The majority of the CFOs refer to market size and growth factors as an especially positive draw when expanding abroad, and to the intensity of local competition being the single greatest challenge. It’s an issue too for companies looking to expand in the major European markets and the USA.
Market size, specifically, is highlighted by those companies looking to expand into the USA and China (76% and 75% respectively), but it is higher growth rates that are particularly applicable to firms expanding into China (64%), Brazil and India (62% each). Another factor of relevance to companies expanding in China is a perceived under-exploited demand for their company’s products and services (26%).
An issue reported by 53% of the CFOs looking to expand into the USA is currency fluctuations, a factor also associated with the UK (43%) and Brazil (40%). This did not appear to be a significant stand-alone issue in the wider ‘C-suite’ interviews conducted last year: either it is a particular concern of CFOs, or the continued challenges to currency are starting this year to become a much larger issue.
Red tape and bureaucratic hurdles are perceived to be challenging by companies setting their sights on the BRIC markets. The issue is seen as particularly acute in Brazil and Russia (58% and 57% respectively), but also in China (50%) and India (43%). Corruption or ethics are also negative factors in these four countries and are highlighted by 41% of CFOs targeting Russia, ahead of China (27%), India (26%) and Brazil (22%).
WHAT MAKES A NEW MARKET ATTRACTIVE
CHALLENGES WHEN EXPANDING ABROAD