A LACK of available local talent will be the single greatest barrier to growth for firms that operate within emerging markets over the next three years.
In developed markets, the high cost of labour is the primary barrier to growth, and as competition for talent grows in all markets, firms will put more effort into their own training and development programs, while also emphasising performance-based compensation more than ever.
A survey of more than 1,000 executives from 84 countries, conducted by the Economist Intelligence Unit, highlighted the importance of emerging markets to companies as primary revenue and sourcing opportunities.
“Although the differences between the developed and developing worlds are eroding, the report makes it clear that they are still very distinct business landscapes,” said Andrew Palmer, editor of the report.
As well as battling with a shortage of skilled local workers, business leaders entering emerging markets face trade and investment barriers, feel that they have a poorer understanding of customers and are more worried by the risk of economic and financial volatility.
For developed markets, by contrast, executives from all over the world point not just to high labour costs but also saturated markets as the critical challenges they face.
Strategies differ too: firms will primarily focus on pushing new products at existing customers in developed markets, while offering existing products to new customers in emerging markets.
“Emerging markets are clearly top of the agenda, but they’re not risk-free environments, and the business culture is frequently very different,” said Andrew Cahn, chief executive of UK Trade & Investment, which sponsored the report.
The survey also found that the Asia-Pacific region is the world’s workshop, but also its biggest source of new demand – and risk.
Fifty-two per cent of executives selected Asia-Pacific as the region offering greatest opportunities for revenue growth over the next three years, far ahead of North America (13 per cent) and Western Europe (10 per cent).