According to a survey of 440 senior executives in a recent study, increasing revenues was cited as the most important reason for investing in emerging markets by 84% of respondents, followed by reducing costs (77%), using low-cost suppliers (69%) and achieving faster time to market (61%).
Despite companies' goals of increasing revenue, under half (47%) of respondents say they had been extremely or very successful in meeting their revenue goals in emerging markets.
China ranked ahead of all emerging markets of interest to executives, with more than two-thirds saying they expect their company to locate or expand into the market within the next five years. Following China, Eastern Europe, Southeast Asia, Latin America and India are also expected to draw investments.
Production and sales/distribution are the most likely functions to be located in or expanded into China with 80% of respondents saying that is the case, while 40% predict research and development operations to relocate or expand into the country.
For each region, the survey results are as follows:
- Eastern Europe: 81% plan to locate or expand sales/distribution operations and 43% will locate or expand production operations.
- Southeast Asia: 72% plan to locate or expand sales/distribution operations and 46% investing in production.
- Latin America: 49% are likely to locate or expand operations.
- India: a third of executives expect their companies to invest in research and development
However, one-quarter of executives surveyed said their company found it difficult to attract qualified workers in China, India, Latin America and Eastern Europe, with the greatest difficulties occurring for highly-skilled workers such as managerial, research and development, and sales/marketing personnel.
Source(s): Deloitte's Global Manufacturing Industry Group