Recently, the next international marketing frontier has been the focus on BRIC Countries, or emerging markets like Brazil, Russia, India, and China, as well as similar markets like Vietnam and Indonesia.
These countries that are quickly modernizing to become huge market opportunities present their own geo-political challenges for foreign companies looking to do business. For example, the recent Google crackdown in China and increased censorship. If a company doesn’t want to have a first mover ‘disadvantage’ and face all the costs and risks associated with being first to market in an emerging nation, how does it combat the risks of entering a country that has government corruption and stronger controls than what American businesses are used to?
1- Have a strategy ready beforehand.
2-When China tells a company like Google to censor search results, do they:
a) do exactly what the government wants OR
b) censor a little bit OR
c) don’t censor and potentially leave the market
Markets like Brazil, Russia and India have their own unique set of challenges. Brazil faces a serious lack of infrastructure, government corruption, and weak education requirements. Russia has recently become a much hotter political climate, as detailed in another class blog post here. With Ukraine issues and European sanctions, Russia has indirectly retaliated by closing American businesses including MacDonald’s for “health reasons”.
Countries like India have became a great location for outsourcing, especially for the technology and medical fields, however foreign investors are greatly affected by currency changes and the recent devaluing of the Indian Rupee.
How can a company combat these issues? We can look at big research firms like Nielsen at how to first approach the foreign market, so which markets are the most popular in these emerging nations? According to Nielsen, media gaming and music are the most rapidly growing industries for consumers in BRIC nations. Nielsen recommends companies should “find opportunities”, “focus on up and coming technology”, and have a plan for “branding and strategy”. It’s also important to look to failures and successes of other companies that might be similar and already in the emerging market. For example, Starbucks and McDonald’s can compare each other to see what the other company does to reach customers and retain them effectively.
So what are your options as a company? Do you have a joint venture, greenfield investment, acquire a local company, or a combination of all three? I think hiring consultants is important and investing in local relationships in order to look towards the long term will make your company seem loyal and serious about the future.