1 Effective Business in Emerging Economies Simon Bedford Thursday 8 th September - Bradford University School of Management 10 th August, 2011

2 Programme UKTI views and coverage World Bank and CPI The influence of culture Emerging markets – entry route Views of some Yorkshire businesses Top tips

UKTI operates in 162 locations, in 96 markets, covering 98 per cent of GDP © UKTI Yorkshire 2011

4 Emerging/High Growth Markets  Which 20 countries would you select? Question?

Brazil Russia India China Colombia Indonesia Vietnam Egypt Turkey South Africa Malaysia Mexico Qatar Saudi Arabia Singapore South Korea Taiwan Thailand UAE Hong Kong UKTI High Growth Markets © UKTI Yorkshire 2011

6 OMIS Top 20 Activity Markets USA China India Brazil Japan Germany France UAE Russia Mexico Australia Spain Nigeria Saudi Arabia South Korea Turkey Canada Singapore Italy Nordics

7 Risk Indices  World Bank  CPI

8 Risk Indices  World Bank –Doing Business Project –Economy Rankings –183 countries –

9 World Bank Rankings Thailand 19 South Africa 34 Mexico 35 UAE 40 Turkey 65 Vietnam 78 China 79 Russia 123 Brazil 127 India 134

10 Risk Indices  CPI –Transparency International –Corruption Perception Index –178 countries –

11 CPI UAE 28 South Africa 54 Turkey 56 Brazil 69 Thailand 78 China 78 India 87 Mexico 98 Vietnam 116 Russia 154

12 CPI Map of the World

13 Culture in negotiating styles  Culture can be a major factor in the success or failure of business negotiations  Be aware of the differences in buyer-seller negotiation styles in selected countries

14 Culture In negotiation with a distributor, or potential customer culture can be a vital ingredient for a successful outcome. How should we approach the meeting, and what signs should we look for in the decision maker. Under the 4 headings below which of these very different words best describes what we can expect in our next overseas meeting?

15 Culture  Business style: Bureaucratic, formal, friendly, polite, aggressive,  Relationships: vital, important, distant, no importance,  Approach in meetings: formal, systematic, repetitive, open, freestyle,  Decisions: Autocratic, key individual, democratic group, top level team,

16 China  Meetings are formal.  Progress is slow and relationships will be built up over a series of meetings.  Language can be an issue and translators will probably be required.  As in many cultures “yes” can simply mean “I acknowledge what you have said”.

17 India  15 official languages, English is universally spoken and is seen the neutral language.  Business is very hierarchical so it is important to identify the decision makers.  An issue for UK companies setting up in India is operating a flat structure as in UK.  In meetings, small talk, particularly about the family is highly valued as you build a relationship.

18 Brazil  Meetings rarely start on time.  The agenda is not rigidly followed.  There can initially be a lot of small so patience is a virtue.  Relationships are important - your hosts will show their feelings openly.

19 Culture shock  For more information see Useful Links – Culture Shock! – a survival guide to customs and etiquette - published by Marshall Cavendish  Also see culture.comwww.worldbusiness

How companies are entering Emerging markets  China  India  Vietnam  Gulf states  Brazil

21 Case Studies Views of some Yorkshire businesses  Engineering company  University  Training and Consultancy

22 Vietnam – Engineering company Key advice from an operations viewpoint:  - Continue to develop relationships with Customs, Industrial Zones Management, Labour Department, Immigration, Tax and even the Police.  - Don't underestimate the amount of bureaucracy involved.  - Keep yourself well informed on legislative issues & laws which are changing frequently as easy to be caught out.  - In the earliest stages consider fully the scope of your business before you apply for your license, e.g to include trading, increase capital contribution, get further duty exemptions on capital imports.

23 University India  People never say no but “yes yes” and “yes yes yes”  Pursue 2-3 activities  Know who to work with  Do not offer help or support but “working together”  Great opportunities but not easy - Get experience somewhere else!

24 University Vietnam  Young, eager, and a thirst for education and personal development  Good opportunities; keep going back.  Keen to learn from the “old & wise”

25 University Gulf region  Stop/start:moves fast when you are there!  Keep going back – send same person.  Wealthy but price sensitive.

26 Training and Consultancy Views of an “emerging market”  Look for a niche  Cultural awareness, tolerance, and sensitivity.  Go yourself or someone else fully briefed  Be prepared for the long game

 Research the market  Have a sound business plan  Decide on your contract terms  Know your partner  Know the law  Look for problems before they arise  Develop good relationships  Be a good communicator  Protect your IPR  Plan an exit strategy Emerging markets - Top ten tips

28 Contact Simon Bedford +44 (0)