For much of the past 15 years, the BRIC nations of Brazil, Russia, India and China were the focus of new market development plans for multi-national companies. In SCM World’s most recent Chief Supply Chain Officer study, all four BRICs ranked among the top five countries for growth opportunities. With a collective population of roughly 3 billion people and a combined gross domestic product (GDP) of nearly $15.5 trillion, this focus is understandable.
Recently, the BRIC nations lost some of their original lustre in the eyes of global organizations as a result of the appreciation in the U.S. dollar and the accompanying stiffening economic headwinds across much of the developing world. With the exception of India, the perspective on these markets is gloomier than it has been for some time. China is struggling. Brazil and Russia are really struggling.
The changing mood on the BRIC countries is causing many executives to begin exploring what opportunities exist in other developing countries and regions of the world. To this end, SCM World recently conducted research on the next set of markets on the growth radars of multinational companies. We wanted to understand the opportunities that lie beyond the BRICs and the advanced economies of the G7 nations (Canada, France, Germany, Italy, Japan, the United Kingdom and the United States).
Using data from our Chief Supply Chain Officer Study, we created a list of the next 12 most intriguing growth markets in the eyes of the supply chain community. The 12 countries in rank order based on the degree of community interest include: Mexico, Indonesia, Turkey, Saudi Arabia, Argentina, Vietnam, Malaysia, Poland, Chile, Thailand, Bangladesh and Colombia.
The majority of these 12 countries are growing even in an economic climate not entirely friendly to developing markets right now. With a collective GDP growth rate above the world average of 3.4 percent and a combined population nearing 1 billion, these markets are promising enough for supply chain strategy teams to begin analyzing and assessing the most optimal way to create supply models for these markets.
In August of last year, SCM World developed what we refer to as our Supply Chain Viability and Market Attractiveness (SCVMA) Index. At the time, we were focused solely on applying the index to a set of Sub-Saharan African countries our community was expressly interested in pursuing for growth. Due to the support and encouragement the index received from the SCM World community, we decided to repurpose the SCVMA index for the next 12 growth countries referenced above.
In essence, the SCVMA Index is meant to assist supply chain strategists with the multiple variables they need to consider when making decisions around the best ways to penetrate new markets. The SCVMA index for the next 12 helps consolidate the numerous factors essential to creating a supply strategy for new markets.
To create the index, we collected publically available data that numerically captures the key elements of a particular market’s attractiveness, and the viability of supply chain structures into and out of this market. This foundational layer of information can then be used to determine the most appropriate supply models to consider based on the nature of the market opportunity within a particular country.
The index is built on 10 pillars. Each pillar represents a key factor commercial and supply chain leaders should understand and weigh when determining the favorability (or lack thereof) of particular markets. At the same time, it highlights the conditions any supply chain strategy proposed for these markets needs to address in order to support market development and access.
The data underpinning each of these pillars comes from a number of sources, including the World Economic Forum’s Global Competitiveness Index, the World Bank’s Doing Business ranking, AT Kearney’s Global Retail Development Index and the World Bank’s Logistics Performance Index. Data from these indices and rankings was normalized on a seven-point scale and aggregated to determine the composite score for the two primary dimensions we are measuring: supply chain viability and market attractiveness.
Plotting the underlying data for these 10 pillars allows us to see similarities in the characteristics of countries that wouldn’t readily be apparent otherwise. For instance, Malaysia and Chile are culturally, linguistically, historically and geographically distinct from each other, and yet, these countries share similarly advantageous market and supply chain characteristics. These countries come out on top for both supply chain viability and the attractiveness of the market conditions.
While the next 12 countries for growth opportunities do have unique characteristics, two key findings from our research were common across all of them:
- Supply chain and commercial leaders must work in tandem when planning the appropriate approach to engaging these countries as market growth potential and supply chain infrastructure and resources are equally important to success.
- Any strategy involving deeper levels of engagement requires a major focus on supply chain workforce upskilling and development. Any attempt to take and hold position in these markets depends on the supply chain talent operating on the ground.