Succeed Emerging Markets

Succeed in Emerging Markets:
Selection, Strategy and First Steps

Not to be distributed without permission.
SUCCEED IN
EMERGING MARKETS:
SELECTION, STRATEGY
AND FIRST STEPS
Sarah Boumphrey
Head of Strategic, Economic and Consumer Insight, UK
CONNECT WITH US
EUROMONITOR INTERNAT ION A L 2 0 1 4

The first and most important step when planning an expansion strategy is
to select the market or markets that are right for your business. Our four
pillar model, encompassing market, population, access and business
environment, brings methodological clarity to selecting new emerging markets.
The primary concern is to undertake a thorough analysis of all markets
of interest before creating a shortlist of potential winners. A failure to do this
could lead to missed opportunities, or an embarrassing and costly mistake.
iv EU R O M O N I TO R I NTERNATI O NAL 2014

CONTENTS
1 INTRODUCTION
Market
Population
Access
Business environment
3 MARKET
Macroeconomic stability
The middle class
Consumer market size and growth
Openness
11 POPULATION
Size and growth
Age structure
Vital statistics
Urbanisation
19 ACCESS
Infrastructure
Internet
Partners
Retail landscape
EUROMONITOR INTERNATIONA L 201 4 v

Con t e nts
27 BUSINESS ENVIRONMENT
Ease of doing business
Regulations
Corruption
Human capital
33 OTHER CONSIDERATIONS
34 SUMMARY AND KEY TAKEAWAYS
35 HOW CAN EUROMONITOR INTERNATIONAL HELP?
36 THE AUTHOR
37 ABOUT EUROMONITOR
vi EU R O M O N I TO R I NTERNATI O NAL 2014

INTRODUCTION
All markets are not the same; each has unique challenges and opportunities.
The first and most important step to successfully launching a product or service
is to pick the market or markets that are right for your business. Too many
companies fail to do their due diligence regarding pre-market entry and then
pay the price in poor sales and unforeseen complications and costs.
Euromonitor International has developed a four pillar model to bring
methodological clarity to selecting new emerging markets. An emerging
market strategy is a long term one, and step one on the path to success is
to choose wisely.
Market
The first pillar, market, incorporates macroeconomic stability, the middle class,
consumer market size and growth, and openness. These elements incorporate
the fundamental concerns of any emerging market strategy.
Population
The second pillar, population, incorporates size and growth, age structure,
vital statistics and urbanisation. Demographics provide the backdrop for all
consumer markets and many of the most important decisions that planners
must make should be shaped by demographic realities on the ground.
Access
The third pillar, access, incorporates infrastructure, Internet, partners
and the retail landscape. The practicalities of market entry are key in getting
products to market and on to the end consumers.
EUROMONITOR INTERNATIONA L 201 4 1

In t rod ucti o n
Business environment
The fourth pillar, business environment, incorporates the ease of doing
business, regulations, corruption and human capital. Better understanding
the environment within a market provides an enhanced context for what
business will really be like within the selected region or country.
Business
Market Population Access
Environment
Macroeconomic Size and Ease of doing

Infrastructure
stability growth business
Middle class Age structure Internet Regulations
Consumer
market size Vital statistics Partners Corruption
and growth
Retail
Openness Urbanisation Human capital
landscape
2 EU R O M O N I TO R I NTERNATI O NAL 2014

MARKET
Market
Macroeconomic
stability
Middle class
Consumer
market size and
growth
Openness
The first pillar, market, is perhaps the most fundamental. It incorporates

macroeconomic stability, the middle class, consumer market size
and growth and openness. These elements are essential concerns of any
emerging market strategy. Is the country sizeable and stable enough to do
business in? Are consumers well-off enough to buy my products and services?
Are the potential growth rates of the market attractive enough to offset
any risk? And are the conditions for foreign businesses right?

M a rk et
Macroeconomic stability
A fundamental issue is one of macroeconomic stability. It isnt
impossible to succeed in unstable economies, but it is much more challenging
and a companys appetite for risk must be substantial. Many factors can
and should be considered ranging from economic growth and price pressures
to external and internal imbalances.
Fast growth is one thing stable, quality growth is another. South Sudan
and Sierra Leone topped the rankings as the worlds two fastest-growing
economies in 2013. However, South Sudan was rebounding from a sharp
contraction, as its economy almost halved in size in 2012 and is almost
completely dependent on oil revenues. Sierra Leone has seen impressive
growth, but is still suffering from the after-effects of the civil war and was
a victim of the 2014 Ebola epidemic in West Africa. Neither market therefore
would be top of many multinationals lists.
The Worlds 10 Fastest-Growing Economies in 2013

The Worlds 10 Fastest-Growing Economies in 2013
South Sudan
2013
Moldova
Sierra Leone 8.9
Ethiopia 9.7
Paraguay
Turkmenist 10.2
Kyrgyzstan 10.5
Macau
Mongolia 11.7
Macau Mongolia 12.9
Paraguay 13.0
Sierra Leon
Kyrgyzstan 16.3
South Suda 24.4
Turkmenistan
Ethiopia
Moldova
0 5 10 15 20 25
% growth
Source: Euromonitor International from national statistics/Eurostat/OECD/UN/International Monetary

Fund (IMF), World Economic Outlook (WEO)

Marke t
Consistent growth with numerous drivers, underpinned by sound fiscal

and monetary policies, is a better indicator of a strong and stable economy.
For instance, there is much talk about emerging markets vulnerable
to tightening monetary conditions in advanced economies. Countries with large
twin deficits (i.e. fiscal and current account deficits) are perceived to be
most vulnerable to rising interest rates. Outside of real GDP growth: inflation,
the unemployment rate, current account balance and the budget
or fiscal deficits are amongst the most crucial indicators to consider.
Its important to look at trends over time and to understand the drivers
of these trends. For example, a country which runs a persistent current account
deficit financed largely on easily reversible portfolio inflows such as Turkey is at
risk because these funds can be easily withdrawn if sentiment changes.
An economy with strong growth based on one factor such as commodities,
or highly reliant on one trade partner such as those who trade very heavily
with China, is also at more risk than one with broadly-based growth.
The middle class

A large and vibrant middle class is often the chief target for many
multinationals because a middle class income is an indicator of sufficient
spending power to consume non-essential goods. In emerging markets,
some of those entering the middle class will have the ability to spend
on non-essentials for the first time, creating significant opportunities
for consumer goods companies. Gaining first-mover advantage in emerging
markets and building a loyal consumer base can therefore be a winning
long-term strategy.
But what constitutes a middle class income varies dramatically even

within a region. For example, in 2013 a middle income household in Bolivia
earned just over US$4,000, compared to US$10,000 in Peru and US$20,000
in Uruguay. The region with the largest variation is the Middle East
with middle income households in the UAE earning 12 times more than their
counterparts in Iran. This gap is expected to widen to 17 times by 2030.

M a rk et
Disposable Income of Decile 5 Households by Region: 2013

Disposable Income of Decile 5 Households by Region: 2013
120,000
Low High
Asia Pacific
100,000 3,066 20,408
Emerging Europe 5,680 21,599
Latin America 4,458 21,668
Middle East
80,000 8,536 101,854
US$ per household
Africa 1,755 8,665
60,000
Source: Euromonitor International from national statistics
40,000
20,000
0
Asia Pacific Emerging Europe Latin America Middle East Africa
Low High
Spending priorities also vary dramatically as a result of different tastes,

motivations and aspirations as well as a result of different budgets.
Spending on Essentials vs. Discretionary Goods and Services by Decile 5

Households in Selected Emerging Markets: 2013
Nigeria
Pakistan
Essentials Discretionary
Egypt
Venezuela 8903.4 14213.3
Philippines
South Afric 4017.8 5119.9
Malaysia Iran 8316 10335.5
Argentina
Indonesia 11293.6 13475.2
Thailand China 3584.4 4213.5
Turkey 12194.9 14272.7
Saudi Arabia
Brazil 7390.6 8476.6
Russia India 7208.5 8209.8
PolandMexico 9081 10289.8
Colombia
Colombia 4901.7 5544.5
MexicoPoland 10101.5 9898.5
India 1845.5 1805.2
Russia
Saudi Arab 17289.9 15896.8
China Brazil 3056.1 2781.8
Indonesia
Turkey 3701 2815.1
Iran Thailand 3593 1935.6
Philippines
Argentina
4582.6 2236.5
Egypt 5621.8 2481.6
Malaysia
Pakistan 3612.3 1096.1
South Africa
Nigeria 4953.9 1348.7
Venezuela
0% 10% 20% 30% 40% 50% 60% 70% 80%
% of total expenditure
Essentials Discretionary

Marke t
In practice this means that a decile 5 household in Nigeria devotes 79%

of its budget to the essentials, compared to a similar household in Venezuela
which devotes just 39%. The prioritisation of household budgets is not simply
correlated to average incomes or cultural differences though. For example,
decile 5 households in Saudi Arabia earned a significant US$31,852
in 2013, making them higher earners than their equivalents in Greece
or Portugal, but Saudi Arabian households devote less than half of their budgets
to discretionary spending. Saudi Arabian households dedicate a high proportion
of spending to food and non-alcoholic beverages due in part to a reliance
on food imports which pushes up food prices. In 2013, a decile 5 household
in Saudi Arabia spent US$9,638 on food and non-alcoholic beverages, compared
to US$7,080 in Greece and US$6,519 in Portugal.
Consumer market size and growth

The size and scale of the consumer market are of course both crucial
and sometimes can understandably be seen as the only or major deciding factor.
It is clear that a stable and sound economy with a vibrant middle class is
important but very low total consumer expenditure could make an otherwise
attractive market too small to be a priority:
Macedonia is expected to see strong economic growth. It has a prudent

fiscal policy and no significant external imbalances. Yet with consumer
expenditure of US$8.1 billion in 2013, a similar amount to the city
of Baku in Azerbaijan, it is too small for many multinationals.
Turkmenistan has seen rates of economic growth average 11.0%

over the past five years, compared with 9.0% in China. In 2013, 67.7%
of households had a disposable income over US$10k, a real terms
increase of 315% since 2005. However, with total consumer expenditure
of US$16.7 billion in 2013, its total consumer market is just one tenth
of the city of Melbourne in Australia.

M a rk et
The Worlds 10 Fastest-Growing Consumer Markets: 2008-2013
[Chart120
4] The Worlds 10 Fastest-Growing Consumer Markets: 2008-2013 3,500
consumer expenditure, US$ billions

% growth of consumer expenditure
100 % growth 2008 total size in billion US$ 2013 3,000
Macau 113.6 57.0
2,500
Libya 80 99.4 29.4
Papua New 90.3 10.8 2,000
Iraq 60 84.5 89.0
1,500
Tajikistan 82.7 8.4
40
Turkmenist 79.8 16.7 1,000
Argentina
20 71.1 404.7
500
Uzbekistan 66.7 27.3
Kazakhstan
0 65.6 105.4 0
China 65.0 3393.3
Source: Euromonitor International from national statistics/OECD/UN/IMF
% growth 2008-2013 total size in billion US$ 2013
Source: Euromonitor International from national statistics/OECD/UN/IMF
Openness
A lack of openness to trade and foreign direct investment can also be a hurdle.
One of the ways to get an understanding of an economys openness is to look
at the contribution of total trade to GDP. The most open large-ish emerging
markets in terms of their trade to GDP ratios include
Vietnam, Malaysia and the UAE.
Total Trade as a % of GDP: 2013

[Chart 5] Total Trade as a % of GDP: 2013
Nauru
trade as % of GDP
Hungary
Guyana Vietnam103.5
Macedonia Lesotho106.6
Kyrgyzstan Lithuania108.8
Belarus 111.0
Cambodia
Congo-Bra 112.1
Mauritania
Liberia 112.1
Equatorial Guinea
Oman 113.8
Thailand Malaysia114.7
United Arab Emirates118.1
Seychelles
Bulgaria Bulgaria120.4
United ArabSeychelles138.4
Malaysia Thailand138.7
Equatorial G Oman143.2
Mauritania Liberia144.6
Cambodia
Congo-Brazzaville145.2
Lithuania Belarus
146.6
Lesotho 150.8
Kyrgyzstan
Vietnam 155.5
Macedonia
Hungary 159.6
Nauru Guyana165.9
-10 10 30 50 70 90 110 130 150 170
Source: Euromonitor International from national statistics/OECD/IMF
% of GDP
Source: Euromonitor International from national statistics/OECD/IMF

Marke t
Foreign direct investment (FDI) is another useful way of assessing an economys

openness. High levels can be indicative of an economy which is
investor-friendly. Data should be interpreted with caution however, as one-off
deals can be enough to transform the trends. For example, Turkmenistan has
high levels of FDI, which peaked at 22.5% of GDP in 2009. Its high inflows
of FDI are however purely symptomatic of its sizeable oil and gas sector
and the construction of new pipelines. Turkmenistan ranks 169th out of 177
countries in the Heritage Foundations Index of Economic Freedom. In terms
of investor freedom, it scores zero, compared to top-ranking emerging market
Chile which scores 85.0. The Heritage Foundation notes, All land is
owned by the government, and other ownership rights are limited.
Laws to protect intellectual property rights are implemented arbitrarily if at all.
Pirated copies of copyrighted and trademarked materials are widely available.
Corruption remains rampant.
The Top 10 Emerging and Developing Market Performers in the Index

of Economic Freedom 2014
35
30 Rank
Chile 7
Mauritius
25 8
Bahrain 12
Georgia
20 21
Lithuania 22
Rank
Macau 26
15
Qatar 27
UAE 28
Czech10Republic 29
Botswana 30
5
0
Chile Mauritius Bahrain Georgia Lithuania Macau Qatar UAE Czech Botswana
Republic
Source: 2014 Index of Economic Freedom, The Heritage Foundation

Note: Ranking is out of a total of 177 countries. The index is based on 10 quantitative and qualitative factors,
grouped into four broad categories of economic freedom: rule of law; limited government; regulatory
efficiency; and open markets.
More difficult to quantify, but equally important, is the receptiveness

of the population to new products and services, new brands, new tastes,
new flavours, new designs and styles and new ways of thinking in short,
openness to new ideas. Euromonitor Internationals 2013 Global Consumer
Trends Survey shows that in the BRIC markets, Indian consumers are most
likely to describe themselves as liking to try new products and services.
Conversely, 8.9% of Russians disagree with this description of themselves.

M a rk et
Percentage of Respondents who Describe Themselves as Liking to Try New

Products and Services: 2013
Percentage of Respondents who Describe Themselves as Liking to Try New Products and Services: 2013
India
Brazil Agree Neither agree n Disagree

China 64.64 31.16 4.2
Russia 66.83 24.26 8.91
Brazil 74.48 21.71 3.81
Russia
India 77.4 19.13 3.47
Source: Euromonitor International's Global Consumer Trends Survey 2013

China
Note: Between 1,800-2,000 consumers in each market are surveyed
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
% of respondents
Agree Neither agree nor disagree Disagree
Source: Euromonitor Internationals Global Consumer Trends Survey 2013

Note: Between 1,800-2,000 consumers in each market are surveyed
This also plays out in purchasing decisions, as noted in Euromonitors Path

to Purchase survey in 2014. The survey found that 65% of Russian respondents
cited previous personal experience as one of the five most important factors
influencing their last purchase of apparel or footwear, the second highest
response rate of the 16 major markets included in the survey.

POPULATION
Population
Size and growth
Age structure
Vital statistics
Urbanisation
Many of the most important decisions planners must make should be

shaped by the demographic realities on the ground. Demographics provide
the backdrop for all consumer markets and enable an understanding of how
the market fits into the demographic landscape and population trends also help
to envisage the future shape and direction of the market.

P op u lati o n
Understanding and being able to harness population trends enables new

market entrants to maximize their profitability by targeting the right people
in the right place at the right time. Marketers and strategic planners should be
posing questions such as:
Where do my target consumers live? Where will they live in the future?
Which age segment offers most opportunities?
What are the opportunities and challenges that lie ahead?
Is my target audience growing and will it continue to do so?
Is it geographically dispersed or concentrated?
The Demographic Landscape in Emerging and Developing Economies: 2013
Average Age
Total Life Fertility Urbanisation
Working Age Median Age at First
Population Expectancy 3.1 children 47.7% live in
65.9% 28.3 years Childbirth
6.1 billion 69.2 years per female urban areas
21.9 years
Source: Euromonitor International from World Bank/Eurostat/UN/national statistics

Note: Data refer to 172 emerging and developing economies
Size and growth

Put simply, population means how many potential consumers do
businesses have? Besides understanding the potential size of the market,
the dynamics are also crucial: how fast is this consumer base growing?
There are vast differences between countries, most obviously in terms
of overall size, but also in terms of growth.

Pop u lati on
In terms of scale, 42.5% of the emerging and developing market population

lives in just two countries China and India and the BRIC markets in total
account for almost half. Another way to look at this is to consider that
the population of China is equivalent in size to the sum of the smallest
150 emerging and developing markets. In terms of sheer size, China
and India are crucial to any emerging market strategy. It isnt all about China
and India though. There are 10 emerging markets with a population over 100
million and 20 with a population over 50 million, including lesser-known
markets such as Ethiopia and Myanmar and strong economic performers such
as the Philippines.
Looking at growth, 21 of the 172 emerging and developing countries which

Euromonitor tracks are expected to have a smaller population in 2030 than
today, with Ukraine seeing the largest absolute fall of 3.1 million inhabitants
(these figures do not take into account the loss of Crimea). On the other hand,
India is set to add a further 247 million to its population accounting for 21%
of the population growth in emerging and developing markets as a whole.
To put this into context, this population of 247 million is the equivalent
of another Indonesia. To operate successfully in a market where the consumer
base is in decline requires a different strategy to one where growth is fast.
However, growth is not everything, quality counts.
Population Change in Emerging Markets: 2014-2030

P op u lati o n
Age structure
Expanding on our Indian example, where will the 247 million come from?
Between 2014 and 2030 the largest increase in population will be amongst
those aged 35-69, accounting for almost three quarters of population growth.
During this same period, the population aged less than 9 years will
actually decline. So the demographics underlying the market for baby care
products are much less favourable than those offering products aimed
at middle-aged adults.
India Population Pyramid: 2012/2030
[Chart 9] India Population Pyramid: 2012/2030
Another example can be found in Poland where the overall population is

in decline, but the population aged 40-54 is actually increasing. This segment
is key in Poland because it is the one with the highest average gross income.
At US$14,766 in 2013, this segment earned 15% more than
the average income of those aged 15+.

Pop u lati on
Another aspect to keep in mind is the demographic dividend. This refers

to a stage in demographics where the population of working age is growing
faster than that of those dependent on it (e.g.: children and old people).
Some of the most notable examples of this are Nepal, Pakistan, Bangladesh
and Turkey, all of which are experiencing this trend. The demographic dividend
should, all things being equal, lead to an increase in income, but of course there
are other factors at play such as government policies, educational attainment,
productivity and the business environment.
Vital statistics
Vital statistics, incorporating fertility, birth and death rates, as well
as migration and life expectancy are key to understanding what is driving overall
changes in the population. The Gulf States offer an extreme example
of why it is important to understand the age demographics. Between 2014
and 2030, the population of the UAE is set to increase by 24.6% which is
well above the emerging and developing market average of 18.9%.
During this period, the population aged 0-14 is expected to fall by 6.1%,
and the birth rate is expected to fall from 10.0 births per 000 population
to just 6.6 births per 000 population by 2030. This is less than the rate
in Japan today. At the same time, the death rate is also set to increase from 1.1
deaths to 2.8 deaths per 000 population. So while the population is growing,
births are declining and deaths are increasing and migration is the answer
to this puzzle. In 2014, 88.3% of the population in the UAE was foreign citizens
and migration is set to average 70,800 per annum to 2030 a far higher figure
than the natural increase (births minus deaths). In other countries, births are
the major driver. This is true in Sub-Saharan Africa, where fertility rates are
declining but birth rates remain at very high levels and net migration is low
or negative (i.e. more people are leaving the country than arriving).
Drivers of Population Growth in Selected Emerging Markets: 2014-2030

Drivers 100%
of Population Growth in Selected Emerging Markets: 2014-2030
% contribution to population change
80%
100% Stacked
60% column (ColumnStacked100 template)
40%
Net Migration Natural Change
India 20% -4548.6 251786.3
Indonesia0% -2832 32456.4
Poland -20% -116.8 -868.8
Russia 4262 -3215.8
-40%
Brazil -597.8 20949.1
Mexico -60% -3865 20231.1
Saudi Arabia
-80% 939.2 7515.5
UAE -100% 1194.4 921.9
Turkey India Indonesia Poland Russia -20.8 Mexico10122.6
Brazil Saudi UAE Turkey
Arabia
Net Migration Natural Change
Source: Euromonitor International from national statistics/UN

P op u lati o n
This matters because growth driven by migration leads to a different

demographic make-up to a population driven by natural increase.
Migration tends to swell the population of working age, rather than child
or old age. Although over time if the migrants remain in the country, it can
generate growth at both ends of the spectrum as the migrants have children
and grow older. It can also have an impact on the ethnic mix of the country
and lead to interesting opportunities to target niche nationality groups.
This can be seen in the UK which is now home to 846,700 Polish citizens.
The sharp increase in the number of Polish citizens in the UK has led
to the much-publicised pursuit for the Polish pound and a corresponding
sharp increase in the number of Polish shops, supermarkets stocking Polish
products and even Polish medical centres.
Life expectancy of the population is another interesting measure. For example

in Nigeria, a person born in 2013 has a life expectancy of 52.5 years,
whereas for someone in Chile it would be 80.0 years. This equates to 27.5 more
years of purchasing over the average Chilean persons life time and of course it
means a far larger potential market for products aimed at older consumers
in particular. In regional terms, Latin America has the highest life expectancy
of any emerging market region with the Middle East and Africa bringing up
the rear. Even within Sub-Saharan Africa there are significant variations
from 75.1 years in Cape Verde down to 45.6 years in Sierra Leone.
Life Expectancy at Birth in Emerging and Developing Regions: 2013
76
Life Expectancy
74 at Birth in Emerging and Developing Regions: 2013
Years
72
Middle East and Africa 62.5
Emerging
70 and Developing Average 69.2
Asia-Pacific 71
68
Eastern Europe 74
Years
Latin 66
America 74.9
64
Source:62
Euromonitor International from World Bank/Eurostat/UN/national statistics
60
58
56
Middle East and Emerging and Asia-Pacific Eastern Europe Latin America
Africa Developing
Average
Source: Euromonitor International from World Bank/Eurostat/UN/national statistics

Pop u lati on
Urbanisation
Urbanisation benefits consumer goods companies through accessibility
and urban populations are generally more open to new ideas and often
(but not always) wealthier. Both the degree and speed of urbanisation vary
significantly across emerging and developing economies.
The Least-Urbanised Emerging and Developing Economies: 2013

[Chart 12] The Least-Urbanised Emerging and Developing Economies: 2013
Emerging & Developing Average
2013
Burundi 11.5Niger
Papua New 12.6Nepal
Trinidad an 14.2
Ethiopia
Sri Lanka 15.2
Malawi Uganda
16.0
St Lucia 16.1
St Lucia
Uganda 16.4
Ethiopia 17.5Malawi
Nepal 17.7
Sri Lanka
Niger 18.3
Trinidad and Tobago
Emerging & 47.7
Papua New Guinea
Burundi
0 5 10 15 20 25 30 35 40 45 50
%
An interesting trend to note is that some countries seeing their total

populations decline are still seeing an increase in their urban populations.
Chief amongst these are European emerging economies including Poland,
Hungary and Belarus. These economies are set to see a combined fall
in population of 2.0 million inhabitants between 2014 and 2030,
but at the same time their urban populations are expected to increase
by a combined 1.5 million. While the demographics at the topline in these
countries may seem unfavourable, at an urban level they are not. 70.3%
of the population is expected to reside in urban areas in these 3 countries
by 2030 and this means that implementing a strategy to target urban
consumers only could still be a winning one.

P op u lati o n
The urban landscape also differs from country to country, with some countries
focused on one or two major urban centres and others with a larger number
of important commercial centres. For example, Georgias capital Tbilisi was
home to 49.3% of the total urban population in 2013, and Riga in Latvia was
home to 47.1% in the same year. On the other hand, Indonesia is an example
of the latter. The capital, Jakarta, accounted for 9.1% of urban
population in 2030 and the top 10 cities combined accounted for just 25.5%
of the urban population. A market which is more concentrated should be easier
to enter, as it could be strategically worthwhile to enter only the main city
or cities.
Urban Population by City in Selected Emerging Markets: 2013

[Chart100%
13] Urban Population by City in Selected Emerging Markets: 2013
Georgia Latvia Indonesia
Capital90% 49.3 47.1 9.1
Next 9 Cities 29.8 29.9 16.4
Others 80% 20.9 22.9 74.5
70%
% of urban population
60%
Source: Euromonitor International from national statistics/UN Others
50%
Next 9 Cities
40% Capital
30%
20%
10%
0%
Georgia Latvia Indonesia

ACCESS
Access
Infrastructure
Internet
Partners
Retail
landscape
The practicalities of market entry are also key. How accessible is the country?
This should be considered in terms of infrastructure, Internet, partners
and the retail landscape.
Will it be difficult to get your products to market?
Are consumers easily accessible for both direct sales and marketing
and promotional activities?
Would a local partner facilitate market entry? Or is a local partner even

a prerequisite?
Is the retail landscape modern or traditional?

Acc ess
Infrastructure
Inadequate infrastructure adds significant costs to doing business in many
emerging markets. Roads, ports, railways, airports, telecoms and electricity
supply help businesses and the economy run efficiently. Yet poor infrastructure
can and is being overcome by corporations, and can also offer additional
opportunities for business.
The quality of infrastructure is not always aligned with the size

of the consumer market. Major emerging markets such as Brazil, Russia
and India suffer from poor infrastructure. Meanwhile, smaller markets such
as Namibia and Malaysia score highly on infrastructure, even beating wealthier
countries such as Australia and Ireland.
Quality of Overall Infrastructure in Selected Major Emerging Markets:

2012/2013
[Chart 14] Quality of Overall Infrastructure in Selected Major Emerging Markets: 2012/2013
Global Mean
Brazil Turkey 3.4

Russia 3.5
Indonesia
Mexico 3.7
India 3.8
China China 4.3
Mexico 4.4
Turkey India 5.3
Global Mea 4.3
Indonesia
Russia
Brazil
0 1 2 3 4 5 6
Score
Source: World Economic Forum Global Competitiveness Report 2013-2014

Note: How would you assess general infrastructure (e.g. transport, telephony, and energy) in your country?
Scores: 1 = extremely underdeveloped; 7 = well developed and efficient by international standards.
Mean refers to the average score of 148 developed and emerging and developing countries.
In the World Economic Forums Global Competitiveness Report

2013-2014, Russia was ranked 136 out of 148 countries in terms
of the quality of its roads; placing it alongside Mozambique.
Russia is the worlds 10th largest consumer market, so it should be noted

that its road infrastructure is woefully inadequate in respect of its scale.
Of course roads are just one aspect of infrastructure, but Russia also
suffers from poor quality port (88th) and air infrastructure (102nd).
For a country that spans 9 time zones, weak transport infrastructure is
a real issue for businesses looking to expand into the country.

Acc e s s
Quality of Transport Infrastructure in Russia: 2012/2013

[Chart160
15] Quality of Transport Infrastructure in Russia: 2012/2013
140 Urban
Roads (score 2.5) 136.0
120 3.9)
Air (score 102.0
Ports (score 3.9) 88.0
100 4.2)
Rail (score 31.0
Rank
80
60
40
20
0
Roads (score 2.5) Air (score 3.9) Ports (score 3.9) Rail (score 4.2)
Source: World Economic Forum Global Competitiveness Report 2013-2014

Note: The ranking is out of 148 countries for roads, air and ports and 121 for railroads. Scores:
1 = extremely underdeveloped; 7 = well developed and efficient by international standards.
Russia is by no means alone in its transport infrastructure challenges.

In Brazil only 13.5% of roads are paved and the country has 29,879 kilometres
of publically operated railway. This is a comparable figure to Mexico, a country
with only one quarter of Brazils land area. Manufacturers of fast-moving
consumer goods products which need to be easily available to end-consumers
often take control of their own distribution to overcome the challenges posed.
Coca-Cola offers a good example through its micro-distribution model,

whereby it employs local entrepreneurs to distribute its products.
In East Africa, including Ethiopia, Tanzania and Kenya, bicycles
and pushcarts are used to get the product to market when roads are
too deficient for delivery trucks.
Colgate in Cameroon uses three-wheeled motorcycles to distribute its

products to small, rural retailers. Deliveries to retailers increased
by 500% and customer sales increased by over 40%, as a result
of using this transport method.
Electricity infrastructure is another key challenge as stable power is needed

for running factories, shops and consumers homes if they are to purchase
electrical products. In the same WEF report, Qatar, the United Arab Emirates
and Saudi Arabia are the highest-ranking emerging and developing countries
in terms of the quality of their electricity supply. All are placed above major
developed economies including Australia and the USA.

Acc ess
India on the other hand fares badly, coming in at 111th out of 148 countries.
Urbanisation, an increasing middle class, and economic growth have all put
a strain on electricity infrastructure in India. Many businesses have installed
their own generators to combat the frequent power outages but this comes
at a cost, which in turn affects the bottom line.
From the consumer standpoint, electricity outages also bring problems.

According to the World Bank, 24.7% of the Indian population went
without electricity in 2011 which equates to 299 million people, more than
the entire population of three Germanys. This clearly has an impact on sales
of all sorts of consumer goods. However it also provides opportunities
for companies able to create new products or services to overcome this issue.
Godrej and Boyce launched what has been fted as the worlds
cheapest refrigerator in 2010. The refrigerator retails for US$69
and was designed to target poor, rural consumers. In a country
with 854 million rural inhabitants, this market is huge with a lot
of potential. The ChotuKool refrigerator from the outside looks like
a box, consumes half the electricity of a standard refrigerator, and stays
cool for hours with no power due to its superior insulation.
Internet
Internet access for both businesses and consumers has an impact on access
to the market. A lack of Internet access complicates building brand awareness
and makes communicating with consumers more difficult. It also poses
considerable challenges for those operating in online retailing. Internet use is
growing strongly and in 2013, emerging and developing economies accounted
for 68.5% of the worlds Internet users. In actual terms this means that there
were 1.8 billion Internet users across emerging and developing economies,
but that still means there were 4.3 billion without Internet access.

Acc e s s
Internet Users in Emerging and Developing Economies: 2008-2013

[Chart2,000
16] Internet Users in Emerging and Developing Economies: 2008-2013 35
1,800 Internet Users Percentage of Population using the Internet

30
2008 14.6
% of population using the Internet

829.6346
1,600
2009 1007.5416 17.5
Internet users - millions
2010 1,400 1247.9775 21.3 25

2011 1458.1578 24.6
1,200
2012 1663.5784 27.7 20
2013 1,000 1828.5648 30.0
15
800
Source: Euromonitor International from International Telecommunications Union/OECD/national statistics
600 10
400
5
200
0 0
2008 2009 2010 2011 2012 2013
Internet Users Percentage of Population using the Internet
Source: Euromonitor International from International Telecommunications Union/OECD/national statistics
Mobile connectivity is increasingly important, with many markets leapfrogging

fixed broadband in favour of smart phones. Mobile ownership is much more
widespread, with 89.8% of emerging and developing market consumers
having mobile phone subscriptions in 2013. The proportion of mobile Internet
subscriptions to mobile telephone subscriptions varies hugely from over 50%
in Macau, Latvia, Croatia and Qatar down to a negligible amount, 0.5% or less,
in Bangladesh, Pakistan and Liberia.
Social media use should also be a consideration. Once again this varies
in terms of the proportion of consumers using social media and also
the preference towards local or global apps and sites and the methods
of accessing it. Because of an increased emphasis on recommendations
from friends or experts in emerging markets compared to developed markets,
social media marketing should aim to leverage peer-to-peer connections
as well as consumer-to-brand connections. Social media strategy must
be customised as a one-size-fits-all policy will not work.
Most Popular Social Networking Sites in Selected Emerging Markets

Country Site
Brazil Facebook.com
Russia Vk.com
India Facebook.com
China Weibo.com
Indonesia Facebook.com
Mexico Facebook.com
Turkey Facebook.com
Source: Alexa

Acc ess
Connection speeds can also vary dramatically. According to Akamai, a cloud

services company, in Q1 2014 Romania, Russia, Poland and Hungary all had
faster average connection speeds than France, Australia and New Zealand.
At the other end of the spectrum, there were six countries out of a total
of 32 emerging and developing economies with average connection speeds
of 1 Mbps or less Bangladesh, Bolivia, Yemen, Botswana, Cameroon
and Lebanon. In terms of the largest emerging markets, the average connection
speed in Russia, the highest performing BRIC, is five times that of Indias,
the worst performing BRIC. High speed internet is not only of relevance
to tech companies, but also to any company looking to reach consumers online
because it impacts how consumers access online content, which in turn
impacts marketing and advertising strategies.
Average Internet Connection Speeds in Selected Emerging Markets: Q1 2014
Romania
Region RussiaConnection Speed (Mbps)
Average
Poland
Lebanon Hungary 0.5
Bolivia Thailand 0.9
Yemen Turkey 0.9
United Arab Emirates 0.9
Cameroon
Uruguay
Botswana 0.9
Mexico
Bangladesh Malaysia 1.0
Paraguay Chile 1.2
Venezuela Ecuador 1.3
India China 1.7
Argentina
Costa Rica Colombia 2
Vietnam Peru 2
PhilippinesSouth Africa 2.1
Indonesia Brazil 2.4
Panama
Panama Indonesia
2.6
Brazil Philippines 2.6
South Afric Vietnam 2.6
Peru Costa Rica 2.7
Colombia India 3
Venezuela
Argentina Paraguay 3.2
China Bangladesh 3.2
Ecuador Botswana 3.3
Chile Cameroon 3.3
Yemen
Malaysia Bolivia
3.5
Mexico Lebanon 4
Uruguay 4.3
0 1 2 3 4 5 6 7 8 9 10
United Arab 4.3
Mbps
Turkey 5
Thailand 5.2
Hungary 7.5
Source: Akamais State of the Internet Q1 2014 Report
Poland 7.5
Note: Average Internet speed is calculated by taking an average of all of the connection speeds calculated
Russia 8.6
during the quarter from the unique IP addresses determined to be in a specific country. Speed is measured
Romania 9.3
in megabytes per second (Mbps).

Acc e s s
Partners
Apart from exporting directly or selling via a distributor, there are three
main choices when entering a new market go it alone, enter into a strategic
partnership or acquire a local company. The companys attitude to risk should
form a large part of the decision, alongside the operational realities and
challenges on the ground; as well as government regulation.
Going it alone can be costly and patience will be required because building a
presence in the market from scratch cannot be achieved overnight. A strategic
partnership enables a business to dip a toe into the water of an emerging
market. It lessens the risks and the capital outlay whilst boosting access to
local knowledge, talent and the supply chain. Making an acquisition enables
the business to integrate the target company into its operations and maintain a
higher degree of control of the market.
One chief consideration should be to observe other market entrants. How

have other successful companies entered the market? In addition if there are
significant gaps in the companys knowledge about market dynamics and
end consumers for example - a local partner could be a useful means to an
end. Finally, if there are challenges in terms of infrastructure or important
gaps in the supply chain, acquiring a local company or entering into a strategic
partnership can be a way to overcome these issues.
The French retailer, Carrefour, is expanding into Africa via a partnership

with CFAO to open stores in eight African countries by 2015. CFAO is
a distributor and a large supplier of cars, trucks and pharmaceuticals.
Carrefour hopes to benefit from CFAOs local business and
government connections and the deal enables it to expand into Africa
at relatively low risk. The agreement between the two companies
covers Nigeria, Cte dIvoire, Ghana, Cameroon, Congo-Brazzaville, the
Democratic Republic of Congo, Gabon and Senegal.
Despite the Indian government liberalising rules on foreign ownership,

Starbucks entered the Indian coffee market in 2012 through a joint
venture with Tata Global Beverages. Tata Starbucks Limited launched
in Mumbai and opened its 50th store in Chennai in July 2014. It also
owns a coffee roaster and packager. In 2013, Tata Starbucks had a 2.2%
brand share in Chained Cafs/Bars in India, way behind the market
leader Caf Coffee Day with 45.0% but it sees the expansion potential
in the country and is looking at moving into second and third tier cities.
Its alliance with Tata has enabled it to grow its business at a faster rate
than would otherwise have been the case.

Acc ess
Retail landscape
The nature of retailing can be key. An economy where the traditional
retail sector dominates, although not impossible to serve, does require
specific strategies. The retail landscape can vary significantly from country
to country. For instance, in Thailand the top five retailing operations account
for 28% of retail sales but in Vietnam the figure is far lower at 7%.
Distribution is going to be a much taller task in Vietnam than Thailand.
It is not easy supplying hundreds of thousands of mom and pop stores.
To meet these distribution challenges, many successful companies employ

their own innovative distribution methods. For instance, micro-distributors
or village entrepreneurs are being used by multinationals across Asia,
Africa and Latin America. This is a particularly useful strategy in retail markets
where traditional retailing remains dominant. It is difficult for companies
to deliver and serve hundreds of thousands of kiosks and mom and pop stores
because they require frequent but small deliveries. Micro-distribution can
take the form of door-to-door sales, home demonstrations and deliveries
through small third party wholesalers.
In Brazil in 2010, Nestl launched an Amazon barge, a floating

supermarket with 100-square meters of selling space which travels
to 18 small cities and 800,000 potential consumers. The barge contains
well-known Nestl brands, including Ninho (packaged milk), Maggi
(soups and seasonings) and Nescaf (instant coffee). As well
as supplying consumers, the barge also supplies micro-distributors
in the area.
Nestl Brazil uses a network of micro-distributors and individual

sellers with handcarts to reach consumers who would otherwise
not have access to Nestl products. As of 2012, Nestl had 200
micro-distributors and 7,000 direct saleswomen, from impoverished
areas and employed by the micro distributors, across the country.

BUSINESS ENVIRONMENT
Business
Environment
Ease of
doing
business
Regulations
Corruption
Human
capital
The friendliness of the business environment is also a crucial factor.

The practicalities of doing business, the regulatory environment,
corruption levels and the skills available in the workforce, which can all make
or break a business. Businesses can thrive in countries where these factors are
not favourable but a carefully thought-out strategy is a must.
Is there a level playing field between domestic and foreign investors?
Is the rule of law sufficient?
How can the business beat corruption?
How can the business recruit and retain talent?

B u si n e s s E nv i r o nm e n t
Ease of doing business

The practicalities of doing business in a market cannot be overlooked.
The World Banks Doing Business Report can be useful in gaining an overview
of the business environment and is cross-country comparable. It should be
noted the report covers local firms, focusing on small and medium-sized
businesses operating in the countrys largest city. However it can still provide
a useful starting point in gauging a governments friendliness towards business.
In terms of emerging and developing economies, Malaysia ranks highest
in the 6th position overall, beating the UK, Australia and Canada
amongst others. At the other end of the rankings comes Chad the most
difficult country to do business in a ranking of 189 economies. In practical
terms this means that it takes 16 days to start a business in Malaysia,
compared to 183 in Chad. It takes 11 days to export a shipment of goods
from Malaysia, compared to 73 in Chad. Chad might not be at the top of mind
for many businesses looking to expand into emerging markets for the first time,
but even large economies such as India (134th) and Brazil (116th) fare badly.
A weak business environment adds costs in terms of both time and money
and this should be factored into any expansion plans.
Top 10 Emerging and Developing Economies in Doing Business 2014

Economy Ease of Doing Business Rank
Malaysia 6
Georgia 8
Lithuania 17
Thailand 18
Mauritius 20
United Arab
23
Emirates
Macedonia 25
Saudi Arabia 26
Rwanda 32
Chile 34
Source: World Bank
Note: Data refer to a ranking of 189 economies

Busin ess En vi ron m e n t
Regulations
Government regulations can be friend or foe. The World Banks Regulatory
Quality Index, capturing perceptions of the ability of the government
to formulate and implement sound policies and regulations that permit
and promote private sector development, is a useful starting point
in understanding the regulatory environment in general. The index scores
and ranks 202 economies. Emerging markets vary in performance,
from Chile which is ranked in 15th position globally above Germany
and the USA to North Korea at 202nd. Chiles strong performance is testament
to the governments commitment to encourage foreign investment.
Foreign and domestic companies are treated equally in almost all sectors
and the Foreign Investment Statute Decree Law 600 (DL600) ensures that
foreign companies encounter transparency.
Looking at The Heritage Foundations 2014 Business Freedom indicator,

Georgia, the Maldives and Lithuania are the best-placed emerging
and developing economies with North Korea, Eritrea and Cuba at the bottom.
This index represents the overall burden of regulation as well as the efficiency
of government in the regulatory process. In terms of the largest emerging
markets, those with a GDP above US$200 million, Malaysia is the best
performer followed by Colombia and Mexico, and India brings up the rear.
India is overly bureaucratic and it has inefficient administrative
and judicial systems. Foreign investors do not receive the same treatment
as their local counterparts and foreign ownership caps exist in some sectors.
In Malaysia, the government has been liberalising the rules governing foreign
direct investment (FDI) and the opening up of the economy has extended
to most subsectors of the economy.

Business Freedom Score in Large Emerging Markets: 2014
90
80
Business
70 Country Name
Freedom
Business freedom score
Malaysia
60 85.6
Colombia 85.2
Mexico50 76.8
South40Africa 74.5
Kazakhstan 74.4
UAE 30 74.4
Qatar20 71.7
Thailand 71.4
Peru 10 70.6
Poland 70.1
0
Russia 70.0
Pakistan 69.4
Chile 69.3
Turkey 67.6
Saudi Arabia 67.3
Egypt
Source: The Heritage Foundation 62.7
Iran
Note: Business freedom is an overall indicator of the62.3
efficiency of government regulation of business.
Philippines 59.9
The quantitative score is derived from an array of measurements of the difficulty of starting, operating,
Iraq 56.9
and closing a business. The business freedom score for each country is a number between 0 and 100,
Indonesia 54.8
with 100 equaling the freest business environment.Data refer to emerging economies with GDP over
Argentina 53.9
US$200 million.
Brazil 53.8
China 49.7
Nigeria 48.0
Venezuela 43.4
Corruption
India 37.7
At the country level, corruption is strongly linked to economic stability

and inflows of foreign direct investment. It affects competition,
government efficiency and income distribution. At the business level,
it is fraught with risk both legal and financial but also reputational.
Corruption therefore has a two-fold impact on business. It is a direct risk
and also an indirect one, through its tendency to suppress market demand
and economic development.
Transparency International collects the most well-known corruption data.

Their Corruption Perceptions Index 2013 ranks 177 countries against
perceived levels of public sector corruption. Chile, UAE and Qatar are the three
best-placed largest, with total GDP of more than US$200 million, emerging
market economies and Iraq, Venezuela and Nigeria are the worst performers.
Corruption is identified as the top impediment to conducting business in 27

out of 148 economies in the World Economic Forums Global Competitiveness
Report 2013/2014. These economies include Bulgaria, Cambodia, Colombia,
Indonesia, Mexico, Pakistan, Russia and Thailand.
In terms of irregular payments and bribes, there is a wide gulf between

those where it is very common to those where it almost never occurs.

Busin ess En vi ron m e n t
Irregular Payments and Bribes: Best and Worst Emerging and Developing
Market Performers
6
Business
Country Name
Freedom
5
Qatar 6.5
UAE 6.4
4
Oman 5.8
Score
Brunei 5.8
3
Chile 5.7
Rwanda2
5.6
Saudi Arabia 5.5
Uruguay
1
5.5
Georgia 5.5
Bahrain
0 5.5
Venezuela 2.5
Benin 2.5
Angola 2.4
Bolivia 2.4
Yemen 2.4
Mali
Source: The Global Competitiveness Report 20132014 2.3
Myanmar
Note: Average score across the five components of the following2.3 Executive Opinion Survey question:
Bangladesh 2.2
In your country, how common is it for firms to make undocumented extra payments or bribes connected
Guinea 2.2payments; (d) awarding of public
with (a) imports and exports; (b) public utilities; (c) annual tax
Chad 2.2
contracts and licenses; (e) obtaining favorable judicial decisions? In each case, the answer ranges
from 1 (very common) to 7 (never occurs). | 201213 weighted average
Human capital
Both finding and keeping talent can be a huge challenge in emerging markets.
Recruiting local talent can really help in building a successful brand.
Local managers will have a deep understanding of cultural norms which is
crucial to success. However, skills shortages can be a problem and churn or staff
retention is often high. The pool of educated professionals can be smaller.
For instance, 18% of the eurozone population has a higher education,
compared to 7% in emerging and developing markets.
Competition for the best people is also tough. A recent McKinsey survey
in China found that senior managers in global organizations switch companies
at a rate of 30-40% a yearfive times the global average.
These kinds of pressures lead to wage inflation. Between 2008 and 2013,
China saw a 45.2% increase in wages in manufacturing, compared to a 1.5% rise
in the USA. The days when emerging markets were seen as a source of cheap
labour are now over in many countries.

Changes in Average Real Wages in Manufacturing in Selected Economies:

2008-2013
China
% change
Ukraine
France -3.5
United KingIndia -3.1
Mexico -1.0
Indonesia
USA 1.5
Turkey Russia 9.3
GermanyGermany 11.4
Russia 27.0
IndonesiaTurkey 27.3
India USA 31.6
Ukraine 35.9
Mexico
China 45.2
United Kingdom
France
-10 0 10 20 30 40 50
% change
Source: Euromonitor International from International Labour Organisation (ILO)/Eurostat/national statistics

OTHER CONSIDERATIONS
These factors are more or less relevant to any business in any sector, but there
are also sector-specific and business-specific factors which should be added
to this matrix. In addition, the importance assigned to each of our 16 factors
will differ according to industry sector and company profile. For some
human capital may be the primary concern, whereas for others it could be
middle class. Our matrix is therefore a useful starting point which can be
tailored to suit any business.
The primary concern is to undertake a thorough analysis of all markets

of interest before creating a shortlist of potential winners. A failure to do
this could lead to missed opportunities, or an embarrassing and costly mistake.
The Whirlpool World Washer is held as an early example

of the unforeseen challenges facing a company targeting
emerging markets. This washing machine was a pared down model
which Whirlpool intended to launch across Brazil, Mexico, China,
and India. The launch was a disaster in India because saris, which are
metres in length and made of very fine material, were getting snarled
and torn in the small space between the machines agitator and drum.
This basic error was due to a lack of research into local needs
and the assumption that what worked in Mexico would work in India.

SUMMARY AND
KEY TAKEAWAYS
All markets are not the same. All have unique challenges and opportunities.
The first and most important step when planning an expansion strategy is
to select the market or markets that are right for your business. Our four pillar
model, encompassing market, population, access and business environment,
brings methodological clarity to selecting new emerging markets.
The first pillar, market, is perhaps the most fundamental. It incorporates

macroeconomic stability, the middle class, the consumer market size,
growth and openness. These elements incorporate the fundamental
concerns of any emerging market strategy.
Many of the most important decisions that planners must make

should be shaped by the factors within the second pillar population.
Demographics provide the backdrop for all consumer markets
and enable businesses to understand how their market fits
into the demographic landscape.
The factors within the third pillar, access, concern the realities
of market entry. How accessible is the country? This should be considered
in terms of infrastructure, Internet, partners and the retail landscape.
The fourth pillar, business environment, incorporates the practicalities

of doing business and how the regulatory environment, corruption levels
and the skills available in the workforce can make or break a business.
Business can thrive in countries where these factors are not favourable,
but a carefully thought-out strategy is a must.
Our four pillar model should be tailored on a case-by-case basis.

There are sector-specific and business-specific factors which should be
added to the matrix. In addition, the importance assigned to each of our
16 factors will differ according to industry sector and company profile.

HOW CAN EUROMONITOR
INTERNATIONAL HELP?
Success in emerging markets begins with knowledge. A thorough

understanding of all aspects of the market is crucial. Euromonitor International
helps businesses understand all of the factors central to understanding
the market insight into industry sectors, economic indicators, the business
environment and consumer trends and lifestyles to ensure optimum
performance in new markets and help lessen the risk of costly mistakes
and missed opportunities.
Euromonitor Internationals Passport database offers data and analysis that

helps companies define their markets from understanding macro-economic
stability and the practicalities of doing business to providing insight
into patterns of income, expenditure, consumer trends, motivations
and attitudes. Euromonitor helps corporations understand the specifics
of their markets down to a granular level.
For example, how many 25-29 year olds earn in excess of US$150,000
annually in Peru or Vietnam or Nigeria? What is the household spend on food
and alcoholic beverages of a middle-income household in Indonesia,
Russia or Turkey? How many households in Colombia, Nigeria or Poland have
access to an internet-enabled computer? This type of information helps you
strategically target and market to your audience in any country across
the globe.
We monitor industry trends and provide market size and company

and brand share information for 28 industries worldwide. This white paper is
just the start of the information we have available in our award winning
Passport database. To ensure your market entry success, request a
demonstration today to learn more about our products and services.

THE AUTHOR
SARAH BOUMPHREY
Head of Strategic, Economic
and Consumer Insight, UK
@SarahBoumphrey | LinkedIn
Sarah has 15 years experience in economic and consumer research.

Sarah focuses on translating economic and consumer trends information
into useful insight, advising clients on how these trends have a real-life
impact on their business. Sarah has played a lead role in developing
Euromonitor Internationals macroeconomic and consumer trend content
with a special interest in issues around sustainability, emerging markets
and the post-recessionary consumer landscape. Previously, as Head
of Countries & Consumers, Sarah led a global team of analysts responsible
for Euromonitor Internationals social, economic and consumer trends analysis.
Sarah has an undergraduate degree in European Studies and a postgraduate

qualification in International Commerce. She joined Euromonitor International
in 1999 as a Project Coordinator researching economic data across
210 countries.

ABOUT EUROMONITOR
Euromonitor International is the worlds leading provider for global business

intelligence and strategic market analysis. We have more than 40 years
of experience publishing international market reports, business reference books
and online databases on consumer markets.
Our global market research database, Passport, provides statistics, analysis,

reports, surveys and breaking news on industries, countries and consumers
worldwide. Passport connects market research to your company goals
and annual planning, analysing market content, competitor insight and future
trends impacting businesses globally. And with 90% of our clients renewing
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To discover more about the power of Passport, read product reviews or request
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Succeed in Emerging Markets:

Selection, Strategy and First Steps

EUROMONITOR INTERNAT ION A L 2 0 1 4

iv EU R O M O N I TO R I NTERNATI O NAL 2014

EUROMONITOR INTERNATIONA L 201 4 v

34 SUMMARY AND KEY TAKEAWAYS

35 HOW CAN EUROMONITOR INTERNATIONAL HELP?

vi EU R O M O N I TO R I NTERNATI O NAL 2014

EUROMONITOR INTERNATIONA L 201 4 1

Macroeconomic Size and Ease of doing

Middle class Age structure Internet Regulations

2 EU R O M O N I TO R I NTERNATI O NAL 2014

The first pillar, market, is perhaps the most fundamental. It incorporates

EUROMONITOR INTERNATIONA L 201 4 3

The Worlds 10 Fastest-Growing Economies in 2013

Source: Euromonitor International from national statistics/Eurostat/OECD/UN/International Monetary

4 EU R O M O N I TO R I NTERNATI O NAL 2014

Consistent growth with numerous drivers, underpinned by sound fiscal

The middle class

But what constitutes a middle class income varies dramatically even

EUROMONITOR INTERNATIONA L 201 4 5

Disposable Income of Decile 5 Households by Region: 2013

Africa 1,755 8,665

Source: Euromonitor International from national statistics

Spending priorities also vary dramatically as a result of different tastes,

Spending on Essentials vs. Discretionary Goods and Services by Decile 5

6 EU R O M O N I TO R I NTERNATI O NAL 2014

In practice this means that a decile 5 household in Nigeria devotes 79%

Consumer market size and growth

Macedonia is expected to see strong economic growth. It has a prudent

Turkmenistan has seen rates of economic growth average 11.0%

EUROMONITOR INTERNATIONA L 201 4 7

The Worlds 10 Fastest-Growing Consumer Markets: 2008-2013

consumer expenditure, US$ billions

Source: Euromonitor International from national statistics/OECD/UN/IMF

% growth 2008-2013 total size in billion US$ 2013

Source: Euromonitor International from national statistics/OECD/UN/IMF

Total Trade as a % of GDP: 2013

Source: Euromonitor International from national statistics/OECD/IMF

8 EU R O M O N I TO R I NTERNATI O NAL 2014

Foreign direct investment (FDI) is another useful way of assessing an economys

The Top 10 Emerging and Developing Market Performers in the Index

Source: 2014 Index of Economic Freedom, The Heritage Foundation

More difficult to quantify, but equally important, is the receptiveness

EUROMONITOR INTERNATIONA L 201 4 9

Percentage of Respondents who Describe Themselves as Liking to Try New

Brazil Agree Neither agree n Disagree

Source: Euromonitor International's Global Consumer Trends Survey 2013

Agree Neither agree nor disagree Disagree

Source: Euromonitor Internationals Global Consumer Trends Survey 2013

This also plays out in purchasing decisions, as noted in Euromonitors Path

10 EU R O M O N I TO R I NTERNATI O NAL 2014

Size and growth

Many of the most important decisions planners must make should be

EUROMONITOR INTERNATIONA L 201 4 11

Understanding and being able to harness population trends enables new

Which age segment offers most opportunities?

What are the opportunities and challenges that lie ahead?

Is my target audience growing and will it continue to do so?

Is it geographically dispersed or concentrated?

The Demographic Landscape in Emerging and Developing Economies: 2013

Source: Euromonitor International from World Bank/Eurostat/UN/national statistics

Size and growth

12 EU R O M O N I TO R I NTERNATI O NAL 2014