Emerging markets - still a risky business?

Manufacturers with operations in the emerging markets are failing to properly assess the risks posed to their business, says Sir Digby Jones, Senior Adviser to Deloitte.

In a podcast to coincide with the UK launch of Deloitte’s Innovation in Emerging Markets 2007 report, Sir Digby Jones and Jane Lodge, UK manufacturing group leader, discuss the vital areas for consideration before establishing operations in the emerging markets.

Deloitte’s study of 446 global manufacturers found just 56 percent of manufacturers conduct a very rigorous risk assessment before entering an emerging market.  Once operating in an emerging market, only 45 percent of executives conduct ongoing risk assessments. 

Jane Lodge said: 'Manufacturers are not currently geared up to view risk holistically. Success in emerging markets requires an intelligent approach to managing the risks necessary to drive future growth, while avoiding risks that have no upside potential.'

One of the main threats facing businesses operating in the emerging markets is intellectual property (IP) theft.  But a third of businesses currently do not conduct a very rigorous assessment of this issue before entering an emerging market.  However, IP theft is not only a threat to manufacturers entering a new market, it also threatens to hinder the development of the market itself.