Global competition drives change

Financial Times ^

[AfricanChristian]

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Companies in the developed world are increasing their commitment to emerging markets at a faster rate than ever before. Faced with the prospect of stagnation (a combination of low growth and high inflation) – or worse – in the US, Europe and Japan, companies are plunging into the high-growth economies of Asia, eastern Europe, Latin America, and, increasingly, Africa. “Emerging markets have inflation issues, environmental questions and social problems, but overall they have better economic growth. In the developed markets you have slow growth and the risk of a new sovereign debt crisis,” says Alain Bokobza, a strategist at Société Générale, the French bank. In a study of European multinationals, Morgan Stanley, the investment bank, found that over the past two years, companies have diversified their exposure away from domestic markets more quickly than ever before. European companies now generate just 53 per cent of sales in developed Europe, while the share from emerging markets has leapt from 12 per cent in 1997 to 29 per cent.