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Wealth of nations

The picture postcard view of Shanghai these days is of the skyscraper-filled
vista of the Pu Dong district, dominated by the space-age Oriental Pearl Tower.
Seen from the Bund, the pre-revolution boulevard across the Huang Pu river, the
gleaming towers symbolise the vibrancy and modernity of the Chinese economy.

But the real story is in the river. Take a trip downstream to where the Huang
Pu meets the Yangtse, and watch as mile after mile after mile of shipyards and
container yards sweep past, while literally hundreds of freighters carry coal,
iron ore, cement, rubbish and heaven knows how many computers, machine tools and
garments – millions and millions of tonnes of stuff moving upstream and
down, testament to China’s voracious appetite for raw materials and components,
and its capacity for production.

How does a country with such a huge share of global trade get classified as
an emerging economy, when so much activity is taking place now? Surely
it’s too late.

When you consider that the people who work in the cities are relieved that
their hard, grubby labour earns them barely $50 a month – easily twice as much
as they could expect on the farms – you begin to appreciate that there is still
so much more growth to come. Fend off the hawkers selling fake Mont Blanc pens
and Louis Vuitton bags, then go to the Plaza 66 shopping and office complex and
watch Chinese women shopping for the real thing.

Growth, not costs

It’s little wonder that China came top of our poll when, last November,
Financial Director asked FDs at the Richmond Events Finance Directors’
Forum for their views as to which were the leading ‘business hotspots’ – places
that still had a lot of unrealised potential. Just over half mentioned China –
and yet less than one in five were operating there. Next on the FDs’ list was
India, cited by more than a quarter of respondents as a ‘hotspot’ although less
than 10%currently operate there. Eastern Europe came next.

The new consumerism is fuelling emerging markets, creating new opportunities.
Respondents to a recent survey by the Economist Intelligence Unit (CEO
Briefing: Corporate priorities for 2006 and beyond
) said they expect the
proportion of revenue coming from overseas markets to jump by one-third over the
next three years, with demand from emerging economies being the most critical
component of that growth. A survey by PricewaterhouseCoopers elaborates on this
by saying that companies are increasingly looking to emerging economies for new
customers rather than cost savings.

Another PwC survey sheds light on the scale of the opportunity. Identifying
seven emerging markets – China, India, Brazil, Russia, Indonesia, Mexico and
Turkey – the firm calculates that these ‘E7 economies’ will actually outstrip
the existing G7 economies by 2050.

Eight to rate

In this Guide we look at eight of the most important emerging
markets. For each, we’ve looked at the current state of play and the business
outlook, as well as noting some of the regulatory issues, not least the
‘corruption perception’ andWorld Bank ‘ease of doing business’ indicators. Above
all, the words of those who have been there and done it provide the most
valuable insight.

One CEO told us – with no hint of irony – that: “The world is becoming an
increasingly global place.”We know what he meant – and it’s equally clear that
you don’t want to be somewhere else when that happens.

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