Major emerging markets move from Asia & Middle East to Latin America and Africa

Survey on the status of entry into emerging markets and future plans 

Latin America and Africa have been rapidly emerging as new major emerging markets of Korean enterprises.

According to the survey, the degree of Korean companies' interest in advancement into Latin American and African markets with great growth potential is gradually rising. 

On the other hand, Asian & Middle East markets, the existing major emerging markets, are losing its appeal gradually owing to the lowering of profit ratio and market saturation following stiff competition between domestic and foreign companies. 

According to FKI survey of 60 large Korean companies that advanced into emerging markets, 76.0% of the respondents picked Asia and Middle East as the existing major emerging markets, whereas 24.0% singled out Latin America and Africa.

However, the portion of the companies that picked Latin America and Africa as the main emerging markets in two years nearly doubled from 24% to 46.4%(22.4%P↓), but that of those that cited Asia and Middle East dropped sharply from 76% to 53.6%(22.4P↓). 

< Portion of Korean firms' major emerging markets by region >

The countries they picked to advance into first were Brazil, Chile and Mexico in Latin America; Mozambique, Tanzania and Angola in Africa; Vietnam, Indonesia and Myanmar in Asia; and Saudi Arabia, Qatar and UAE in Middle East.

Latin America attracted enterprises' interest owing to rich reserves of natural resources, and Africa lured their attention thanks to the recent excavation of large-scale gas field and inter-state railroad and infrastructure construction projects in Mozambique and Tanzania.

On the business achievements in emerging markets, 42.9% replied they fell behind their earlier expectations. They pointed out stiff competition with foreign (Chinese and Indian etc.) companies, competition with cheap price for orders among domestic companies and an increase in foreign governments' ex post demands other than contents on the agreement as the key reasons.

The fields that about 54.3% of the respondents hope to advance were construction of infrastructure, including housing, roads, harbors and power generation facilities, and development business of oil and natural gas.

Meanwhile, 73.2% picked the shortage of information on local markets and difficulty in seeking local partners as the most serious problems in advancing into emerging markets.

To expand Korean firms' advancement into emerging markets, the preparation for a system offering information on local business data, systems and commercial practices is urgent, according to the survey result.