Innovative strategies key to success in India : Deloitte

03 August 2006

With India and China reaching new trade heights, Global manufacturers in the last few years have had to confront these challenges and realize the new opportunities emerging markets can create.

Mumbai, India, 3rd August, 2006: With the conclusion of the 2006 Summit on Indian Manufacturing Competitiveness today, a new report Innovation in Emerging Markets: Strategies for achieving commercial success, was released by member firms of Deloitte Touche Tohmatsu. The report indicates that global manufacturers have responded to the impact of emerging markets with the foresight to source, develop, manufacture and sell their products in these high growth regions.

More than half of global manufacturers (56 per cent) surveyed expect to substantially grow revenues in emerging markets over the next three years, with nearly three-quarters anticipating significant increases in China. Less than one quarter (23 per cent) are optimistic about prospects in developed markets, according to research by business advisory firm Deloitte.

However, only 29 per cent of the companies surveyed enjoyed higher margins in emerging markets than in developed ones. But, of those that did, 54 per cent provided different product features to the ones offered in their home markets, compared to 43 per cent of those whose margins were the same or lower.

From the survey, manufacturers send out a clear message — organizations must tailor their products, pricing and strategies specifically to Asian, Eastern European and Latin American countries, if they are to realize the enormous potential of these emerging economies. Half of the manufacturers surveyed provided products in emerging markets that were very similar to those they provided in their home market, despite the fact that 40 per cent generated lower gross margins in emerging markets.

And a key to achieving success in emerging markets appears to be research and development. Forty-nine (49) per cent of the companies selling new products conducted R&D locally. The executives surveyed cited "better understanding of the local market", "faster time to market" and "lower R&D costs" as the top three reasons for conducting R&D in emerging markets.