The BRIC acronym is one of economics’ most renowned. It’s been around for over a decade and has come to represent the world’s four most emerging economies, Brazil, Russia, India and China. Other advanced economies such as, South Africa and South Korea have also been touted as worthy inclusions due to their rapid development over the past five years or so.
This year however, Brazil’s economy has slowed down and is predicted to only grow by 2% this year whilst Russia’s development is likely to plateau also, causing minor tremors around the business world. It has acted as a timely reminder of just how delicate emerging markets are and how misleading the term ‘emerging’ can be when coupled with a market that is still yet to establish itself as a dominant player.
Brazil and Russia are still two of the world’s most emerging economies, with the combined BRIC GDP equating to almost a quarter of global domestic product. A slowdown however in the fortunes of two of the acronym’s most prominent players will not fill prospective investors with much hope and optimism.
This begs the question as to whether companies from developed economies should continue to fight for a presence in developing nations or be content with the progress that they’re making in their current geographic regions.
There are a number of issues that arise for potential new entrants, including culture, infrastructure and language. These may seem academic in principal, but they play a huge role in a company’s likelihood of success. Retailers Best Buy and Tesco failed in China because they didn’t take cultural factors into consideration; they didn’t understand how retail worked in China and although it would be unfair to say that they built stores identical to ones back home, they weren’t far off.
The way you interact with people is also unique to the BRIC that you are investing in. When dealing with Brazilian businessman you need simpatico, a confrontational approach never works. It’s entirely different in Russia, where combativeness often wins the day. Understanding these fluctuations in behavior can hold the key to achievement in these areas.
The message is to make sure that you are fully aware of how different your operations will be in a BRIC country when compared to your own. There is so much success to be had with the BRICS, it just requires care and attention and knowledge of not just how a country’s market works, but also how its people intereact with products.