Staying Competitive in Emerging Markets
Despite heightened competition from local companies and slowing economic growth, emerging markets are still compelling for global companies who want to enter or expand market share. These economies benefit from hundreds of millions of households gaining consumption power. That many of these populations are growing faster than those of developed market countries is another reason why emerging markets will continue to be appealing for international businesses. To understand how to navigate emerging markets these days, one must understand new economic forces that have supported the growth of services businesses.
Historically, waves of globalization have been driven by new technologies used to increase productivity in various industries. Stable cross-border financial and trade flows supported economic growth and integration. However, we are now entering another phase of globalization with characteristics different from those of prior phases.
Digitization bolsters services businesses
According to Boston Consulting Group [1], in recent years, global trade flows have declined, while services flows have increased. This is partly due to how digital technologies are reshaping productivity in most industries. For example, as manufacturing companies benefit from increased productivity due to technology implementation, the low cost of labor in emerging markets becomes less relevant to profitability, and operations are moving closer to the markets where companies are headquartered. Despite the fact that trade of goods in decreasing, digital distribution channels and the growth of digital platforms increase opportunities for services-based companies to sell into new markets. It is easier than ever for small and mid-sized businesses to compete. Accurate translation facilitates market entry and the capture of market share.
Decentralization requires attention to local markets
Another key characteristic of this new phase of globalization is decentralized global governance and growth. Rather than being driven by one region’s growth, the new global economy demands that companies shift from a focus on global headquarters and a globally optimized strategy to one of local maximization. A focus on local markets is another aspect of BCG’s strategic recommendations that requires a comprehensive, professional translation process to accompany the broader execution strategy.
[1] Bhattacharya, A., Bürkner, H., & Bijapurkar, A. (2016, July 20). What You Need to Know About Globalization's New Phase. Retrieved from https://www.bcgperspectives.com/content/articles/globalization-growth-what-need-know-globalization-radical-new-phase/
