Emerging markets describe countries of the world with relatively recent industrial and technological change and now experiencing rapid economic growth.
Goldman Sachs popularized the acronym BRIC (Brazil, Russia, India, and China) to identify countries that many economists believe to be economically powerful in terms of current and future growth. These are the well-known, high potential emerging markets, but the term extends to countries in Africa, the Gulf, other countries in South America like Mexico and Europe too.
Each emerging market is unique, of course, and businesses need to approach them individually addressing their unique economic, market, business and consumer characteristics.
Large populations generally characterize emerging markets, as is obvious with China and India. They also tend to be dominated by young populations.
Whereas some of these markets remain politically and economically unstable, many other nations have through reform successfully stabilized their economies and normalized their trade practices.
Emerging markets (130 countries and counting) comprise more than two-thirds of the global land mass. Most are rich in natural resources (in large part because their slow industrial and economic development has left their resources untapped) and host diverse industries, including manufacturing, oil and gas, agriculture and tourism.
Outsourcing from developed markets
As corporations re-engineered their operations through global outsourcing and new market development, they also imported into “client” emerging market countries advanced expertise in finance and business processes, for example banks have outsourced operations, companies have outsourced call centers and manufacturing.
Global intermediaries such as the International Monetary Fund (IMF) became more sophisticated in advising these nations on economic management.
Some emerging market nations have the potential to leapfrog developed markets because they are not slowed by legacy technologies. Japan (a “developed market”) became an advanced economy post World War II by leapfrogging technology developed by countries like the UK after the Industrial Revolution, amongst other factors. India has leapfrogged land- line telephony to become a mobile, wireless economy.
Emerging on emerging:
Many emerging markets are trading or partnering with other emerging markets, for example, China is penetrating markets and collaborating with specific industries in Africa.
Why they’re significant
These markets are even more significant now because of the economic slowdown in developed markets and general market saturation.
Even though developing markets are experiencing recessionary effects from the global financial crisis, many emerging market countries remain in a robust growth position. Growth will continue to come from emerging markets for the next 10 to 15 years at least, not only during this current recessionary period (in developed markets).
Economists have forecasted that China is soon to be the next superpower, by becoming the world’s largest economy, measured by gross domestic product (GDP).
With fast economic growth and transition, there’s a rise of middle classes in emerging markets, significant parts of the economy are rising up from poverty and are keen to purchase imported consumer products.
These consumers make good markets for companies struggling with declining sales in in developed markets.
The role of the Internet
The Internet has removed travel and time boundaries by allowing trade among markets in real time. The global reach of the Internet may be the most significant transformative development since the industrial age. As infrastructure and telephony bring Internet penetration to billions more of the world’s people over the next few years, the emerging markets phenomenon will be exponential. The Internet will become the major platform that allows the free flow of business activity, leveraged by applications and tools such as websites, video applications, social media, collaborative tools and mobile.
Companies in sluggish developed markets now have the potential to penetrate these markets with Internet marketing with lower risk and higher accuracy.
To find out more about B2b marketing in global markets, you can read Emerging Business Online, Global Markets and the Power of B2b Internet Marketing a New York FT Press Publication.