Investment Enigma in Emerging Markets

Topics: Retailing, Investment, Shopping mall Pages: 20 (4875 words) Published: March 24, 2014
[INVESTMENT ENIGMA IN
EMERGING MARKETS]

Abstract:

The correlation between the advent of big organized players and the unorganized markets in emerging economies has been the centrifuge of discussion for many years. The decision for investment in these economies is a rather precarious one for the big players. While on one hand they have a plethora of opportunities considering the variety in labor demographics and the economic appetite, the volatility of the economy poses an unprecedented threat.

The retail sector of any economy would be attractive for foreign investors when two very basic elements are in place: supply of goods in the concerned sector and infrastructure to facilitate distribution. In the backdrop of these two pre-requisites, this paper aims to examine the investment potential in the retail sectors of all emerging economies, particularly the following:



Brazil



India



Pakistan



South Africa



Russia



Turkey

The basic factors that determine and influence the supply of goods in any economy include demographics of the labor population, technological advances in various sectors, money in circulation in the respective sector and regulatory norms.

In order to study the infrastructure support, factors including presence of unorganized retail networks and socio-political stability in the countries would provide interesting insights.
This paper studies the current potential of the emerging countries and the scope for their development with respect to the above stated test factors. It takes into account the prevailing investment climate in each of these countries and goes about the analysis in a four-fold fashion.



Defining the opportunities and threats



Analyzing the existing regulatory norms



Analyzing market appetite



Forecasting investments based on trend patterning

It then moves on to making an attempt at understanding the attractiveness of the countries under study from the point of view of potential foreign investors.

The emerging markets have and will always be the greatest source for investment in new businesses. It is now up to each of these individual economies to make the most of their potential market and progress towards a brighter future.

Executive Summary:

Retailing as a commercial activity is the heart of any sector in an economy. Goods and services produced, must reach the consumers in the desired form at the right place and time. This calls for an efficient and robust network of retail in the country. A company aiming to enter a foreign market would need to ensure that the infrastructure needed to support its retail system is in place and the goods or services it provides reach the target audience.

This report aims at providing a potential investor with a glimpse of investment climate in six emerging countries – Brazil, India, Pakistan, Russia, South Africa and Turkey. It makes a quantitative and qualitative assessment of these countries in terms of their feasibility as a destination for investment in retail sector.

Introduction:
An emerging economy is a storehouse of opportunities in terms of market potential, workforce diversity and unexploited resources. And where there is an opportunity, there is a need and scope for investment. Investment in these economies is thus a very attractive option in the long term. But, to make a choice as to when and where one should invest is perhaps the million dollar question, the solution to which can never be standardized. It depends on various macro and micro economic factors.

Of the many perils an investor has to face in an economy, some are bigger than the others. In order to avoid or mitigate some of these, an informed decision making process is of paramount importance. This paper aims to provide the investors with the necessary information they would need to evaluate and hence arrive at a final decision regarding the relative attractiveness of the discussed...
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