Companies looking to target emerging markets could benefit from focusing both on obvious locations like China and India and somewhat neglected areas such as Colombia and Vietnam.

Financial services provider BBVA identified ten nations it believes will do more to aid the worldwide expansion in GDP than a majority of their advanced counterparts over the coming decade.

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Major brand owners like General Electric, DuPont and Nestlé are all turning to India as an innovation hub. Some interesting examples :

General Electric has opened, some ten years ago its John F Welch Technology Centre, Bangalore, investing around $175m since then. It has outlined an intention to boost the headcount at this unit by 3,000 scientists, supplementing the 5,500 existing staff, alongside constructing a plant in the country. “India is a very critical market right now. As the outlook for the US and Europe slows … the interest levels here continue to go up,” said John L Flannery, President/CEO, GE India. “We have reorganised the business, created a separate P&L so that we could be more responsive to the market and make decisions quickly.” “If we were to pick a word of what we have to do in India, it is localisation.”

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According to the Indian National Council of Applied Economic Research (NCAER), a very high praised think tank, at least 45% of the  nation’s population are likely to live in towns and cities by 2050. This compares with a total of 30% at present, and should result in 379m people migrating from rural areas during the next four decades.

The increasing size of the middle class and accelerating urbanisation in India will provide substantial opportunities for brand producers.

Currently, the 20 biggest cities in India contain 10% of its residents but generate 31% of earnings, 60% of surplus income and 21% of consumer spending. Rural areas – currently home to 70% of Indians - are also undergoing a transition.

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International brands could gain significant benefits from focusing their efforts on India, where consumer spending may prove more resilient than other emerging markets.

According to a report from the Schwab Center for Financial Research, the country has a variety of factors in its favour.

• Low penetration of goods and services combined with a large population experiencing rising incomes is likely to help India sustain near-term growth,
• Alongside a population of 1.2 billion people, it has a young workforce which is set to expand in size by 46%, or 275 million people, between 2000 and 2025.
• The domestic middle class also now encompasses 38 million shoppers, including a number of English-speaking graduates employed in the services and IT industries. Increasingly, the middle class has the income to spend on discretionary items ,

If companies are refining products to meet the unique needs of Indian consumers, such as a washing machine that automatically finishes a wash after a power outage, success will be round the corner. [Read more →]