High tech companies are aggressively expanding in emerging markets to tap growth opportunities in multiple countries, especially in Asia, that offer a rising consumer class and the promise of increased sales.
Companies are well established in some of the more mature “emerging” economies. In UPS’s Fifth Annual Change in the (Supply) Chain Survey, 71% were already doing business in China, 45% in India and 45% in other Asia-Pacific markets. Additional markets in which they reported an existing presence included Mexico (43%), Brazil (42%), Russia (31%) and countries in Africa (26%).
The future offers even richer prospects for growth. The top three emerging countries that high tech companies plan to enter within the next year are Brazil (21% of respondents), Russia (20%) and India (20%).
They should expect to encounter significant barriers to expansion. In 2013, 19% of high tech executives surveyed by UPS cited the difficulty of “understanding the appeal of products” in new markets as their number-one obstacle. This year, 35% of respondents said their top barrier is the regulatory environment. In 2013, only 10% named that factor as a key obstacle.
Top concerns of high tech executives today include meeting regulatory requirements (43%), conforming to country-specific trade rules (37%) and understanding free-trade agreements and government-sponsored trade initiatives (35%).
Leading companies are opting not to face these challenges alone. They’re drawing on the expertise of logistics service providers to help them thrive in challenging markets. Such partnerships can sharply reduce the need to invest in their own resources and infrastructure.
Survey respondents cited a number of key areas in which they rely on logistics service providers, including managing the customs process (28%); providing in-country warehousing, distribution and transportation (22%); supporting shipment processing through Web-based systems (14%); understanding country-specific rules (13%), and establishing best practices (10%).
For high tech companies looking to succeed in emerging markets, logistics partnerships allow them to craft flexible supply chains as they continue to expand their global presence.
Learn more about strategies for succeeding in emerging markets by downloading the Change in the (Supply) Chain Survey.
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