HCMC - Global investors have again picked Vietnam as the number one emerging investment destination beyond Brazil, Russia, India and China (BRIC) for the third year in a row since 2008 as indicated in a recent report by the UK Trade and Investment (UKTI) and the Economist Intelligence Unit.
More than 520 global executives representing all major industries participated in a survey conducted from July to August this year to explore the changing outlook for businesses already operating in emerging markets or planning to expand into these markets.
The executives expressed in the “Great Expectations: Doing business in emerging markets” report the markets they think are representing the best opportunities and the primary rationale for operating.
Aside from the BRIC bloc, global investors ranked Vietnam above Indonesia, Mexico, Argentina, Saudi Arabia, South Africa, Nigeria, Malaysia, United Arab Emirates and Turkey when they were asked about the emerging markets in their main targets for new and/or increased investment over the next two years.
In the top 10 investment targets for 2010, Indonesia advanced to second from fourth in last year’s survey and Argentina to fourth from twelfth while Mexico stood unchanged. Malaysia slid to eighth spot from fifth and the UAE to eighth from second in 2009.
On the global scope, the executives selected China as the top market for investment with 20% of them opting for the world’s second-largest economy, followed by Vietnam with 19% and India with 18%.
The survey points out up to 76% of global investors see emerging markets as a source of new business growth, and these markets are also viewed generating new consumer demand for the global economy.
According to the report, 71% of the respondents agreed that emerging markets beyond the BRIC countries collectively offer an opportunity too big to ignore. As a result, companies are prioritizing a range of other countries alongside their well-established operations in the bloc.
Many global firms are increasingly familiar with emerging markets, as recognized in the survey that shows nearly half of the respondents have been operating in one or more emerging markets for at least a decade and two thirds have been there for six years or more.
Far more executives believe that the potential rewards far outstrip the risks within both the BRIC countries and other emerging markets. The findings show 52% of them expect growth prospects for their once-risky emerging markets business to be “significantly better” over the next two years.
The UK Business Secretary Vince Cable said in support of launching the new report in London last week that the balance of global economic power was shifting towards emerging markets.
Emerging markets magnetize not only big companies but also small and medium enterprises. One in every three SMEs polled plan to expand into one new emerging market over the next two years through joint ventures or partnerships with local companies.
The survey found local companies in emerging markets are sought after for partnerships and alliances. Despite a greater ease with the risks of new places, the need to tap into local knowledge and contacts quickly remains strong.
The UKTI notes by 2030, 93% of the world’s middle class will live in emerging markets and the 30 fastest growing cities will be in emerging markets in the 2008 -2025 period.
Late last year, PricewaterhouseCoopers released a study showing that Hanoi and HCMC would be the top two cities having the world’s highest average real GDP of 7% in 2008-2025 in the list of the top 30 fastest growing cities in terms of economic growth.
