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Focus from costs to customers

The emergence of economic powerhouses like China and India is a major theme of this week's WEF.

india Updated: Jan 25, 2006 12:34 IST
Reuters
Reuters
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The world's business leaders are more wedded to globalisation than ever as their attention switches from cutting costs to winning new customers, according to research released on Wednesday.

The emergence of economic powerhouses like China and India is a major theme of this week's World Economic Forum annual meeting in Davos, which brings together the world's business and political elite.

A PricewaterhouseCoopers analysis of responses from 1,410 chief executives found 63 percent were confident globalisation would have a positive impact on their businesses over the next three years.

Overall, 71 percent expected to do business in China, India, Brazil or Russia over that period, with 78 percent viewing China as the most significant market opportunity.

The survey underlines how corporate objectives and attitudes have shifted as key emerging markets have started to mature, generating a growing middle class with the money and inclination to buy Western goods and services.

"Cutting costs is no longer the sole purpose for globalisation," said PwC chief executive Samuel DiPiazza.

"The economies of Brazil, Russia, India, and, of course, China were once seen primarily as sources of low-cost production.

"However, they now present substantial growth opportunities for both multinational and locally-based companies, and at the same time are producing a new crop of serious global competitors."

That view was echoed by a smaller survey of 200 executives from Deloitte Touche Tohmatsu, which found 58 percent of manufacturers expected their company's revenues to grow substantially in emerging markets over the next three years.

Only 23 percent of the same group were as optimistic about prospects in developed markets.

When it comes to achieving their goals for global expansion, executives have a number of favoured strategic options.

Forming alliances with partners tops the list, followed by opening new offices, developing unique products, outsourcing, and mergers and acquisitions.

The biggest single obstacle to globalisation was considered to be over-regulation, cited by 64 percent of respondents in the PwC survey, with trade barriers coming a close second.

The threat of terrorism and protests by the anti-globalisation movement -- evident again at last month's world trade talks in Hong Kong -- come bottom of the list of perceived threats, mentioned by only 48 and 21 percent of CEOs respectively.

The world's business leaders are more wedded to globalisation than ever as their attention switches from cutting costs to winning new customers, according to research released on Wednesday.

The emergence of economic powerhouses like China and India is a major theme of this week's World Economic Forum annual meeting in Davos, which brings together the world's business and political elite.

A PricewaterhouseCoopers analysis of responses from 1,410 chief executives found 63 percent were confident globalisation would have a positive impact on their businesses over the next three years.

Overall, 71 percent expected to do business in China, India, Brazil or Russia over that period, with 78 percent viewing China as the most significant market opportunity.

The survey underlines how corporate objectives and attitudes have shifted as key emerging markets have started to mature, generating a growing middle class with the money and inclination to buy Western goods and services.

"Cutting costs is no longer the sole purpose for globalisation," said PwC chief executive Samuel DiPiazza.

"The economies of Brazil, Russia, India, and, of course, China were once seen primarily as sources of low-cost production.

"However, they now present substantial growth opportunities for both multinational and locally-based companies, and at the same time are producing a new crop of serious global competitors."

That view was echoed by a smaller survey of 200 executives from Deloitte Touche Tohmatsu, which found 58 percent of manufacturers expected their company's revenues to grow substantially in emerging markets over the next three years.

Only 23 percent of the same group were as optimistic about prospects in developed markets.

When it comes to achieving their goals for global expansion, executives have a number of favoured strategic options.

Forming alliances with partners tops the list, followed by opening new offices, developing unique products, outsourcing, and mergers and acquisitions.

The biggest single obstacle to globalisation was considered to be over-regulation, cited by 64 percent of respondents in the PwC survey, with trade barriers coming a close second.

The threat of terrorism and protests by the anti-globalisation movement -- evident again at last month's world trade talks in Hong Kong -- come bottom of the list of perceived threats, mentioned by only 48 and 21 percent of CEOs respectively.