SEMINAR: The BRIC Wall – Breaking down the barriers of emerging markets

October 18, 2012


BRIC Wall Seminar - Barriers of emerging markets

Last week we were busy with a rather exciting event…our first seminar since settling into our new offices earlier this year. 

We wanted to look at the opportunities and challenges of expanding into the key emerging markets of Brazil, Russia, India and China which, as discussed in an earlier blog, are seeing the greatest rise in international assignees but are also the most challenging relocation destinations.

We found the seminar a dynamic and engaging event and were pleased to host representatives from UK Trade and Investment and Communicaid.  Our practise manager, Asma Bashir, also led a session and attendees were then given refreshments and had the opportunity to network.

So what can we share from the themes which were discussed and debated?  We will break down each of the three main sessions in turn and draw out some of the most useful facts and tips we’ve learnt.

The BRIC Wall - Emerging markets

UK Trade and Investment – BRIC – the Opportunities & Challenges – Robert Hurley

Robert summarised the UK Government’s ambitions as follows:

  1. Doubling UK exports to £1 trillion a year by 2020;
  2. Getting 100,000 more UK companies exporting by 202;
  3. Getting one in four UK companies to export (European average) rather than one in five at present; and
  4. Maintaining the UK’s position as the most favoured location in Europe for inward investment.

He then examined the ways in which UKTI helps UK companies to improve their business performance overseas and encourages inward investment in UK projects.  Key opportunities for UK companies in each BRIC country were explored:

Country

Areas/Industries of opportunity

Comments

Brazil

Consumer, fashion & clothing, creative industries, education, environment, financial & legal services, infrastructure, construction, healthcare, science & technology, telecommunications, transport.
  •  Has a broad & sophisticated industrial base + Govt programme of privatisation and deregulation.
  • Growing middle class with real spending power, who appreciate high quality merchandise.
  • If a product/service is competitive in world markets, it is also likely to be so in Brazil.

Russia

Aerospace, architecture, automotive, biotechnology, consumer, fashion & clothing, education, environment, financial & business services, power, rail, ports & airport, sports & leisure.
  • Has rich natural resources, well-educated workforce & reforming industrial base = potential for substantial future growth.
  • Population = 142million; 8th largest retail market in the world; 4th largest market in Europe.
  • Long term market of great potential for UK exporters/investors.  UK exports of good to Russia valued at £2.4b in 2009.  Western goods and expertise remain in demand.

India

Aerospace, automotive, biotechnology, consumer services, education, engineering, environment & water, financial services, healthcare, ICT, marine, ports & airports, sports & leisure.
  • One of the fastest expanding global economies, with a rapidly expanding consumer class.
  • UK has strong ties w/India – UK companies well positioned to take advantage of this growing export & investment market.
  • Liberalisation of the economy continues, w/ trade barriers largely removed and the peak tariff reduced from 350% in 1991 to 20% in 2005.

China

Aerospace, agribusiness, architecture, automotive, biotechnology & pharmaceutical, consumer, education, e-health, environment & water, financial services, ICT, rail, ports & airports.
  • Economy continues to grow, albeit at a slower rate – by 9.2% in 2011, 10.3% in 2010 – and Govt is taking measures to ensure growth does not fall below 7.5%.
  • Focus on increasing imports in an effort to boost China’s global trade.
  • Opportunities for business in China can be found not only in the business centres of Beijing, Shanghai, Guangzhou, Shenzhen, but also in numerous emerging regional centres.

The talk gave a clear indication of the wealth and breadth of opportunities which the BRIC countries offer to UK companies, and it was encouraging to hear that there is still the scope for expansion and investment despite the global economic downturn.

Communicaid: Building BRICs of Culture – Culture and the BRIC Countries – Matthew Hill

This seminar was designed to provide awareness of the cultural differences which UK companies should understand when seeking to set up business in the BRIC countries.

Matthew began by asking three questions which our attendees had to consider as though meeting potential clients for the first time:

  1. Do you/they seem to be acting more as an INDIVIDUAL or within a GROUP?
  2. Do you/they seem to be coming from a system of HIGH POWER where the boss is the boss and the executive receives commands or a MERITOCRATIC stance where individuals share responsibility and speak from a place of wisdom?
  3.  Finally, is your/their communication style blunt, clear, DIRECT and to the point or diplomatic, INDIRECT and mindful of relationships and people’s feelings?

These questions highlighted the importance of understanding the people you are attempting to connect with, and approaching them in a manner which they will not find abrasive or which will cause them alarm.

We were then given examples of cultural norms in each of the BRIC countries, which attendees were encouraged to discuss and expand on with their own experiences.  We have summarised some key points for our readers:

Country

What can you expect?

Suggested Action

Brazil
  • Here the softly spoken and controlled British business executive may be swept away be drama, expressions of emotion and pleas for help when they are negotiating from a position of strength. They may face chaos and spontaneity that feels a long way from home.
  • Brazil is about relationships, trust building and preparing for the unpreparedness you will encounter.
  • Learn your limits, adjust your communication to the local environment and resist the temptation to “rescue” your Brazilian counterpart just because it will make YOU feel more comfortable.

 

Russia
  • The lack of smiling, warmth and pragmatism can be daunting for the newly arrived business traveller. Unless you are introduced by someone of influence you will feel very much out in the cold.
  • Relationship building takes time and the cliché of vodka may have given way to French wine but the principle remains. They need to know who you are in order to do business with you.

 
  • Construct your “story” and overcome your natural reticence to talk about your “soul”. Forget about compromise and politeness as a strategy and take the frequently heard word “NYET” in your stride. In Russia “No” does not mean “No.”

India
  • Here the busy, noisy and dramatic backdrop will distract you from your rational, linear British ways of executing business. You will hear “Yes” frequently as well as many ideas and suggestions. Here the learning is about distinguishing the real from the polite.
  • India is a collective culture where individual modesty and interdependence are a long way from Anglo Saxon accountability and hubris. Look out for the signs.
  • Allow plenty of time and relationship based exchanges to occur before you uncover the local agenda, get engagement and get movement. Patience is the key.
  • Start building a diagram of interested parties, needs and connections. Accept the need to multi-task and act in chaos.

China
  • Here you will be again overwhelmed by scale and difference. Ride your culture shock and keep up your party face.
  • China is famous for its respect, tact and the avoidance of brutal truths. In a meeting a strained smile is not a good thing. You may have embarrassed your host, overreached their authority or been too direct for them to maintain face.
  • Go out for the 10 course banquet, plan a longer trip, tell your story and enjoy Chinese humour and kindness. Establish their agenda, take your time to make your point and do take the exchange of business card seriously.

Finally, in the Newland Chase session we looked at the emergence of the BRIC countries as key destinations for international assignments, an overview of the immigration processes in each of these countries and common pitfalls, and the advantages and disadvantages of the Business visitor visa category.

We hope that the following overview of immigration requirements will prove a useful starting point for any individual or company planning a relocation to one of the BRIC countries:

Country

Immigration Overview

Brazil
  • Work permit type depends on length of assignment & payroll location
  • Spouses & partners need separate permission for work
  • Entry work visas required for all expats before taking delivery of household goods
  • Numerous legalised documents needed
  • Process can 3-5 months

Russia
  • Work permit and visa must be in place before employee is on payroll
  • Lead times of up to two months
  • Annual quota system
  • HIV testing required
  • Highly Qualified Specialist program for those who fit criteria
  • Increased scrutiny by Russian immigration authorities

India
  • Work permits issued to Highly Skilled
  • Evidence of relevant skills required
  • Processing times vary depending on location
  • ICT’s can change employers within same group from within India
  • Only permitted one change
  • Local registration required

China
  • Company Registration necessary
  • Capital Requirement (for sponsoring company)
  • Medical Examination of assignee required
  • Police Registration necessary on arrival
  • Compliance – Chinese immigration authorities have launched campaign vs illegal immigration in recent months

 

We hope you’ve found this breakdown of the key issues and information discussed in our seminar an informative read. 

We hope to host another seminar in the near future, so if you’d be interested in coming along then let us know!