Challenges

The emerging markets are gradually graduating from their role as cost-effective outsourcing locations and developing into cutting-edge competitors in many areas of the economic and corporate landscape. A host of engineers are battling for increased market shares, and qualified researchers are seeking out pioneering product concepts.

From the point of view of analysts, this marks the start of the third phase of globalization. Driven by growth and acquisitions, more and more companies from the growth markets are stepping up to the global stage. Corporations like Lenovo, Tata, Lukoil and Petrobras are operating as global players on par with established multinational corporations.

Brazil, Russia, India and China are benefiting from these developments:
Brazil - In 2007 Brazil passed the 160 billion US dollar threshold in terms of product exports for the first time and is now considered to be Latin America's guiding light. Thanks to increased foreign exchange reserves, it paid off its IMF debts totaling some 15 billion US dollars ahead of time.

Russia - Russia continues to strengthen its position in the strategically important commodities and energy sectors.

India - With research and development investments totaling 21 billion US dollars, India has become one of the world's strongest research countries. Its pharmaceuticals and bio-technology sectors already rank among the best in the world.

China - Since China opened up its markets to foreign investment in 1978, international corporations have invested over 500 billion US dollars in the country. China has overtaken both France and the UK and is now the fourth biggest economy and the third largest trading nation in the world.

Opportunities and challenges for Swiss companies
The major domestic markets are increasingly figuring on the radar of international investors. Around 2.7 billion people - over 40 percent of the world's population - live in the four most important growth markets. A dynamically growing middle class is starting to establish itself in these countries, and several hundred million Chinese and Indians already have an income on par with Western standards.

In 2008 Swiss companies exported goods worth approximately 6.1 billion Swiss francs to China - more than 430 percent of the amount in the year 2000. This propelled China (excluding Hong Kong) to third place, after Japan and Hongkong, among the Asian export markets for Swiss companies. An end to this trend is not in sight. Indeed, the investment flow in the opposite direction is also growing, with foreign companies investing more about 200 billion Swiss francs in Switzerland in 2005.

The increasing complexity of their internal economic ecosystems are, however, presenting these countries with a growing set of challenges. The "three billion new capitalists" that economists have projected for the growth markets may only be able to achieve long-term, sustainable success if they successfully manage the speed and impact of their economic development.

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