• Bookmark and Share
  • PRINT

Global Business: Best New Opportunities for Growth

20120304-a-corners-of-business.jpg
© Heide Benser / Corbis

Forward-thinking companies are seeking out untapped markets to grow their business.

Two years ago, Evren Ozkaya took a business trip to Tegucigalpa, Honduras, to help a manufacturer run a local plant more efficiently. He looked forward to spending the week in the colonial capital, but it never worked out. Instead he was caught up in an unexpected revolution. When a former president waged a surprise takeover against the current Honduran regime in September 2009, airports were shut down and Ozkaya was trapped in the country. “On the first day [at work] they gave us armed bodyguards and escorted us back to the hotel,” remembers the former management consultant.

After four grueling days of an army-imposed round-the-clock curfew, he flew out of Honduras on a single-prop Cessna to neighboring Guatemala and then to San Salvador and made his way back to his family in Atlanta. “That day it was the first and only plane that was allowed to leave the country,” says Ozkaya, who is now director of strategic planning at Sandoz Inc., a generic drug manufacturer owned by Novartis.

Places like Honduras that once seemed off the beaten path are no longer on the periphery for investors, as U.S. companies increasingly tap into opportunities in sectors like energy, tourism and manufacturing. For those hoping to break the cultural barriers necessary for conducting business abroad, in-person visits are mandatory, but crossing borders still presents life-threatening risks. “Companies are definitely getting huge benefits, but don’t necessarily consider the types of [travel] risks involved,” says Ozkaya, adding that “ultra local” economies are a major revenue-builder.

High Risks Yield High Rewards

Even through a global recession, payouts for companies willing to do the legwork to expand beyond their home markets are staggering. U.S. firms earn $12.50 for every $1 invested in business travel in 2011, according to Oxford Economics USA, an economic forecasting firm. The revenue stream from entering emerging markets has helped the travel industry expand in recent years. In a survey of travel buyers, the Alexandria, Va.-based Association of Corporate Travel Executives said that they would be increasing travel spend in 2011 for trips and supplier costs.

“There’s still no substitute for in-person connections,” says Richard Plansky, a senior managing director in the business intelligence and investigations division at Kroll, a New York-based global risk consultancy. Risks can be daunting: monsoons in Southeast Asia, corporate espionage in Eastern Europe, gang activity in Central America or mosquito-borne diseases in areas of the Tropics. But with the chance to enter emerging markets, many executives are becoming just as comfortable traveling to Laos as they are to London. To keep up between business trips, Plansky encourages clients to maintain relationships using videoconferencing software to mimic real-life interaction.

Plansky helps companies plan for the what-ifs: As a general rule, Latin American countries may present a larger physical threat, while visiting China or Russia may result in corporate data breaches, he says. Recent unrest in some Middle Eastern countries like Egypt and Syria can turn a business trip into an Indiana Jones adventure. Before entering a new market, his company helps large and medium-size companies complete comprehensive threat assessments (by studying a company’s vulnerability and past criminal activity) or provide security software to prevent data breaches. To quickly ready executives for high-risk travel, he suggests corporate clients learn the particulars of the destination and how to access reliable location-specific intelligence such as travel warnings from the U.S. State Department.

Calculating the Dangers

For those working their way up the corporate ladder, staying home is not an option. “Business is so global now; there are very few places that our executives don’t go,” says Plansky, whose job it is to keep them secure once on the ground. There’s no simple way to make international travel 100 percent safe, but acting cautiously during your stay is most important, he says. Rely on local expertise—not your home office—in case of an emergency. While your home office can book travel arrangements, it’s best to address problems with local employees, Plansky says. In almost anyplace you travel, the company suggests clients take preventive measures by avoiding large jewelry or attention-grabbing clothing, staying at centrally located hotels on a lower floor toward the back of the building and relying on trusted sources at your destination. Business hotels in many cities often implement extra security features such as metal detectors if there have been terrorist attacks in the area.

Face-to-Face Connections

Traveling is sometimes the only way to find growth opportunities—especially when cultural differences are involved, says Tiffany Cavallaro, the senior vice president of sales and marketing at June Jacobs Laboratories LLC, a U.S.-based spa products company. She helps the company maintain and build relationships with emerging hospitality markets, spending three weeks on the road with two-week breaks at home in her New York apartment. The vagabond lifestyle has paid off: “Asia is worlds ahead of the U.S. when having to do with spas, so being the first American spa brand to be sold in Asia has been huge for us,” explains Cavallaro, who has spent five years with the New York-based company and launched the brand abroad. Nowadays, more than half of the company’s profits come from emerging economies with strong growth in the hospitality industry—far away from the company’s American roots. Working with spa clients means Cavallaro has been traveling to areas where upscale hotels are booming, such as resort towns in Vietnam and China. On a single trip, she can visit as many as 10 cities. Recently she traveled to Hoi An, Vietnam and Chennai, India.

Even without life-threatening hurdles, commuting to emerging countries is often a logistical nightmare with endless waits through customs and poor infrastructure, says Cavallaro. On her last trip to Asia, Cavallaro took a flight from Hoi An, Vietnam, through Korea to Jinan, China, with four connections. She missed two of the four legs and ended up at an empty airport after hours waiting for inevitably lost luggage. “They don’t let you leave the airport if you’ve lost your luggage—it’s China and can be impossible to do anything there,” she explains. Unable to find a taxi once the luggage arrived, she asked a local for a ride. But she didn’t have the address of her hotel written out in Mandarin, which meant they got lost. Travel is complicated, “but it’s a means to an end, and I actually see tangible results,” Cavallaro says. “I’m setting up the business, training the people and seeing that our products are being well received.” Since many regional airlines can make customers check in luggage, a well-packed carry-on can go a long way, she says. Despite the hassles, she focuses on the goal (growing the market) and says the alternate world view has made her a better business person.

Government Support

The National Export Initiative, announced in 2010 by President Obama, aims to double exports by 2014 and has spurred a ramp-up of government-led trade missions to help executives of small or medium-size businesses. In 2010, the U.S. Department of Commerce conducted 35 trade missions to 31 different countries. Signing up for the weeklong missions helps mitigate the risks of traveling to a new market for the first time, says Suresh Kumar, assistant secretary of commerce for trade promotion and director general of the U.S. and Foreign Commercial Service. Kumar points out that U.S. companies also benefit from the networking opportunities among the group and receive formal introductions to local government officials. Heightened security is another perk.

Recently Kumar led an aerospace mission to South Korea, helped companies tour Ulan Bator, Mongolia, for coal-mining opportunities and escorted a mission to Tunisia to help U.S. businesses tap into local infrastructure opportunities. At a time when the domestic economy is shaky, tapping further into emerging markets can help companies stay viable. “We help companies figure out their specific opportunities and help with introductions,” he says, noting that nearly 400 companies participated in 2010. Still, there’s a long way to go: Only 1 percent of America’s 30 million companies export, and 58 percent of exporting companies work in only one international market and have not yet expanded into neighboring countries, he says. Another government program, the Gold Key Service, helps match U.S. business owners with business owners in emerging economies.

Getting Personal

The draw of traveling to remote destinations is about much more than earning an impressive bonus or expanding market share, say some executives. Being able to see and learn from the lives of other lesser-known communities is invaluable, explains Cavallaro, who loves experiencing new cultures. “I find it so inspirational to travel, especially to remote destinations, but I think [you need] the patience of a saint.”

Global Business: Where the Heat Is

These countries are the fastest growing in the world, based on percentage of GDP in 2010. By way of comparison, the U.S. grew by 2.834% or $14,657.80 billion.

COUNTRY GDP GROWTH (%) GDP (U.S. BILLIONS)
Qatar 16.27% $129.485
Paraguay 15.27% $18.475
Singapore 14.47% $222.699
Taiwan 10.82% $430.58
India 10.36% $1,537.97
China 10.30% $5,878.26
Turkmenistan 9.22% $ n/a
Argentina 9.16% $370.269
Sri Lanka 9.13% $49.68
Republic of Congo 9.09% $11.53
Zimbabwe 9.00% $7.474
Peru 8.79% $152.83
Botswana 8.56% $14.03
Uzbekistan 8.50% $38.987
Uruguay 8.46% $40.272

Source: EconomyWatch.com

Global Business: Cityscape

These cities are the fastest growing in the world*, and 12 of the 15 are in China.
  • Shanghai
  • Beijing
  • New York
  • Tianjin
  • Chongqing
  • Shenzhen
  • Guangzhou
  • Nanjing
  • Hangzhou
  • Chengdu
  • Wuhan
  • London
  • Los Angeles
  • Foshan
  • Taipei

*Based on predicted GDP growth from 2007 to 2025. Source: McKinsey MGI Cityscope

Alina Dizik is an American freelance journalist currently living in Dubai. Her work appears regularly in the Wall Street Journal and the Financial Times.


Market Place