economy: megatrends 152 Identifying market opportunities 223 Governments and their policies 334 Managing talent and the workforce 425 Infrastructure and property 516 Supply, distribution and marketing 587 Innovation and R&D 708 Ethics and competition 769 Entering the market 86

10 Rebalancing and transformation 93

Part 2 Regional and country profilesThe BRICs 107China 110India 115Brazil 120Russia 125

Emerging Asia 130Bangladesh 132Indonesia 135Malaysia 138Pakistan 141

Contents


The Philippines 144South Korea 147Thailand 150Vietnam 153

Emerging Europe 156Poland 159Turkey 162Ukraine 165

Middle East and North Africa 168Algeria 172Egypt 175Iran 179Iraq 182Saudi Arabia 185

Africa 188Kenya 191Nigeria 194South Africa 197

Latin America 200Argentina 202Chile 205Colombia 208Mexico 211Peru 214Venezuela 217

Index 221


Contributors and sources

Aidan Manktelow, director Europe, the Economist Corporate Network, edited the book. He also wrote the sections on economic megatrends, identifying market opportunities, governments and their policies, the manufacturing revolution, competition, rebalancing and transformation, management hubs, Russia, Poland, Turkey, Ukraine, South Korea and Algeria, and the emerging Europe overview.

Frida Wallin, formerly associate director, Asia, the Economist Corporate Network, edited parts of the book.

Rodrigo Aguilero, editor/economist, the Economist Intelligence Unit, wrote the sections on Chile and Mexico.

Vanessa Barchfield, formerly research editor, EMEA, the Economist Corporate Network, wrote the sections on talent management and ethics, and conducted interviews.

Federico Barriga, editor/economist, the Economist Intelligence Unit, wrote the sections on Colombia and Venezuela.

Edward Bell, editor/economist, the Economist Intelligence Unit, wrote the section on Iran.

Robin Bew, managing director and chief economist, the Economist Intelligence Unit, wrote the introduction.


viii guide To emerging markeTs

Mary Boyd, director, Shanghai, the Economist Corporate Network, wrote the sections on China.

Toby Iles, regional editor/economist, Middle East and North Africa, the Economist Intelligence Unit, wrote the section on Iraq.

William Lee, editor/economist, the Economist Intelligence Unit, wrote the section on Peru.

Irene Mia, regional director, Latin America, the Economist Intelligence Unit, wrote the section on emerging-market cities and the Latin America overview.

Philip McCrum, editorial director, EMEA, the Economist Corporate Network, wrote the sections on Egypt and Saudi Arabia and wrote the Middle East and North Africa overview.

Ross O’Brien, director, Hong Kong, the Economist Corporate Network, wrote about competition, rebalancing and Indonesia.

Katharine Pulvermacher, director, Africa, the Economist Corporate Network, wrote the sections on corporate sustainability and responsibility (CSR), distribution, Kenya, Nigeria and South Africa.

Pamela Qiu, associate director, South-East Asia, the Economist Corporate Network, wrote the sections on Malaysia, the Philippines and Thailand.

Sujatha Santhanakrishnan, editor/economist, the Economist Intelligence Unit, wrote the sections on Bangladesh and Pakistan.

Pat Thaker, regional director, Africa, the Economist Intelligence Unit, wrote the Africa overview.

Robert Ward, country publishing director, the Economist Intelligence Unit, wrote the BRICs overview.


Contributors and sources ix

Justin Wood, director, South-East Asia, the Economist Corporate Network, wrote the sections on India and Vietnam and the Asia overview.

Robert Wood, senior editor/economist, the Economist Intelligence Unit, wrote the section on Brazil.

Coralie Zacchino, editor, Wire Services, the Economist Intelligence Unit, wrote the section on Argentina.

This book drew on research available in various parts of the Economist Group, including The Economist newspaper, the Economist Corporate Network, the Economist Intelligence Unit and Economist Education. Insights were also drawn from interviews conducted with senior business leaders operating in emerging markets, and from discussions with Delia Meth-Cohn, formerly editorial director, CEMEA, the Economist Corporate Network, and Lourdes Casanova, senior lecturer at Cornell University.

The Economist Corporate Network (www.corporatenetwork.com) is the Economist Group’s business intelligence, briefing and networking service for senior executives of companies operating in emerging markets. It works closely with the CEOs and regional managers of over 400 companies such as Coca-Cola, IBM, DuPont and Dow Chemical.

Any comments about this book can be sent to Aidan Manktelow at: [email protected]


Introduction: the big shift and what it means for business

Honeywell inTernaTional, a multinational conglomerate, has doubled the size of its non-US business in the past ten years, driven by growth in emerging markets. Shane Tedjarati, president, global high-growth regions, says that the company’s business in China and India has been growing by over 20% annually since 2004. He points to the huge opportunities:

There is massive urbanisation happening in high-growth markets, with very few exceptions. And these markets also require infrastructure. So there’s huge spending on airports, seaports, on roads …

There is also huge growth in consumer spending, which extends well beyond the largest cities and often involves very different levels of purchasing power compared with consumers in developed economies:

The story of China is in tier two, three and four cities. It’s in the mid-market, but a different mid-market than in the US. The Chinese mid-market is about $5,000 GDP per head.

Honeywell’s success in emerging markets over that period came by radically changing its approach. Until 2004, it was basically a West-to-East company:

One of our products could be slightly modified and sold in China … But that model gets old very quickly. In 2004 we decided to take a fresh look at the market. We started by saying we were putting a lot more into understanding what the market is. So it was marketing,


2 guide To emerging markeTs

R&D and putting a sales force together that really understood what kind of products our customers want, what features and at what cost. And doing that with local speed. Because these markets are fast … and dynamic.

Manufacturing then followed.The approach continues to develop and to lead to radical

transformations in how Honeywell operates:

Our strategy, which we call East-for-East – design and innovate in China for China and in India for India – has now evolved and we’ve become East-to-West, because the products we’re developing here will be needed elsewhere in the world. That strategy has worked very well.

This has required a major change of mentality, including empowering local operations. Tedjarati speaks of creating the spirit of an entrepreneurial Chinese company inside a large multinational company. Honeywell now expects “high-growth markets” to drive over 55% of its growth in the coming years.

Honeywell’s experience reflects the rapid transformation under way in emerging markets. Companies cannot afford to ignore these countries, which will be the main source of global growth in the coming decades. But it also suggests that in order to succeed there Western multinationals will have to get used to doing business in different ways – and will fundamentally change themselves in the process.

Common characteristicsThe very phrase “emerging markets” courts controversy. As a label, it lacks precision – being applied indiscriminately to countries which compete aggressively on the world stage, along with those trapped in subsistence agriculture or commodity extraction. More focused monikers, such as frontier markets (for those viewed as less developed and more challenging for business) and newly industrialising (for those bursting onto the global economic stage), may be more helpful.

Some companies, like Honeywell, are switching to growth markets


Introduction: the big shift and what it means for business 3

or high-growth markets. But these terms are insufficiently nuanced as well – do growth markets always grow, and are companies really writing off growth in the developed world completely?

Emerging markets probably retain a greater hold among business leaders or commentators, so for the purposes of this book we acknowledge the difficulties but use the phrase anyway, as a means of describing collectively the markets of Asia, Latin America, eastern Europe, the Middle East and Africa which are of most interest to business leaders as current or prospective sources of opportunity.

In any case, some characteristics do bind this group of countries together. All have incomes per head substantially lower than the US, western Europe and Japan. All are less efficient – productivity is markedly lower than in the world’s richest nations. But in these seemingly negative traits lies their promise. If inefficiency can be reduced, if workers can become more productive, if firms can climb up the value chain, then living standards can rise dramatically. The promise, alas, is not always realised. There are many examples of countries that are barely better off today than they were 20 or 30 years ago. Putting in place the right policies, setting up the right political and legal institutions and creating the conditions for growth, too often elude countries.

But where countries are able to see best practice and implement a version of it at home, the opportunity for business success beckons. Because rapid growth for these countries means overcoming major challenges – and in the challenges lie opportunities for companies. These are challenges of affordability, of meeting infrastructure needs, of coming up with new and innovative products to satisfy local tastes and customs. And there are the challenges of keeping up with rapid social and economic change. The CEO of a US automotive components supplier says that in China, where his firm supplies a large local manufacturer:

The growth rates are just incredible … The challenge of staying on top of the demand is certainly unlike any other country we have ever worked in.

Of course, even where countries get it right and experience rapid growth and rising living standards, the economic, political and



business environments hardly match up to those in the advanced economies. Growth may be fast, but is often extraordinarily volatile, with regular crises knocking the country off course. Political systems are generally immature – corruption is often rife, bureaucrats are ineffective and policy decisions are driven by narrow special interests. And businesses often compete on a highly skewed playing field. For foreign firms hoping to profit from emerging markets, the opportunities resulting from rapid growth come with the complexities and risks of a challenging and sometimes capricious business environment. Rewards, as ever, are balanced by risks.

Historical rebalancing

The countries which are currently described as emerging were once dominant

world powers. According to research by Angus Maddison, who was a professor

of economics at the University of Groningen, China alone accounted for

approximately 25% of the global economy from about 1500 until 1800, with

India only slightly smaller. The US, now the largest economy in the world, was

scarcely economically active at that time. But in the late 1700s Britain, followed

by western Europe and then America, started to industrialise. The introduction

of machinery, the use of steam power and the expansion of factories allowed

productivity to improve. In the British textile sector, which industrialised earliest,

the gains are estimated to have been a 20-fold improvement in output per

person over the 100 years from 1700 to 1800, with some activities seeing

even greater advances. Although the impact on the economy as a whole

was smaller (since many other important sectors, such as agriculture, did

not experience the same degree of mechanisation), this was sufficient to

put western Europe and America on a growth trajectory which led to their

domination of the global economy. Their technological lead meant that the gap

in living standards between Western industrialisers and other nations widened

dramatically.

Why did the emerging markets lag behind for so long? While it is a gross

simplification to point to a single cause, many non-industrialised markets

followed economic policies which cut them off from world markets and best

practices (often not by choice – the impact of colonialism was also a major

factor). Some used tariffs to keep imports out, in the hope that this would



stimulate domestic industry to rise up and meet local demand. Often it did,

but without the spur of competition such industries were weak and inefficient.

Best practices from other countries – in everything from effective policymaking

to institutional design, from application of the rule of law to corporate

management techniques – were resolutely ignored as local leaders pursued

narrow agendas often more concerned with retaining power than delivering

growth. As a result, crucial infrastructure was not built and populations were left

uneducated. Firms were not pitted against the best and therefore lacked the

imperative to improve. Output per person languished and, as a result, countries

remained poor.

Yet a 200-year period of Western dominance may be drawing to a close.

Emerging markets are starting to narrow the gap with the West. Over the past

20 years, average growth in the emerging world has outstripped that of the

developed markets by over three percentage points per year – even more at

the height of the boom that preceded the 2008–09 crisis and while developed

economies were laid low thereafter.

Catch-up between the emerging markets and the West has started because,

one by one, countries have moved away from inward-looking strategies and

FIG 1.1 The cost of the crisisDifference, in % terms, of real output per head before the crisis started in 2007 and in 2012

Source: The Economist Intelligence Unit

2001 2003 2005 2007 2009 2011 2013

China

India

Saudi Arabia

Brazil

Russia

Germany

Japan

US

France

UK

Italy

–10 0 10 20 30 40 50 60



begun to embrace global competition and adopt best practices. Perhaps the

biggest and most well-known change of heart was in China, where Deng

Xiaoping approved a series of economic reforms from 1978 onwards. The

country was opened to foreign trade and investment, markets for products

and services were opened to private businesses, some state-owned industries

were privatised, and foreign technology and business practices were adopted.

India followed suit with an economic liberalisation of its own in 1991. South-

East Asia famously embraced foreign trade and became the region of both the

Asian Tigers (South Korea, Hong Kong, Singapore and Taiwan) and other ASEAN

growth stars such as Indonesia, Thailand and Malaysia. Latin America gradually

liberalised too, with Brazil moving away from its policy of global economic

disengagement in the late 1960s and Argentina reforming from the 1980s.

In central and eastern Europe, reforms had to wait until the fall of the Soviet

empire from 1989. In much of the former Soviet Union and Africa liberalising

reforms remain patchy even to this day.The pay-off from reform has been tremendous. In China, for example,

income per head has risen from just 2% of US levels (measured using GDP per head at purchasing-power parity) in 1981 to 18% in 2012. The gap is expected to close further in the years ahead: by 2030 Chinese incomes will be running at about a third of US levels. Other countries have done even better – some of the Asian Tigers can truly be said to have emerged, with incomes per head approaching US levels. While not all emerging regions have benefited to the same extent, there has been a widespread acceleration in growth across much of the emerging world over the past decade, as governments have adopted more market-oriented policies.

Key trendsWhat of the future? Here are a few pointers of what to look for.

catch-up will continue, but more slowlyIt seems likely, although not inevitable, that many emerging markets will continue on the road of reform, and that incomes will rise more rapidly than in the West. But the pace of catch-up may still slow, in part because the global financial crisis has been such a drag on the advanced economies although it is reasonable to assume that they



will recover at least some of their vim in the years ahead. Catch-up also becomes harder over time. Once the most effective policies and management techniques have been adopted in the emerging world, finding new ways to narrow the productivity gap becomes harder and growth therefore slower. And in countries such as China and Russia, demographic changes will further act as a drag on growth as their populations age. Nevertheless, even with a slower pace of catch-up, the emerging world will be where the growth is for business in the decades to come.

the biggest economies will not be the richestChina, India and other high-population countries are moving rapidly up the global economy league table. China is forecast to overtake the US by 2020. But China has five times as many people as the US, and its citizens will be considerably poorer on average than their Western counterparts. This means that companies will not just be able to farm out products developed with more affluent Western consumers in mind – pricing will be key.

FIG 1.2 Collectively rich, individually poor

Source: The Economist Intelligence Unit

2001 2003 2005 2007 2009 2011 2013

USJapan

Germany

ChinaIndia

Brazil

0

10,000

20,000

30,000

GDP, 2025 US$ trn

USJapan

Germany

ChinaIndia

Brazil

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

90,000

GDP per head, 2025, US$



no convergence of politicsIt was once fashionable to predict that, as emerging economies liberalised their business environment and became wealthier, they would also become more socially and politically liberal. While it is true that new-found wealth does seem to bring popular demands for social freedom, there is little evidence that emerging-world governments are keen to respond to this. Companies will therefore need to get used to a world in which the largest economies are run according to very different rules and norms from those in the West.

increased turbulenceEmerging markets are, by definition, immature economies. Often they have immature politics too. Economic and political crises are common – few countries that have embarked on the road to catch-up have proceeded smoothly (think of the 1997 Asian crisis, the maxi-devaluations in Argentina, Brazil and Russia, and the uprisings of the Arab spring). As emerging markets become more dominant in the global economy, such crises will continue – even though emerging markets’ resilience has increased and the 2008–09 crisis showed that Western countries are not immune from boom and bust either. But as emerging markets account for an ever greater share of global demand and spending, emerging-market crises will hurt more. So companies will need strategies that can contain volatility.

reversalsJust because emerging markets have the potential to catch up with the rich world, this does not mean that they will. In many countries the basic ingredients necessary to allow productivity to rise are absent: economies remain highly regulated, or are run for the benefit of their leaders, or are socially fractious, or have non-economic priorities such as territorial or tribal ambitions. Some countries will not join the catch-up party. Others will leave the party halfway through. Companies will need to be able to identify those countries with the best chances of sustained growth.



intensified competitionThe competition for companies is increasing and changing. This is partly because any multinational will find that its global peers are also trying hard to increase their share in emerging markets. It is also because emerging-market companies are rapidly becoming much more serious competitors. They may enjoy advantages, including better cultural understanding, more appropriate business models, better relationships with government, entrenched protectionism and possibly fewer restrictions on how they do business. Some 20% of the Fortune Global 500 are already emerging-market companies – Chinese, Indian, Brazilian, Russian, South Korean and Turkish firms all feature. They will increasingly challenge Western firms not just in their home markets but globally.

rich-world angstThis is a book about emerging markets. But Western attitudes towards the rise of the emerging world will be central to the way in which individuals and firms engage in the fast-growing countries. As the status and weight of the West decline, it is inevitable that worries will increase about a loss of influence, a loss of jobs, pressure on pay, increased demand for raw materials, the environment and the geostrategic intentions of the newly powerful countries. Business engagement in the emerging world will be complicated by rich-world angst about the global rebalancing.

Corporate rebalancingAttitudes of Western businesses to emerging markets have also evolved. In the 1990s and to some extent in the past decade, the rise in business investment in emerging markets was driven by cost cutting and outsourcing, still primarily directed at catering for final demand in the developed world. But as consumption in the emerging world has surged, companies have come to see these as key markets in their own right. A 2010 report by the Economist Intelligence Unit (EIU) showed that three-quarters of companies surveyed see emerging markets as a source of new business growth. Only 23% were looking for a low-cost manufacturing base.



Indeed, the rise of emerging markets touches every sector. A list of major investment successes in Turkey by the country’s investment agency includes big names across a range of industries: fast-moving consumer goods (Coca-Cola, Nestlé, Unilever), clothing (Mango), consumer electronics (Bosch, GE), engineering (Alstom, Schneider Electric, Siemens), automotive (Ford, Hyundai, Pirelli, Toyota), energy (Shell), chemicals (BASF), pharmaceuticals (Pfizer), agribusiness (Cargill), telecoms (Ericsson), IT (Intel, Microsoft), logistics (DHL) and finance (BNP Paribas, Citi, HSBC). Nor is the big shift just a story for FTSE 500 companies – medium-sized and even small companies are getting in on the act too.

The rise of emerging countries as markets in their own right has meant a shift in priorities. Many multinational companies initially tried to tap the demand in these countries by selling unadapted (and often substandard) Western products. But as emerging markets have become a more important part of global strategy, and as multinationals have faced growing competition in these markets both from their peers and from local firms, companies are coming to accept that emerging markets require dedicated products and innovations. Multinationals have also come to understand the need to become more local. This means not just establishing a local presence, increasingly staffed by local talent, but empowering it to take decisions so that local needs can be met and companies can keep pace with the rapid pace of change.

But these shifts still have a long way to go. Companies are hindered by the difficulty of grappling with the complexity of the emerging world, by resource constraints and by corporate rigidity. The changes required for success are far-reaching, requiring radical transformations in company organisation and even corporate culture. Ultimately, emerging countries need to become just as much home markets as the US, Japan or western Europe – companies need to become truly globalised.

In conclusion, the balance of the global economy is shifting. The process will be bumpy and potentially unsettling. But it is also inevitable, and therefore needs to be accommodated by anyone hoping to prosper in the new world order that will result, even if it requires companies to undertake major changes.



A guide to emerging marketsThis book gives some pointers to how business leaders can cope with the changes, identify where the opportunities lie, manage and mitigate the inevitable risks, and compete successfully.

It is divided into two parts. Part 1 looks at the main opportunities and challenges. Chapter 1 examines the trends driving the growth of emerging markets and gives a view on how emerging markets will fare in the future. Chapter 2 looks at the extent to which emerging markets share similar characteristics in terms of business opportunities and highlights the role of market research in identifying where the opportunities lie. Subsequent chapters discuss the major challenges for business: dealing with governments and their policies; managing talent and the workforce; infrastructure and property; supply, distribution and marketing; innovation and research and development; ethics and competition; market entry; and corporate rebalancing and transformation.

Part 2 is a guide to the leading emerging markets. It starts with a chapter on the BRICs (Brazil, Russia, India and China). They may be old news, but they still account for a huge chunk of the emerging-markets growth story, offer vast untapped opportunities – especially beyond the main cities – and are crucial for companies looking to rebalance towards the emerging world. Subsequent sections cover the principal markets in emerging Asia, emerging Europe, the Middle East and North Africa, Africa and Latin America.

In general, the selection of countries is based on their size in terms of population, close to 30m or above, and GDP, over $100 billion in 2012. There are a couple of exceptions. Chile should not qualify in terms of population, but it is included because it completes the round-up of the “big seven” economies in Latin America. Kenya should not make it by size of economy, but as sub-Saharan Africa is currently a focus for many companies, including it provides more of a flavour of the opportunities there – and it is one of the leading markets attracting interest. The selection criteria mean that countries such as Ethiopia and Myanmar, which have large populations but whose poverty means their economies are still relatively small, do not make an appearance. Some of these countries will become



important markets in time, and more adventurous companies are already expanding there.

Broadly, though, the countries selected are the ones that are likely to be of most interest to companies based on population and market size. This does not mean that they are necessarily bankers for growth. As the country sections make clear, some of them are considerably less attractive once dodgy business environments and questionable economic prospects are factored in. Including countries such as Venezuela and Iran does, though, have the advantage of giving a fuller picture of the diversity of the emerging world.


AABB 93Abidjan, Côte d’Ivoire 81Abu Dhabi 171Abuja, Nigeria 194Accenture 116Accra, Ghana 102Adidas 90, 157Afghanistan 141, 143Africa

overview 188–190banking sector 189bureaucracy and regulation 188consumer market 190corruption 188economic growth 188, 189education 43electricity access 189foreign investment 189GDP 188information and

communications technology (ICT) 188, 189

infrastructure 189liberalising reforms 6mobile telephony 189–190multinational companies in 190political risk 188population growth 188, 190

retail sector 189road and rail networks 65trade with China 99urbanisation 188

Ahmadinejad, Mahmoud 179, 181Air Liquide 93Akzo Nobel 100Al Saud family 185Al Shabaab terrorists 193Algeria 172–174

bureaucracy 172civil war (1991–2002) 172, 175doing business 173–174economic growth 172economic indicators 173foreign direct investment 172GDP per head 172historical snapshot 172hostility to foreign interference

172Islamic militants 174market dynamics 172military influence 173–174oil and gas 172poverty 172private sector 173security services 174underinvestment 172unemployment 172

Index



Alibaba 23Alstrom 10American Tower 38Amil 121Andes mining projects 201Angola 189Anti-Bribery Act (UK) 76, 78Apple 60–61Aquino, Benigno, III 144Arab spring 8, 34, 169, 172Arap Moi, Daniel 191Argentina 202–204

agriculture 202boom and bust 202competition policy 204crony capitalism 204debt default (2001) 202, 204democracy 202doing business 202–204domestic investment 204economic growth 202economic indicators 203economic liberalisation 202,

204economic reform (1980s) 6foreign investment 204GDP per head 202historical snapshot 202inflation 202international dispute settlement

203labour force 202manufacturing 202market dynamics 202nationalisation 203natural resources 202oil and gas 202population 202privatisations 204protectionism 203–204

tax system 204volatility 202

Arroyo, Gloria Macapagal 144ASEAN (Association of South-east

Asian nations) 6, 112 Asia

overview 130–131diversity 131economic growth 131emerging-market cities 18free-trade agreement with

Colombia 208global revenues 93globalisation of service

industries 131industrialising and urbanising

130manufacturing 130middle class 24multinationals in 130population 130private consumption 131

Asian crisis (1997–98) 8, 135, 146, 147

Asian Tigers 6AstraZeneca 93AT Kearney Global Services

Location Index 140Australia, and trade quotas 41Avon 28Azerbaijan 29, 158

BBaghdad 183Baltic states 157Banco Nacional de

Desenvolvimento Econômico e Social (BNDES) 122

Bangalore: GE health-care division 72


Index 223

Bangladesh 61, 132–134, 152coal and gas reserves 132–133corruption 134doing business 134economic growth 132economic indicators 133export processing zones 134GDP 132historical snapshot 132macroeconomic stability 132market dynamics 132–134population growth 132poverty 132private sector 134public-private partnerships

133and reverse innovation 71telecommunications 132urbanisation 132

base effects 29BASF 10, 59, 88Basra, Iraq 183Behrens, Alfredo 44, 46Beijing Olympics (2008) 15Belarus 158Bhalla, Surjit 24Bharatiya Janata Party (BJP) 115Bhumibol Adulyadej, King 150Bhutto, Benazir 142Big Cola 84Blanco, Edgar 65BNP Paribas 10Bogotá, Colombia 18, 102Boko Haram 194boom and bust 8, 156, 159, 160,

162, 202Booz & Company 72Bosch 10Bosideng 112Boston Consulting Group 62

Bouteflika, President Abdelaziz 172, 174

BP 34, 127BPO see business process

outsourcing Brasilia 102Brazil 29, 120–124

BNDES loans 122–123Congress’s multi-party alliances

36corruption 77“custo Brasil” 121doing business 121–122economic indicators 123English skills lacking in 43–44foreign direct investment 200GDP 108, 120, 121GE R&D centre 72global economic

disengagement (1960s) 6growth spurt (2004–10) 121historical snapshot 120hyperinflation (1980s-90s) 108,

120inflation targeting 121–122infrastructure 120–121, 122interest in Africa’s non-oil

sectors 189labour laws 48, 49large-scale protests (2013) 201market dynamics 120–121market potential 124maxi-devaluation 8middle class 107, 120oil production 120, 121, 122protectionism 123–124public-private partnerships 122R&D 200retail sector 65Summer Olympics (2016) 120



underinvestment 108World Cup (2014) 120

“bread and dignity” 169, 175bribery 76–79BRICs (Brazil, Russia, India and

China) 22overview 107–109China as the cornerstone 107,

108concept of 15, 17–18need to reform internally 107,

109offering untapped

opportunities 11organising round cities 100outbound investors 109private consumption 20, 22rise of 107societal transformation of 107

Britainindustrialisation 4infrastructure spending 21

brownfield 89build-operate-transfer 162Bulgaria 83, 156, 157Burberry 23business process outsourcing

(BPO) 145–146BYD 70

CCambodia 61, 152Cameroon: transport problems 51Camisea gas project 214Canada: North American Free

Trade Agreement (NAFTA) 211Cape Town, South Africa 197Cargill 10Caribbean region 201Caterpillar 67

Caucasus 158Cayman Islands 37Central Asia 158Central Bank of Iraq 183central and eastern Europe (CEE)

163boom and bust in 159divergence between states 157nearshoring 62–63over-reliant on foreign capital

inflows 156Centre for India and Global

Business, Judge Business School, University of Cambridge 73

Chad 39chaebol (industrial

conglomerates) 147Chambers, John 95Chávez, Hugo 217, 219chavismo 217, 219Chennai, India 52Chery 112Chevron 39Chile 205–207

competition 207doing business 207dynamic domestic economy

207earthquake (2010) 205economic growth 205, 207economic indicators 206energy costs 205–206financial sector 207free-trade agreements 205GDP 207high-value-added industries

206historical snapshot 205labour market 207


Index 225

market dynamics 205–206middle class 205population 205service industries 205skill shortages 207

China 110–113, 20012th and latest five-year plan

(2011–15) 108, 110, 111and Africa 99, 189automation versus low-cost

labour 61automotive sales 20Coca-Cola in 91communications 113cornerstone of BRIC economies

107, 108corruption 77, 113demographic changes 7, 111, 113doing business 112–113economic growth 3, 7, 34, 108–

109, 111, 121economic indicators 114economic reforms (from 1978) 6electricity capacity 54exchange rate 31exports 111financial sector 113forecast to overtake the US 7, 15,

107, 130foreign-currency reserves 110free-trade agreement with Chile

205GDP 29, 109, 110–111, 113GDP per head 115global investment 112government effectiveness 35historical snapshot 110historically a dominant world

power 4Honeywell in 1–2, 85

income 6, 23, 47, 111“indigenous innovation” policy

113infrastructure 21, 63injury compensation 49joint ventures 88labour unrest 61, 112–113land prices 56market dynamics 110–112mergers and acquisitions 112mid-market 1middle class 111–112new “workshop of the world”

61“open door” policy 110and Oreo 68–69overtakes Japan 107, 110, 130per-head disposable income in

urban China 19population 110poverty 107, 110power dynamics of

Communist Party 36private consumption in 30productivity 17R&D in 72, 74regional structures 100retail sector 65rural economy 113SEZs 40soft skills go untaught 43state-owned enterprises 110, 112supply chains 58trade litigation 112urbanisation 26, 100

China-ASEAN trade agreement (2010) 112

China-Taiwan trade agreement (2010) 112

Chotukool 70



Cisco 95, 103Citi 10Civic Platform (PO) (Poland) 159climate change 17clustering countries 99Coca-Cola 10, 65, 67–68, 72, 82,

91collectivisation 110Colombia 208–210

business environment 208competitiveness 209corruption 210doing business 210“Dutch disease” 209economic growth 208economic indicators 209education 210free-trade agreements 208historical snapshot 208independent institutions 208infrastructure 210internal conflict 208, 210market dynamics 208–209natural resources 208–209population 208poverty 210unemployment 210urbanisation 208

colonialism 4Commonwealth of Independent

States (CIS) 102, 156–158Communist Party of Vietnam

(CPV) 153competitiveness 31, 108, 120, 152,

202, 209consumer spending 1, 131, 169, 177,

193, 200corporate responsibility see under

ethics and competitioncorporate social investment 80

corruption see under ethics and competition and under individual countries

creating shared value (CSV) 80, 81credit availability 29–30credit growth 30Credit Suisse 21crony capitalism 135, 204currency devaluation 30, 117, 125,

153Cyprus 128Czech Republic 17, 22, 156, 157

DDakar, Senegal 102Dallas, Texas: economic growth 18decentralisation 73, 96–97, 100decollectivisation 110Deloitte 87Democratic Republic of the

Congo (DRC) 189Deng Xiaoping 6, 110developed markets

effect of the crisis on 15export markets 15private consumption levels 20

DHL 10disabled workers 48distribution see under supply,

distribution and marketing distribution centres 52Dow 189Dow Southern Africa programme

80–81Dubai 102, 170–171Dupont 157“Dutch disease” 108, 209, 217

EEast African Community 193


Index 227

eastern Europelack of resilence 15rapid rates of credit growth 30

eBay 23Economist, The 31, 35, 51Economist Corporate Network

(ECN) Asia 93, 98, 101, 102, 130Asian Business Outlook Survey

(2012) 136Economist Intelligence Unit (EIU)

9, 15, 18, 20, 84, 97, 126, 130, 135, 138, 147, 190, 200Global City Competitiveness

Index 19Egypt 168, 175–178

budget deficit 176consumer spending 177coup (2013) 175disparities in wealth 176doing business 176–178economic indicators 177foreign direct investment 176GDP 175, 176GDP per head 176historical snapshot 175market dynamics 175–176Muslim Brotherhood 175population 175relative poverty 176revolution (2011) 99, 175, 176, 177services sector 175structural reform 176tourism 176transport problems 52unemployment 175–176violence in 176, 177–178

Eindhoven University of Technology 65

El Salvador 201Elfrink, Wim 95–96

ELN 210Emerging Europe, the Middle East

and Africa (EEMEA) 98, 99emerging-market cities 18–20emerging markets

ability to grow while developed world in crisis 16

business investment in 9common characteristics 2–4historical rebalancing 4–6investment opportunity 20key trends 6–8

corporate rebalancing 9increased turbulence 8intensified competition 9politics 8reversals 8rich-world angst 9

pace of growth 15, 20, 22private consumption levels

20–21employer branding 45entering the market 86–92

acquisitions 88–89appointed distributors 90brownfield 89franchises 90–91greenfield 89–90growth goals 91–92joint ventures 87–88modes of entry 86

Ericsson 10Estrada, President 144ethics and competition 76–85

bribery and corruption 76–79tackling the problem 78–79

corporate responsibility 79–82failure of traditional CSR

79–80making CSR work 80–82



Ethiopia 11, 189, 193euro zone 156–159Europe

overview 156–158competition 156divergence between northern

and southern Europe 157fragmentation 157GDP 156growth rates 157hardest hit by the global

financial crisis 156industrialisation of western

Europe 4investment in Africa 189market share 156mature economies 156R&D spending 72

Europe, the Middle East and Africa (EMEA) 101, 102–103, 157, 161

European Union (EU) 159, 164, 167, 205, 208

export processing zones (EPZs) 134

FFacebook 136Falun Gong sect 35FARC 210Fashola, Babatunde 195fast-moving consumer goods

(FMCG) 127, 128FAW Group 60FIA business school, São Paulo

44financial crisis (2008–09) 5, 6, 8,

15, 29, 125, 126, 132, 156, 165, 188, 201, 205, 208

Folli Follie 112Ford 10

foreign direct investment (FDI) 36, 84, 111, 117, 121, 128, 138, 149, 150, 172, 176, 200, 204

Fortune Global 500 9, 84franchises 90–91Fransoo, Jan 65FTSE 500 companies 10Fujimori, Alberto 214

GG20 nations 126GE 10, 71, 72, 98Geely 85General Motors 24, 189Ghana 189GlaxoSmithKline 98, 103Global City Competitiveness

Index 19global competitors 83–85Global Innovation 1000 report

(2010) 72Global Intelligence Alliance 64globalisation 61, 103, 131, 135Globalisation Centre East,

Bangalore, India 95Godfrey & Boyce Manufacturing 70Goldman Sachs 15, 54Goodyear 35, 90Google 74government policies 33–41

government effectiveness 34–36investment incentives and SEZs

40the legal and regulatory climate

37–38local sourcing requirements 40political culture 36political stability 34quality-certification procedures

41


Index 229

risk mitigation 37the tax system 38–39trade quotas 40–41

Greece 156greenfield 89–90gross domestic product (GDP)

28–29growth goals 91–92growth markets 2–3, 17, 44, 62, 94,

96, 98, 99, 102, 124, 157, 162, 164Gulf (Persian Gulf) 39, 43, 169, 170,

176, 185, 187Gulf of Mexico 212Gupta, Anil 42–43, 44, 71

hH&M 112Halliburton 77Hangzhou Wahaha 82high performers see under

managing talent and the workforce

high-growth marketsbribery in 77and BRICs 107density in Asia 98investment in 2, 3, 69, 156urbanisation in 1

Honduras 201Honeywell International 1–2, 83,

85, 103Hong Kong, an Asian Tigers 6,

101–102Horn of Africa 193HSBC 10Huawei 84Hub Power Co 142Humala, President Ollanta 214Hungary 17, 157Hussein, Saddam 182

Hutchison Essar 37hyperinflation 108, 120Hyundai 10, 147

IIBM 85, 98, 100, 116, 129, 189IKEA 25, 127IMD 152India 4, 115–119

balance-of-payments crisis (1991) 115

corruption 77, 108, 118, 137current-account deficit 117demographic profile 108distribution 67doing business 117economic growth 115economic indicators 118economic reforms (from 1991) 6education 43electricity capacity 54“frugal engineering” 116GDP 29, 116GDP per head 115“Hindu rate of growth” 108historical snapshot 115Honeywell’s success in 1, 2importance of family 27industrial sector 116–117inflation 108, 117infrastructure 21, 52, 117investment 115, 117, 119investment in Africa 189IT and business-services sector

116, 131land issue 55, 56, 118–119least developed of the BRICs

108macroeconomic problems 108market dynamics 115–117



microcredit industry 34–35middle class 115–116politics 115purchasing-power parity 30R&D spending 72regional structures 100and reverse innovation 71urbanisation 116

Indian National Congress 115Indonesia 61, 135–137

alternative technology 136an ASEAN growth star 6corruption 136, 137doing business 136–137economic growth 135economic indicators 137foreign investment in 135–136,

137historical snapshot 135language 49market dynamics 135–136natural resources 136“New Order” 135private consumption 135self-sufficiency 136trade quotas 41

industrialisation 4, 21, 123, 130, 146, 147

information and communications technology (ICT) 16, 188, 189

Infosys 70infrastructure

boom driven by emerging markets 21

crucial infrastructure not built 5high-growth markets 1investment in 19meeting needs 3a widespread problem in Africa

189

see also infrastructure and property and under individual countries

infrastructure and property 51–57land and real estate 55–57power supply 54telecommunications and

broadband 54–55transport services 51–53

injury compensation 49innovation and R&D 70–75

adapting products for local conditions 72

creating a global R&D function 73–74

frugal innovation 70–71intellectual property protection

74–75relocating R&D 72–73reverse innovation 71

Inovar-Auto 124Intel 10intellectual property 31, 74–75International Energy Agency 54International Monetary Fund

(IMF) 157, 176International Road Transport

Union 53International

Telecommunications Union (ITU) 132

International Tribunal for the Law of the Sea (ITLOS) 133

internet 51, 55, 80, 113, 154, 198Iran 12, 170, 179–181

1979 revolution 179bazaar merchants 181diversified economy 179doing business 180–181economic indicators 180


Index 231

economic liberalisation (late 1990s - early 2000s) 179

historical snapshot 179Islamic republic 179large, young population 179largest economy in MENA 185market dynamics 179negative real interest rates 179nuclear programme 179oil and gas sector 179, 181resistance to foreign investment

180sanctions 168, 179, 181state enterprises 181

Iraq 182–184banking sector 182bureaucracy 184corruption 184doing business 184economic growth 182economic indicators 183foreign investment 182–183GDP growth 183historical snapshot 182inflation 183infrastructure 184Kurdish population 182market dynamics 182–184oil economy 182, 183–184political instability 182, 184Saddam Hussein’s regime

toppled (2003) 182security risks 184Shia/Sunni Muslims 182telecommunications sector 182underinvestment 184US troops withdrawn (2011) 182violence in 182

Islamic Justice and Development Party (AKP) 162

Islamic Revolutionary Guards Corps 181

Istanbul 102–103, 163, 164

JJaguar 85Jamaica 108, 201Japan

automobile industry 58China overtakes 107, 110, 130free-trade agreement with Chile

205global revenue 93R&D spending 72success of Sony Walkman 84wealthiest country in Asia

(1960s) 144Johannesburg 102John Deere (tractor manufacturer)

73joint ventures 60, 87–88, 91Jonathan, President Goodluck 195

KKANU 191Kazakhstan 53, 158KBR 77Kenya 191–193

consumer spending 193corruption 193dependent on hydroelectricity

192doing business 192–193drought 193economic indicators 192financial services 193historical snapshot 191independence (1963) 191market dynamics 191middle class 191, 193



multi-party democracy (from 1991) 191

Nairobi as hub 191non-governmental

organisations (NGOs) 191oil and gas 191reliance on tax revenues 191reputation for innovation 193single-party rule 191telecommunications 55, 193terrorist incidents 193tourism 191violence 191, 193

Kenyatta, Jomo 191KFC 37, 91Khosla, Sanjay 68, 69Kia Motors 56, 57Kibaki, President Mwai 191King Abdullah University of

Science and Technology, Saudi Arabia 44

Kirchner, Cristina Fernández de 202–203, 204

Kirchner, Néstor 202Knowledge@Wharton 95Koc Holdings 163KPMG 97–98Kuala Lumpur 140Kurdish issue 163, 182Kurdistan 182, 183Kurdistan Regional Government

(KRG) 182

Llabour see managing talent and

the workforcelabour costs 47labour laws 48–49, 62, 118Lagos, Nigeria 18, 102, 194land and real estate 55–57

Land Rover 85Laos 152large strategic units 99–100largest economies, world’s ten

(2000 and 2020) 16Latin America

overview 200–201“big seven” economies 11,

205choice of hub 102competition 200consumer spending 200democracy 200drug-related crime 201economic growth 200foreign direct investment

200infrastructure 200liberalisation 6major spending programmes

201middle class 200natural resources 200poverty reduction 200reforms unpopular among

voters 201social unrest 201

Law and Justice (PiS) party (Poland) 159

Lawson 82legal and regulatory climate

37–38Lenovo 85LG 116, 147Libya 168Lima, Peru 18, 214literacy 28, 80, 153living standards 3, 4, 205, 207L’Oréal 37Lula da Silva, Luiz Inácio 120


Index 233

MMac 400 electrocardiogram (EEG)

machine 71McKinsey & Company 18, 19, 24,

31, 932012 report 20–21, 97

Maddison, Angus 4Maduro, Nicolás 219Malaysia 138–140

an ASEAN growth star 6Bumiputera favoured 138, 140doing business 139–140, 143economic indicators 139education 139–140foreign direct investment in 138GDP 138historical snapshot 138, 141Islamic finance sector 140market dynamics 138, 141–143open economy 138private consumption 138private investment 138race-based politics 138strong manufacturing clusters

140management hubs see under

rebalancing and transformation managing talent and the

workforce 42–50labour costs 47labour laws 48–49localising talent 43–45retaining high performers 45–46the Western expatriate 42–43workforce relations 49–50

Mango 10manufacturing see under supply

distribution and marketing Mao Zedong 110Marcos, Ferdinand 144

market opportunities 22–32bottom of the pyramid 26–27characteristics of emerging

markets 22–23demographics 28due diligence 31–32exchange rate 31GDP 28–29income 29–30inflation 30–31local differences 27–28market research 38middle of the pyramid 24–25proxy indicators 31top of the pyramid 23–24

market share 23, 97, 156, 170Massmart 89Mauritius 197MENA see Middle East and North

AfricaMercosur 202mergers and acquisitions (M&A)

112Mexico 211–213

banking sector 213Christmas bonus in 48corruption 213distribution 65doing business 212–213domestic economy 211drug-traffickers 213economic indicators 212economic liberalisation 211energy sector 201, 212financial crisis (1994/95) 211foreign direct investment 200historical snapshot 211infrastructure 212labour relations 213manufacturing 200, 211, 212–213



market dynamics 211–212nearshoring 62per-head income 211second largest economy in

Latin America 211skill shortages 213Walmart scandal 78

Mexico City 65, 102Miami 102microcredit industry 34–35Microsoft 10middle class, expansion of 20,

22–23, 24, 107, 115–116, 120, 143Middle East and North Africa

(MENA)Arab spring 8, 34, 169, 172consumer attitudes 169employee demands 170GDP growth 169government spending 169international companies in

168–169market share 170middle class 170new spirit of enterprise 170overview 168–170resilient business 168young populations and high

birth rates 169Mitsui 61mobile phones 24, 37, 55, 113, 132,

151–152, 189–190Mondelez International 68money-laundering 77Monterrey, Mexico 102Morsi, President Mohammed 175,

177Motorola 74–75Mubarak, President Hosni 175,

176

multinational companiesin Africa 190in Asia 130Brazilian 122in Central Asia and the

Caucasus 158competition 10, 82, 83, 84expansion through acquisition

85and Indonesia 135, 136–137interest in Africa’s non-oil

sectors 189and land issue 57in the Middle East and North

Africa 168–169and need to be more local 10,

27in Poland 161and political stability 34regrouping 98relocating R&D 72in Russia 128sale of unadapted Western

products 10taxation 39Western multinationals’ need

to change 2Mumbai High Court 37Muslim Brotherhood 175Myanmar 11, 133

NNagpal, Harit 66–67, 96–97Nairobi 102, 191, 192, 193“nano-stores” 65NASSCOM 116nationalisation 185, 203, 219NATO 159natural resources, extraction of 35nearshoring 62, 158


Index 235

Nehru, Jawaharlal 115Nestlé 10, 52, 81, 93New York Times 78Nigeria 194–196

corporate governance regulations 196

corruption 77, 193, 194, 195counterfeit and “grey” products

196democracy 194doing business 195–196economic growth 194, 197economic indicators 195energy reform 196foreign investment 189historical snapshot 194independence (1960) 194international companies

195–196market dynamics 194military rule 194Muslim north/Christian south

194Nigerian law 196oil dominance 194political instability 194telecommunications sector

194violence 194

Nike 67Nintendo 84Nissan 135–136Niyazov, Saparmurat 31Nokia 24, 52, 93non-governmental organisations

(NGOs) 191North America: R&D spending 72North American Free Trade

Agreement (NAFTA) 211North Vietnam 153

OObopay 73OECD 64, 198

Anti-Bribery Convention 76, 77offshoring 62, 158Oreo 68–69output per person 5outsourcing activities 9, 66, 116,

140, 158, 161business process outsourcing

(BPO) 145

PPakistan 141–143

and Afghanistan 141, 143civil unrest and threat of

terrorist violence 141cotton crops devastated by

floods (2010) 40doing business 143economic growth 141economic indicators 142education 141financial services and telecoms

sectors 142–143foreign investment 142historical snapshot 141infrastructure 143market dynamics 141–143middle class 143military coups 141power sector 141–142privatisation 143telecoms sector 142–143a vital US ally 141

Partido Revolucionario Institucional (PRI) 213

Peña Nieto, President Enrique 201

PepsiCo 30, 82, 127–128



Peru 214–216doing business 215–216economic growth 214, 216economic indicators 215GDP per head 214historical snapshot 214infrastructure 216labour market 216market dynamics 214market reforms 216middle class 214mineral deposits 214–215population 214private investment and

consumption 214rural communities 215Shining Path 214social conflict 215, 216

Petróleo Brasiliero (Petrobras) 122Petronas 39Pfizer 10, 78philanthropy 79–80Philip Morris International 157Philippines 144–146

BPO business 145call centres 131, 145–146corruption 144doing business 145–146economic growth 144economic indicators 145education 145export industry 144, 146foreign investment 144GDP 144historical snapshot 144infrastructure 144, 146labour force 144–145, 146manufacturing sector 146market dynamics 144–145mineral resources 144

population 144private consumption 146and telecommunications 55unemployment 145

Pinochet dictatorship 205, 207Pirelli 10Pittsburgh Tribune-Review 74Pizza Hut 27Poland 157, 159–161

banking sector 159business growth 22competition 160–161doing business 160–161economic growth 160, 161economic indicators 160education 161emergence from communism

159historical snapshot 159infrastructure 159manufacturing 161market dynamics 159–160NATO and EU membership 159outsourcing services 161politics improving 159small and medium-sized

enterprises 161weathers 2008–09 crisis 17

polycentric innovation 73portfolio capital 117Portugal 156Posco 37, 119poverty

and BRICs 107and low output per person 5reduction in 107, 120, 132, 200statistics of 26see also under individual

countriesPrahalad, C.K. 26–27


Index 237

pricescommodity 108, 132, 200consumer 20electricity 192energy 126, 184expectations about 29land 56oil 125, 127, 129, 169, 182, 207property 101volatile 30, 138

private consumption 20–21, 30, 121, 131, 135, 138, 146, 185

privatisation 33, 125Procter & Gamble 37, 93property see infrastructure and

propertyprotectionism 9, 17, 120, 123–124,

203–204public-private partnerships (PPPs)

122, 133Puea Thai Party 150purchasing-power parity (PPP) 15,

30, 122, 130, 150, 162, 165, 211Putin, Vladimir 125, 127

Qquality-certfication procedures 41

RR&D see innovation and R&DRadjou, Navi 73Rand Corporation 71Razak, Dato’Sri Najib 138real estate, land and 55–57rebalancing and transformation

93–106corporate transformation 95–96key principles 96–97management hubs 101–103

emerging Asia 101–102

Latin America 102the new neglect 94–95regrouping: new geographical

organisation 98–100large strategic units 99–100organising around cities 100small country clusters 99

relocating: more big boots on the ground 97–98

rethinking: an emerging-market mindset 103–104

relocating 97–98Repsol-YPE 203reshoring 62resources-for-investment deals 189reverse innovation 71Rio Tinto 35risks

and business environment 4for foreign firms in Iran 181government interference 37intellectual property 75level of 23political risk in Africa 188security risks in Iraq 184spreading 60–61and strong local presence 168

Roberson, Dennis 74Romania 156, 157Rosatom 134Rousseff, Dilma 120, 122Rowhani, Hassan 179Russia 125–129

acquisitions issue 89automotive industry 21, 129business connections of groups

within government 36Coca-Cola advert 67–68company expansion in 91competition 127, 129



corruption 77, 125, 127crisis of 1998 125currency devaluations 30, 125doing business 127drives its neighbours’

economies 157economic growth 7, 126economic indicators 128education 126foreign direct investment 128GDP 126, 128GDP per head 125a growth market of global

significance 157historical snapshot 125inflation 108labour laws 48market dynamics 125–127maxi-devaluation 8middle class 125oil/gas 125–127, 156poor demographic outlook

125poor image in Western media

127poverty reduction 107private consumption in 30redundancies 49regional structures 100rivalries between government

factions 34trade bans 41underinvestment 108working visas 49

SSabanci Group 163Samsung 84, 147Santiago 102São Paulo, Brazil 102

Saudi Arabia 99, 170, 175, 185–187Al Saud family 185capital expenditure 187competitiveness 185–186doing business 186–187domestic demand 187economic diversification 185,

186economic growth 185economic indicators 186foreign-currency reserves 185government spending 185,

186–187historical snapshot 185job creation 185–186market dynamics 185–186nationalisation 185oil dependency 185poor payer 187second largest economy in

MENA 185stability issue 185, 186

Schneider Electric 10, 97–98Seattle, Washington State:

economic growth 18Selena Group 53September 11th 2001 terrorist

attacks 141SEZs see special economic zonesshadow economies 29Sharma, Amit 37–38Shell 10, 166Shenzhen, China 40Shia Muslims 182Shinawatra, Thaksin 150Shinawatra, Yingluck 150Shining Path 214Shtokman gas field, Arctic 126Siemens 10, 56, 77Singapore 6, 101–102


Index 239

Skoda 49Slovakia 56, 57, 157Slovenia 156, 157Smart-Connected Communities

95SMEs (small and medium

enterprises) 83, 122–123, 124, 161Somali government 193Sony 84South Africa 188, 197–199

apartheid regime 197, 198banking sector 197capital markets 197doing business 198–199economic growth 198economic indicators 199historical snapshot 197income inequality 198–199industrial action 198infrastructure 189labour laws 198market dynamics 197–198mineral wealth 197non-energy investment 189population 197productivity 198residual influence of apartheid

36retail sector 198right to strike 49telecommunications sector 198unemployment 198unique position in Africa 197violent crime 197

South Korea 147–149ageing population 147an Asian Tiger 6chaebol (industrial

conglomerates) 147doing business 148

economic growth 147, 149economic indicators 147foreign direct investment 149free-trade agreements 149GDP per head 147historical snapshot 147household debt 147interest in Africa’s non-oil

sectors 189market dynamics 147–148pace of growth 22, 147, 149R&D 147relations with North Korea 149robotics 147services sector 148strong domestic companies 147,

149South Pars gas field 181South Sudan 193South Vietnam 153South-East Asia

ASEAN growth stars 6Asian Tigers 6

south-east Europe (SEE) 156–157Soviet Union, fall of (1989) 6Spain: boom and bust 160special economic zones (SEZs) 39Sri Lanka 61Standard Chartered Bank 37Starbucks 60Startup Chile 207state-owned enterprises (SOEs)

110, 112, 153, 154strikes 49, 113, 170Suez Canal 175Suharto, President 135Sunni Muslims 182supply, distribution and

marketing 58–69choosing suppliers 59



distribution 64–67choosing and managing

distributors 66creating a distribution

network 66–67integrating suppliers 60–61the manufacturing revolution

61–63advanced manufacturing

techniques 63automation versus low-cost

labour 61global manufacturing 63reshoring, nearshoring,

offshoring 62–63marketing 67–68monitoring supply standards

60supply chains 58, 117, 198

Symantec 116Syria 168

civil war 163

TTaiwan 6talent management see managing

talent and the workforceTanzania 189tariffs 4–5Tata Group 70, 85Tata Motors 119Tata Sky 66, 96TCI 58Tedjarati, Shane 1–2, 83–84, 85,

103–104Telkom 198Telmex/América Móvil 211Tesco 87Thai Rak Thai government

150

Thailand 6, 131, 150–152constitutional monarchy 131,

150consumer market 150doing business 151–152economic indicators 151education 151floods (2011) 150foreign direct investment 150GDP 150GDP per head 131historical snapshot 150infrastructure 151–152investment in 150labour costs 152lack of English-language

proficiency 152market dynamics 150military coup (2006) 150minimum wages 152power struggle 150productivity 152reliant on exports 150telecoms technology 151–152

TNK-BP 127tourism 154, 171, 175, 189, 191Toyota 10, 58, 61

Prius 60trade unions 49, 50, 81, 113, 213transformation see rebalancing

and transformationTransparency International,

Corruption Perceptions Index (2012) 77

Tunisia 168Turkey 162–164

competition 163current-account deficit 163customs union with the EU 164demographics 162


Index 241

disabled workers 48doing business 163–164economic indicators 164economic liberalisation 162energy issue 163financial crisis (2001) 162financial system 162GDP per head 162health-care sector 162, 164historical snapshot 162infrastructure 162, 163investment in 10Kurdish issue 163labour-market regulation 163large-scale protests (2013) 162,

163low indebtedness 162market dynamics 162–163military coups 162political risks 163tax system 163transport issue 52, 163

Turkmenistan 31, 158Tymoshenko, Yulia 33, 165

uUkraine 22, 157–158, 159, 165–167

agricultural sector 165banking system 165corruption 167currency 165doing business 166–167economic boom 165economic indicators 166foreign investment 165free-trade agreement with EU

167GDP per head 165hard-hit by 2008–09 financial

crisis 165

heavy industry 165historical snapshot 165independence from the Soviet

Union (1991) 165market dynamics 165oligarchs 167Orange Revolution (2004) 33,

165reliance on gas imports from

Russia 166–167retail and services sectors 165Yanukovych regime 33

unemployment 36, 145, 172, 175–176, 198, 210

Unilever 10, 26, 65, 72, 74, 93, 103, 116, 135, 157

United Arab Emirates (UAE) 43, 170–171, 175diversified economy 170economy dependent on

immigrant workers 171GDP 171importance as a regional hub

170infrastructure 171third largest economy in MENA

170United Nations (UN) 190

Millennium Development Goals 80

United States (US)automotive sales 21China forecast to overtake the

US 7, 15, 107, 130free-trade agreements 205, 208industrialisation 4investment in Africa 189largest economy in the world 4North American Free Trade

Agreement (NAFTA) 211



reshoring 62start of recovery 17

UnitedHealthcare 121University of Groningen 4University of Maryland: Smith

School of Business 42urbanisation 1, 18, 21, 26, 54, 100,

116, 130, 132, 154, 188US Foreign Corrupt Practices Act

(FCPA) 76, 78US Securities and Exchange

Commission (SEC) 77–78Uzbekistan 158

VVaca Muerta shale formation 202value chain 3, 79, 81, 136Venezuela 12, 217–219

chavismo 217, 219corruption 217, 218doing business 217–219“Dutch disease” 217economic growth 217economic indicators 218economic volatility 217, 219falling GDP 17government attitudes 218–219historical snapshot 217inflation 207–208labour laws 218lags behind as an investment

destination 219market dynamics 217nationalisation threats 219natural resources 217population 217poverty and inequality 217price and exchange controls

218tax regime 218

Vietnam 61, 131, 152, 153–154banking system 153centralised economy 131communist state 131, 153corruption 154currency devaluation 153doi moi (economic renovation)

programme 153doing business 154economic growth 153economic indicators 155financial services 154foreign investment 153, 154GDP 153GDP per head 131historical snapshot 153inefficient state-owned

enterprises 131inflation 131, 153, 154infrastructure 154manufacturing 153market dynamics 153–154population 153–154state-owned enterprises 153,

154tourism 154urbanisation 154

Vietnam war 153Visser, Wayne 79Vodafone 37VoIP (voice over internet protocol)

198Volkswagen 49–50Volvo 85

WWalmart 78, 89, 189, 198Warsaw 102Water and Development

Authority (WAPDA) 142


Index 243

Western expatriate employees 42–43

Wimm Bill Dann 128Wipro 70Wong, Stanley 37workforce relations 49–50World Bank 26, 53, 197World Economic Forum (WEF)

144, 146World Trade Organisation (WTO)

40, 110, 112, 126, 141Wuttke, Joerg 59

xXintang, China 40

yYahoo! 116Yanukovych, Viktor 33, 165, 167Yeltsin, Boris 125Yemen 168, 176Yunnan province, China 60

ZZara 82ZTE 84


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