Multinational companies cannot afford to ignore emerging markets. Nor can they afford to ignore the difficulties involved.
With about half of global economic output now coming from emerging markets, multinationals have been right to increase their investments in these countries so that they now generate about 20 per cent of revenues from the developing world compared with 10 per cent 20 years ago.
The so-called Bric economies alone – Brazil, Russia, India and China – will add about $12,000bn to the world economy over the next decade, double the US and the eurozone combined, says Jim O’Neill of Goldman Sachs, coiner of the Brics concept. That leaves multinationals little choice about expanding their emerging market investments. Those that do not will cede vital ground to their rivals from the developed world and, increasingly, from emerging economies headed by China, India, Russia and Brazil.