Aftermath of global economic decline, low buying power
Published On May 13, 2014 » 1739 Views» By Moses Kabaila Jr: Online Editor » Business, Columns
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Policy analysis1TODAY, I want to look at the aftermath of the global economic decline amid the now rising buying power in up-and-coming markets.
To do that I am featuring the unabridged article by JOANNE BUSHELL who writes that:
As the global economy recovers from the downturn and consumer purchasing power in emerging markets soars, the latest Regus survey confirms that businesses have returned to focusing on their domestic markets.
In a reversal of the trend highlighted two years ago, businesses globally report that they are focusing more on domestic market expansion than foreign market growth.
Africa, however, goes against the grain, where 40 per cent of businesses are expanding abroad, compared to 36 per cent experiencing growth in their home market.
The research, canvassing the opinions of more than 20,000 senior executives and business owners across 95 countries, found that, after focusing heavily on foreign expansion and following the growth trail around the globe two years ago, two fifths of companies globally (42 per cent) are now experiencing growth thanks to expansion in new markets within their own country.
Emerging economy businesses are by far the most likely to report this trend confirming that they are experiencing expansion at home (51 per cent).
This confirms that the effects of the exponential growth experienced in these countries in the past few years, are finally trickling down to consumer level and nurturing stronger consumer demand for goods.
A growing middle class is increasing domestic demand and reducing reliance on export, which in turn has a stabilising effect on the global economy.
Nevertheless, a fifth (17 per cent) of businesses globally report that they are still experiencing growth through foreign expansion.
Businesses in India (25 per cent), Canada (23 per cent) and Belgium (27 per cent) are particularly likely to be growing thanks to their efforts abroad.
In particular Belgium and Canada have a strong history for exporting to their neighbours and as the economy in the United States of America and European Union improves, demand for their products and services can only increase.
Exporting businesses, however, face a number of key challenges that businesses experiencing growth domestically have only in part to deal with.
When expanding abroad African businesses say they have more difficulties finding and recruiting top quality staff (86 per cent).
T  his may be because they do not have established relationships with good recruitment intermediaries in the new country, or because they are not established enough in their new location for would-be employers to actively seek them out.
African businesses setting up abroad also lament lack of local knowledge and connections (78 per cent) for which would support their efforts in recruiting, hiring and finding good suppliers as well as new clients for example.
Lack of market information (74 per cent) is another bugbear linked to lack of intermediaries and of an existing network.
Another huge problem for businesses that want to expand abroad is access to flexible office space, a challenge for 85 per cent of African firms.
When entering a new market, especially with limited local knowledge and market information, it is vital for businesses to remain flexible so that they can respond to the market in a speedy fashion.
Being able to rapidly downscale if things go wrong or are slower than imagined without financial penalty, or to upscale in response to strong demand can make all the difference to a company’s success.
Finally, the very fact that there has been such a rapid reversal with the majority of businesses choosing to focus on domestic rather than export markets over the last two years highlights how important it is for businesses to remain reactive to the markets at all times.
Businesses need to be nimble to be sure that they can grasp opportunities where they present themselves, so being able to upscale or downscale rapidly is a key capability.
Regardless of where businesses are expanding, their success depends on a series of key factors.
Without access to reliable and up-to-date market information, networking opportunities and a number of options to choose from when considering the best location to set up, businesses will find it hard to expand both abroad and within new markets in their own country.
•JOANNE BUSHELL is Africa Vice-President for Regus, which is a multinational corporation that provides flexible workplaces, with a network of more than 1,800 business centres in more than 100 countries including Zambia.
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Next week I will look at the derivatives exchange by focusing on the now operational Bond and Derivatives Exchange Zambia Plc.
Comments: 0977 246099, 0955 431442 or e-mail: jmuyanwa@gmail.com

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