EY - The Master CFO Series: What lies beneath?

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The Master CFO Series - What lies beneath?

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“It’s something that’s on the radar of every board and investor. As a company, you want to be seen to be investing in those markets.” - Paul Brooks, CFO of Experian

Expansion into rapid-growth markets has become something of a mantra for growth-hungry CEOs. If a company does not have a rapid-growth market strategy, investors will want to know why.

With rising per capita incomes, favorable demographics and large populations, rapid-growth markets have significant momentum behind them. Most have come through the financial crisis with very little long-term damage and remain on impressive growth trajectories.

According to the latest Global Economic Outlook from the International Monetary Fund* (IMF), emerging economies as a whole will grow by 6.5% annually in both 2011 and 2012. This compares with 2.4% in 2011 and 2.6% in 2012 for advanced economies.

For CEOs and CFOs on the hunt for long-term growth, the statistics coming out of rapid-growth markets make for compelling reading, particularly in a context of sluggish growth in developed markets. A number of those interviewed for this study stressed that they are under pressure to have a growth story for shareholders around their plans to capture this potential.

There’s a real pressure on business to invest in markets such as Brazil, India and China,” says Paul Brooks, CFO of Experian, a global information services company. “It’s something that’s on the radar of every board and investor. As a company, you want to be seen to be investing in those markets.

The choice of investment destination is becoming more diverse

The increasing importance of rapid-growth markets to their future prospects is encouraging multinationals to look beyond the first-tier rapid-growth markets, such as the BRIC countries of Brazil, Russia, India and China, into less familiar economies. Although countries such as China and India will remain vital destinations for investment, finance leaders surveyed for this report say that their companies are also looking further afield, to countries including Indonesia, Thailand, Mexico and Ukraine.

In which of the following rapid-growth markets does your company have significant investments, or is planning to invest significantly in the next two years?
EY - In which of the following rapid-growth markets does your company have significant investments, or is planning to invest significantly in the next two years?

* http://www.imf.org/external/pubs/ft/weo/2011/01/index.htm