Emerging Markets a Mixed Bag Filled with Different Levels of Potential, Concern

Despite ongoing, trite talk of the global slowdown and/or growth malaise, a handful of nations continue to stake their claim as true emerging markets as was evident during the closing session of FCIB’s 22nd Annual Global Conference.

“Doing Business in the Emerging Markets” featured a panel of experts, but also leaned heavily on the experiences of those in the crowd. Of course, the BRICs (Brazil, Russia, India, China) were top of mind, as is usually the case whenever emerging economies are in play for discussion:
  • Brazil – There are some inflation-based short-term concerns and write offs can be a problem. However, due diligence yields some powerful results in a nation with a growing middle class and a position as a host nation for some major events this decade (Olympics, World Cup). John LaRocca, of Hitachi Data Systems Corp., noted his company increased sales by $30 million without a huge spike in write-offs as a result of requiring three years of financial statements from customers to “give us consistency” in what was being analyzed.
  • Russia – As noted in previous eNews blog reports from Global, most of the audience is quite suspicious of doing business with Russian-based companies without significant or complete payment up front. Said attendee Alex Adashev, of Fifth Third Bank, “It’s like the Wild Wild West.”
  • India – It’s increasingly being seen as the number two world market on potential, but concerns linger about differing currencies and a poor financial infrastructure.
  • China – Anecdotes from credit professionals found that, as more companies based at least some of their production operations there for cost-cutting purposes, there have been increasing complaints with product quality, adherence to specifications and even wait time. As such, many credit professionals are increasingly hearing, “I’m not paying for that” after a shipment of goods arrives.

Panelists and attendees also mentioned a couple of surprises among emerging markets, such as one-time drug hotbed Columbia as well as Angola. In Columbia, attendees doing business there noted the amount of Americans doing business there continues to increase noticeably, and the major cities/business hubs have been largely cleaned of drug activity.

Meanwhile, Angola may just be a bit of a hidden gem. Said panelist Mike Dwiggins, of Wells Fargo Bank, “the potential there is fantastic.” While admitting the infrastructure in Angola must come a long way, he said the use of financial institution guarantees and assistance from the Export-Import Bank of the United States is something credit-granting businesses should be looking into.

Brian Shappell, NACM staff writer

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