Ireland Inc sees potential of emerging markets
ASIA BRIEFING:The biggest challenge Irish organisations face is local competition and also not knowing enough about the competitive landscape
EMERGING MARKETS, especially in Asia, will be key drivers of Irish economic growth in coming years, a new report shows, with India and China dominating as the main focus of activity.
The report, The Global Consumer: are Irish organisations ready?, was compiled by the Economist Intelligence Unit (EIU) and commissioned by Accenture.
Of the 150 Irish-based companies surveyed, who between them employ up to 133,000 people, almost half (47 per cent) consider themselves to be very prepared to target the emerging market consumer – more than any other consumer group.
Asked which emerging market they expected to be doing the most business with over the next five years, 17 per cent said China, followed by India at 13 per cent, and Russia on 7 per cent.
On the consumer front, 99 per cent expected India to be the most important market for consumers in the next five years, followed by China on 94 per cent and Russia in third place on 46 per cent.
“The results suggest that, following a number of years’ consolidation, Irish companies are now looking beyond Ireland to opportunities linked to the emerging markets,” said Mark Ryan, country managing director of Accenture Ireland.
The report is interesting, as it also shows how major growth markets like Indonesia are still not registering on the consciousness of Irish exporters. It includes concrete examples from companies like Tesco and Paddy Power.
According to the OECD, by 2030, two-thirds of the world’s consumers will be in the emerging markets of Asia. However, the report suggests Irish organisations should remain focused on their business-to-business strengths rather than targeting emerging-market consumers directly.
Damien McLoughlin, professor of marketing at UCD’s Smurfit School, says in the report that it would be “insane” for Irish companies not to think about getting into China but they need to think about things in a different way.
The largest consumer firms in the world have gone to China and not achieved the market leadership they anticipated because they did not differentiate their products, citing the highly-localised version of KFC that Chinese consumers prefer, for instance.
The report also shows up a lack of necessary investment in digital channels or adequate attention to the social media strategy.
The biggest challenge Irish organisations face is competition from established local businesses and also not knowing enough about the competitive landscape, although, on the plus side, half of those surveyed believe their organisations are highly effective at moving into new geographies.
Some 40 per cent conceded language and cultural barriers were a big impediment.
The report did expose some worrying developments, Accenture said, including the revelation that 32 per cent of Irish businesses lack risk appetite while 31 per cent are unwilling to make the required investment.
The EIU also pointed out that Ireland is not well set up to sell directly to consumers in Asia, and that Irish companies probably do not have the resources or scale to attempt the shift. However, they do have the potential to feed the supply chain that reaches hundreds of millions of end-consumers in emerging markets.
“It is encouraging that they recognise the huge potential that exists with the changing consumer but the report also indicates that Irish companies may struggle to make sufficient inroads without the necessary investment,” the report said.
To realise the potential, Ireland Inc needed to develop the right skills including language, international business skills and technology in order to exploit the opportunity offered by shifting global patterns to the fullest degree.