Emerging Markets: Indicators or People?
A quick scan of the front page of The Wall Street Journal this morning revealed this headline: “Wary Investors Flee Emerging Currencies.” It captured a growing sentiment that emerging markets are not so promising, as once thought: they are too risky; investments should be made elsewhere. Well, they are risky, and they will not “emerge” in linear and entirely predictable ways.
What is important to remember however is, irrespective of economic and financial indicators, emerging markets ultimately are comprised of people – consumers – with pent-up demand for goods and services. Billions of them still need to eat, need transportation, housing and infrastructure, need to be educated, need all kinds of consumer goods and services and will have a general trend toward greater purchasing power for all these things.
The savvy investor/banker/marketer will know to fine-tune his or her investment strategy and will play the long game. S/he will target aforementioned sectors and opportunities that inevitably will be lucrative. S/he will find and nurture relationships with reliable partners on the ground. In addition to economic and financial indicators, s/he will stay apprised of political and social trends, idea and product diffusion, weather patterns and other geographic forces, evolving business practices, and events in other markets that unwittingly create opportunities or challenges in emerging markets; s/he will monitor consumer attitudes and behaviors – in country – using reliable research methods and s/he will maintain data-bases that can help to predict trends and opportunities to be seized. S/he will get “stuck in,” as my football buddies say, and will not lose sight of the goal, even when the goal posts may move.
Emerging markets are no place for Chicken Little, nor Aesop’s fabled hare. Positive-outlook, Patience, Prudence and Perseverance should be added to any marketing mix in them. And finally, People are the most important consideration. That they depend on goods, services, policies, ideas and a well-functioning marketing system greatly affected by FDI and constructive engagement is reason enough to stay the course in emerging markets, despite the short-run vicissitudes of some economic and financial indicators.