The association between “emerging markets” and “growth” these days is so commonplace it feels like part of the natural order, especially if you listen to the quarterly results of big US companies. But what about “profitable growth”? That’s a different matter.
Ernst & Young makes the distinction in a new report that pours some cold water on the buzz over emerging markets. It reminds us that higher sales do not always translate into higher profits - and reveals that this is especially true when you try to break into new markets.
The accountancy firm has surveyed more than 1,400 senior executives around the world and reported back with an unexpected conclusion: if you want to secure profitable growth, rushing into emerging markets is not the best way to do it.