What are the major opportunities that emerging markets offer to international companies and what are the key considerations that such companies have to take into account when formulating strategies for doing business in emerging markets?

The notion of an emerging, or developing, market economy appeared 1981 in a World Bank report. This term was used since emerging countries have embarked on economic development and reform programs, and have begun to open up their markets and "emerge" onto the global scene. Therefore emerging markets are fast growing economies and benefit from the globalization of the world market. Emerging markets, especially the “giants” such as China, India, Russia, Mexico and Brazil are changing the face of global economics and politics. Today, roughly thirty countries are considered to be in transition to higher levels of economic development and have hence earned the title “emerging markets” from the International Finance Corporation (IFC) of the World Bank. Companies are increasingly looking to emerging markets as a vital source of growth, both for outsourcing and competing. But these new opportunities are also a source of danger for the industrialized world’s company in case of a bad understanding of institutional variations. Because these markets are in transition and hence not stable, investing in Emerging Markets Economies (EME) adds considerable risk to a company’s portfolio.

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[...] The market: Gaining access to new customers As the economy and purchase power are rising and the barriers to trade reducing, emerging economies become large untapped markets for all types of industry, as mentioned in the first part of this document. During an interview, Jacques-Olivier Legrand, Engineer at Essilor, a French CAC 40 world leader of corrective lenses producing company, told me that given their statistics of the Chinese population is suffering from myopia (short-sightedness), as well as the Japanese population. [...]

[...] This part tries to assess the most common risks to which exporting companies to emerging markets are exposed and how they can reduce them. The pillars of transformation Deregulation, privatization, Opening up to foreign trade and investment and labor reforms are known as the four pillars of transformation of an developing country to a developed country. Those characteristics have to be specifically observed in order to enter an emerging market; The market openness, as its name indicates, characterizes the “openness to foreign investment” of a country and its “openness to trade”. [...]