Oops. Companies that targeted BRIC countries as the cornerstone of their international strategy suffer disappointing results. Brazil and Russia appear deep in recession, India is labeled as a persistent under-achiever and the China Express has slowed. The mid-term outlook does not improve.
Brazil’s structural complexities represent a significant barrier to entry and the 52 % currency devaluation versus the dollar places the price of imported brands now out of reach for most.
Russia was a “borderline BRIC” to begin with. Russia should recover somewhat when the price of oil increases. However, the fundamental fact is that Russia’s population will decline by 5 million people by 2025.
India remains tough to conquer, except for multinationals with bundles of money.
However, the Nestle Maggi noodle scare sent shock waves, causing big investors to think twice.
China is the big prize, with millions moving permanently into the middle class and shopping at modern supermarkets filled with international brands. The Chinese love imported Confectionery, Snacks and Beverages, but have been slow to embrace other “Western” Foods. Marketers need to teach Chinese consumers about their categories and conduct research to learn to adapt their brands to Chinese taste profiles.
Listed below are Export Solutions insights to reduce dependency on “Broken BRIC’s” to new sources of future growth.
1. USA opportunity is “bigger than BRIC’s” for European exporters.
With the USA dollar trading at close to parity versus the euro, this is the time for Europeans to develop the USA. Treating the USA as another export market will result in failure. Test your product first in mid size chains and invest propoerly in consumer marketing and trade prmotion. Please approach the USA in the “American” way by hiring an experienced USA broker manager based in a place like Chicago or Atlanta to navigate the system. Basing a European in Miami, Los Angeles , or New York is fun for the employee, but miles away from any major customers buying office.
2. Mexico is Hot !
Mexico’s population will pass 125 million soon, passing Japan to be the 11th largest country in the world. Mexico’s economy is a star in Latin America, as it serves as a supply depot to the USA. Many auto and industrial manufacturers produce in North Mexico, a short stroll to the USA market, avoiding month long shipping backlogs from Asia. This translates to increased spending power and an expanding Mexican middle class.
3. Target the VIP’s: Vietnam,Indonesia & Philippines
These high growth countries will exceed 500 million in population by 2025.USA exporters are discovering the Philippines due to the 100 million population with good acceptance of USA brands. Myanmar is worth a look, with a new government and a population of 56 million. I visited Myanmar twice in 2015 and am optimistic about the future.
4. Hire a Team for China
Winning in China requires a team effort. The battle has shifted and “over achievers” place a team of local sales,marketing, and research professionals on the ground to build the business. This is true even when you are working with a distributor. Don’t rush to follow the pack to “Tier 2” cities until you have completed the job in major supermarkets in Shanghai,Beijing, and Shenzhen. China holds great potential, but you will be lost managing from home office.
Brand owners face difficult choices on where to place “big bets” on new market development. BRIC disappointments provided expensive lessons on the long term process of changing eating habits in emerging markets. Our Island market success stories remind us that export business contains a mix of giant countries and smaller ,profitable nations. Senior management must be willing to admit “We’ve failed” if you have small businesses in pivotal countries like China, USA, and Mexico. Frequently, the answer is to treat these big countries like your home market with investments in product innovation, local factories and fully staffed teams.