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Effective Business in Emerging Economies

Simon Bedford

Thursday 8th September - Bradford University School of Management

10th August, 2011

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Programme

• UKTI views and coverage• World Bank and CPI• The influence of culture• Emerging markets – entry route• Views of some Yorkshire businesses• Top tips

UKTI operates in 162 locations, in 96 markets, covering 98 per cent of GDP

© UKTI Yorkshire 2011

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Emerging/High Growth Markets Which 20 countries would you

select?

Question?

BrazilRussia IndiaChina

ColombiaIndonesiaVietnamEgyptTurkeySouth Africa

Malaysia

Mexico

Qatar

Saudi Arabia

Singapore

South Korea

Taiwan

Thailand

UAE

Hong Kong

UKTI High Growth Markets

© UKTI Yorkshire 2011

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OMIS Top 20 Activity Markets

USAChinaIndiaBrazilJapanGermanyFranceUAERussiaMexico

AustraliaSpainNigeriaSaudi ArabiaSouth KoreaTurkeyCanadaSingaporeItalyNordics

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Risk Indices

World Bank

CPI

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Risk Indices

World Bank – Doing Business Project– Economy Rankings– 183 countries– www.doingbusiness.org

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World Bank Rankings

Thailand 19South Africa 34Mexico 35UAE 40Turkey 65Vietnam 78China 79Russia 123Brazil 127India 134

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Risk Indices

CPI– Transparency International– Corruption Perception Index– 178 countries– www.transparency.org

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CPI

UAE 28South Africa 54Turkey 56Brazil 69Thailand 78China 78India 87Mexico 98Vietnam 116Russia 154

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CPI Map of the World

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Culture in negotiating styles

Culture can be a major factor in the success or failure of business negotiations

Be aware of the differences in buyer-seller negotiation styles in selected countries

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Culture

In negotiation with a distributor, or potential customer culture can be a vital ingredient for a successful outcome. How should we approach the meeting, and what signs should we look for in the decision maker.

Under the 4 headings below which of these very different words best describes what we can expect in our next overseas meeting?

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Culture Business style: Bureaucratic, formal, friendly, polite,

aggressive, Relationships: vital, important, distant, no importance, Approach in meetings: formal, systematic, repetitive,

open, freestyle, Decisions: Autocratic, key individual, democratic

group, top level team,

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China Meetings are formal.

Progress is slow and relationships will be built up over a series of meetings.

Language can be an issue and translators will probably be required.

As in many cultures “yes” can simply mean “I acknowledge what you have said”.

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India 15 official languages, English is universally spoken and is seen the

neutral language. Business is very hierarchical so it is important to identify the

decision makers.

An issue for UK companies setting up in India is operating a flat structure as in UK.

In meetings, small talk, particularly about the family is highly

valued as you build a relationship.

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Brazil

Meetings rarely start on time.

The agenda is not rigidly followed.

There can initially be a lot of small so patience is a virtue.

Relationships are important - your hosts will show their feelings openly.

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Culture shock

For more information see Useful Links – Culture Shock! – a survival guide to customs and etiquette - published by Marshall Cavendish

Also see www.worldbusiness culture.com

How companies are entering Emerging markets

China India Vietnam Gulf states Brazil

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Case Studies

Views of some Yorkshire businesses

Engineering company

University

Training and Consultancy

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Vietnam – Engineering company

Key advice from an operations viewpoint: 

- Continue to develop relationships with Customs, Industrial Zones Management, Labour Department, Immigration, Tax and even the Police. 

  - Don't underestimate the amount of bureaucracy involved.  - Keep yourself well informed on legislative issues & laws which are changing frequently as

easy to be caught out.

- In the earliest stages consider fully the scope of your business before you apply for your license, e.g to include trading, increase capital contribution, get further duty exemptions on capital imports.

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University India

People never say no but “yes yes” and “yes yes yes”

Pursue 2-3 activities Know who to work with Do not offer help or support but “working together” Great opportunities but not easy - Get experience

somewhere else!

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University

Vietnam

Young, eager, and a thirst for education and personal development

Good opportunities; keep going back.

Keen to learn from the “old & wise”

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University

Gulf region

Stop/start:moves fast when you are there!

Keep going back – send same person.

Wealthy but price sensitive.

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Training and Consultancy

Views of an “emerging market”

Look for a niche

Cultural awareness, tolerance, and sensitivity.

Go yourself or someone else fully briefed

Be prepared for the long game

Research the market Have a sound business plan Decide on your contract terms Know your partner Know the law Look for problems before they arise Develop good relationships Be a good communicator Protect your IPR Plan an exit strategy

Emerging markets - Top ten tips

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Contact

Simon Bedfordsimon@sgb-associates.com+44 (0) 7771 834238

www.ukti.gov.uk