International Strategy - Future Markets, Future Growth

The most severe effects of the economic crisis appear to be overcome. Several Western economies are showing signs of a fragile recovery, however, the future consequences of high debt in the public sector and the continuation of government economic support programmes remain to be seen. The crisis did however make one thing clear: global growth is dependent on major emerging countries like China and India continuing to grow at a significant rate.

But what if dark clouds roll into the Middle Kingdom of China making it less cost competitive? Will India attract sufficient investment into infrastructure and education to enable it to meet its challenges? What if high inflation in China and India puts a brake on high growth and domestic demand? What will it take to stem ill affordable leakages through improved standards of governance and accountability in most emerging countries?

These days global growth is supported mainly by countries in Asia and South America. They have proven themselves to be more resistant to the economic crisis than some had assumed. Globalisation has seen China emerge as the new world economic power after the United States.

We are witnessing a major shift in economic power as the major emerging countries account for an increasingly higher share of global GDP. For the West the opportunity lies mainly in gaining advantages through leading technologies and high quality of products and services at affordable prices. Many companies from traditional industrial nations have understood this: they are reinforcing their sales and service networks in emerging markets, shifting production as well as research and development to be closer to the customer and enhancing their product portfolios for new target markets.

In the process, foreign operations have reached a new level of development: second-tier emerging markets, like the African continent, are also rapidly becoming a driving force as they mimic the larger BRIC economies in many respects. Sustainable success in these markets requires a roll out of products and services which appeal to the mass of consumers with small wallets.

While many western companies are still trying to redefine their market strategies, the great wheel of globalisation continues to turn: up-and-coming emerging markets contest the role of big players like China as cost and price leaders. Cheap producers increasingly shift to neighbouring countries. Higher salaries and increasing inflation in China is endangering the cost leadership it currently enjoys. Simultaneously, it is a constant battle to increase domestic consumption through a reduction in the traditionally high savings rate.

China's infrastructure and growth has benefitted considerably from the high level of state investment over many years but can this continue indefinitely without adverse economic effects? India too has challenges arising from poor logistics and inadequate infrastructure. Will these act as a brake on growth and per capita income and consumption?

Whilst the West continues to have the edge, advances in innovation and technology are now also being incubated in major emerging economies. Emerging markets multinationals are making headway in new markets. At the same time, Western companies are in the process of learning from emerging market companies and integrating their cost and sales structures into their supply chains. These developments will ensure the survival of market dynamism and competition.

Download the KPMG publication "International Strategy - Future Markets, Future Growth" (PDF, 1.5 MB)
 

International Strategy: Future Market Future Growth

The most severe effects of the economic crisis appear to be overcome. Several Western economies are showing signs of a fragile recovery, however, the future consequences of high debt in the public sector and the continuation of government economic support programmes remain to be seen. The crisis did however make one thing clear: global growth is dependent on major emerging countries like China and India continuing to grow at a significant rate.

Date: 02/02/2011 | Size: 1355,77kB

Auslandsstrategie im Wandel

Die akuten Zeiten der Wirtschaftskrise liegen hinter uns. Die neue KPMG-Publikation analysiert die Auswirkungen und die daraus resultierenden Entwicklungen, mit denen sich Unternehmen im Auslandsgeschäft konfrontiert sehen.

Date: 09/20/2011 | Size: 2137,26kB

• Industries