Research

1 “If you understand the culture, opportunities can be cultivated better,” Igor Filatotchev, Professor of Corporate Governance and strategy at Cass Business School, said.

However, according to Dean White, head of the emerging markets group at PA Consulting, do not rely too heavily on secondary sources of information, particularly when provided by people or organisations that may have a vested interest.

For example, government officials may want to build trade links between countries. “Nothing replaces being on the ground if you are considering going into a market,” Mr White said. He suggests going to the bar at the local Marriott and chatting to other business people.

Have an exit plan

2 Know how you would get assets and, if necessary, people out of the country. “I would not recommend going into a new geography without a plan for how to get out if the business does not develop the way you expect,” Mr White said.

Choose the right place

3 Too many businesses take a regional approach rather than recognising the diversity between and within countries, Ben Shankland, an emerging markets consultant at Double Helix Development, said. Emerging markets are not homogenous.

“For example, countries in Central and Eastern Europe have launched profound economic reform and their transition to liberal market economies has been accelerated by the prospects of European Union membership,” Professor Filatotchev said. “In China and Russia, on the other hand, the State is playing an increasingly important role, especially in strategic industries. When planning a market entry, foreign entities must understand differences in cultural, legal, political and economic environments.”

Everything will be different

4 People tend to expect emerging markets to operate on similar lines to those they already know, but the reality is very different, Ratika Jain, the chief operating officer at Imperial College Business School’s Rhajiv Gandhi Centre, said. “You need to grow much faster and much larger in emerging markets,” Tommy Weir, the managing director of leadership solutions at Kenexa, said.

Take a test run

5 Consider testing the waters, with a limited transaction before jumping in, Mr White advised. “I have seen companies set up in certain countries because they feel that they have the right fit for what’s needed, but they fail because they were not aware of undercurrents in the economy.” Finding a local partner can also be a useful approach, Miss Jain said: make sure that you do a thorough background check on any potential partners before signing up.

Don’t think like a colonialist

6”Never assume that you can open up a new market with your existing products,” Dr Weir said. And don’t rely on research carried out in the developed world when positioning brands in emerging markets, Mr Shankland added. “Companies should look to build business propositions for emerging markets early in their product development process rather than looking at emerging markets as a second wave of commercial activity,” he said.

Know the rules

7 “You must understand the regulatory environment,” Miss Jain said. “In India, for example, you have federal, state and local legislation ... and it’s important to understand all of this.” Laws around issues such as taxes or the environment can seriously change the economics of your business proposition, she added.

You also need to know the unwritten rules relating to everyday business practice, Mr Shankland said.

Relationships are critical

8 “It is very difficult to win a tender for your goods and services if you do not have a relationship with that potential client”, regardless of the quality of your proposal, Mr White said. Make the effort to meet people face to face. The relationship will be even more important once the deal is done; in many countries, it is very difficult to rely on contracts, particularly if the client is or has strong connections to the government.

Learn from others’ mistakes

9 Analyse the failures and successes of others before formulating your own strategy, Professor Filatotchev said. Being first in may not be such a good idea, Mr White said. “I would rather go with the pack because there is protection in being part of the herd. It’s nice to be able to see how others are doing. The first-mover advantage can be transitory at best.”

Employ the right people

10 “[Western businesses] understand that consumers are different in these markets, but we have not figured out that the employee is different, too,” Dr Weir said. The average age of local employees will be much younger, while many will be new to both cities and corporate life; this, in turn, will call for a different leadership style. Typically, businesses attempting to break into emerging markets send entrepreneurial personalities and technical experts, but not people who can develop employees.

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