30/07/2014


By John Spencer, UK CEO at Regus

A couple of years back, all talk of the BRIC countries was admiring and excited. But in 2014, we're more accustomed to headlines about slowing growth.

Both views are simplistic, of course - the BRICs were never the 100% success story that fans made out; nor is their growth finished. And whatever happens next, businesses have a huge amount to learn from the ups and downs of the BRICs.

There are two reasons to learn these lessons. First, it will make businesses' future experiences in these countries more productive. Second, it will help them prosper in other emerging economies in Asia, Africa and Latin America.

With extensive networks of business centres across China, Brazil and India, Regus has supported numerous multinationals and SMEs as they target the BRICs. We've also helped BRICs companies to expand into other markets. Based on our experience, here are some of the lessons that businesses can learn from the BRICs to become more successful.

There's no substitute for local knowledge:

The growth of the middle class in India, China and Brazil has created millions of new consumers, but it's not straightforward to sell to them - just look at the number of internet words about the difficulties of selling mobile phones in China. Consumer tastes in Asia and Latin America can be very different, and market-specific products, innovation and marketing strategies may be necessary.

Companies that find success in the BRICs do so on the back of deep insights into local markets. They spend time on research and building local contacts and partnerships, and they're prepared to iterate their approach.

Plan B may well be needed:

Flexibility and agile decision-making are as important as size - which is why SMEs can enjoy as much export success as larger companies.

When expanding into an emerging market, wise firms do not commit to long-term arrangements for aspects like real estate until sure of their prospects; they instead use flexible workspaces that allow them to move, grow or downsize at will. With no upfront investment in real estate required, flexible workspaces also help preserve working capital.

Change happens:

Income levels in emerging markets increased 96% between 2000 and 2010, according to Deloitte.[1] So the financials of doing business in emerging markets can change quickly.

In China, rising labour costs and competition for talent have persuaded some businesses to investigate manufacturing options in Thailand, Indonesia, Vietnam and India, among others. Again, this highlights the need for flexibility. It's also a reminder that low wage costs should not be the sole criterion for choosing a base.

Peripheral issues can eat up resources:

Investment in infrastructure in the BRICs has fuelled their high growth rates, but the 'developing' nature of this infrastructure can hinder businesses - for example, variable power supply can impede productivity.

Dealing with such issues is time-consuming for managers. Operating from locations such as our business centres, where someone else reliably manages issues from electricity provision to arranging telecoms, frees up resources for core tasks.

Look after the talent:

Just as wage costs in emerging economies have risen quickly, so have businesses' attrition rates. 80% of organisations in India experience problems in attracting and retaining critical-skill and high-potential employees,[2] so talent management is essential.

In China and India, flexible working and training opportunities are increasingly valued by workers, and both businesses and staff can benefit from this. In research for Regus, well over 70% of businesses in China, India and Brazil think flexible working makes their staff more motivated and energised.[3]

It's worth travelling beyond the top-tier cities:

The size and populations of the BRICs mean that cities often considered second- or third-tier in these countries still offer huge opportunities. For example in Brazil, whilst investment initially focused on the south and southeast of the country, there's rising interest in 'new' regions such as the north and west.

It's worthwhile looking for providers and partners that can help target regional cities and Tier 2 and 3 locations, as well as the main cities. The same will apply in other populous emerging economies.

There's a world beyond the BRICs, and the BRICs can help businesses target it:

The rise of the BRICs has redrawn many of the world's trade routes - think of the example of Indian Tata Motors buying Jaguar-Land Rover in the UK and successfully selling luxury cars in China.

The BRICs are developing as regional powerhouses of finance, local management talent, expertise and connections - convenient springboards for exploring the opportunities in other emerging markets nearby. So, not only do the BRICs offer businesses a lesson in how to explore new markets, they can also be the physical base for future exploration.


[i] Deloitte University Press, 'Business Trends 2013: Adapt. Evolve. Transform'.
[ii] Towers Watson, 'The next high-stakes quest', 2013.
[iii] Regus, 'Flexibility boosts productivity', 2012.