Businesses capitalising on opportunities in the world's fastest growing economies
According to results published today from the Grant Thornton International Business Report (IBR), privately held businesses are now starting to capitalise seriously on opportunities to trade with the fast-growing BRIC economies (Brazil, Russia, India and China). These countries are expected to represent 44% of global GDP by 2050. Far from being a threat, the growth of Brazil, Russia, India and China has been positive for businesses over the last two to three years. The survey explores the views of 7,200 business leaders in 32 countries and represents 81 per cent of global GDP.
Alex MacBeath, global leader of privately held business services for Grant Thornton International, said:
“Businesses are increasingly finding ways of doing business with the fast-expanding boom economies of the BRIC countries. It is no longer just the huge multinationals who are finding ways of taking advantage of the BRIC phenomenon – which has to be good news for the global economy.”
Of all the BRIC countries, economic expansion in mainland China has had the greatest impact on all privately held businesses around the globe with a positive balance* of +12%, over the past two years. Both Russia and India share second place in the survey at +8%, followed by Brazil at +5%. The positive impact of mainland China on privately held businesses has doubled in the past year, rising from +6% in last year’s survey.
EU based businesses appear to have woken up to the opportunities presented by the growth of mainland China over the last year. EU businesses ranked the impact of mainland China as +14% this year compared with 0% last year. German businesses were most positively affected with a score of +29%, followed by the Netherlands at +21%. The impact of China on NAFTA businesses also remains high at +18% this year compared with +18% last year, with US businesses even more positive at +22%, compared with +19% last year. Businesses which experienced a significant negative impact on business as a result of the economic expansion in mainland China were in Thailand (-39%) and Turkey (-17%).
Alex MacBeath continued: “It is particularly good news that European businesses are focusing on these opportunities for the first time. However, we believe there are further opportunities than those currently being exploited – and it will be critical for privately held businesses to continue engaging in these markets if they want to stay competitive.”
The top exporters** to the BRIC countries are:
Optimism among privately held businesses is very strong in the BRIC countries. Indian business owners are the most optimistic in the world and those in mainland China are the third most optimistic. Business owners in Brazil and Russia are also more confident about their countries’ economic prospects than the global average. 82% of Indian business owners consider globalisation to be more of an opportunity than a threat for their businesses compared to Brazil at 69%, mainland China at 71% and Russia at 30%.
However, in three out of four BRIC countries, businesses perceive access to finance as a major constraint on their ability to grow. Four in ten businesses in Russia cite the cost of finance, shortage of working capital and shortage of long-term finance as major constraints on expansion. Businesses in Brazil and mainland China are also highly likely to cite these financial factors as restricting expansion.
Alex MacBeath concluded, “This finding emphasises that Indian businesses experience less restrictions than other BRIC economies when accessing capital, a further sign of the maturity of their economy. Coupled with factors such as the liberalisation of restrictions on foreign trade and investments, India could be set to make the largest impact on the global economy.”
Ends
*The figure is the percentage balance of the respondents who are positively impacted Vs negatively impacted. The highest possible figure countries are able to record is +100% and the lowest is -100%.
**Medium/large privately held businesses
Notes to editors
Grant Thornton International started a major annual survey of the attitudes and expectations of small and medium-sized businesses in 1992 called the European Business Survey (EBS). In 2003 the research project was widened to an international perspective covering medium-sized businesses and renamed the International Business Owners Survey (IBOS).
In 2007, the survey’s name was changed from IBOS to the International Business Report (IBR). The IBR survey draws upon 15 years of trend data for original EBS participants and 5 years for original IBOS countries. 15 year trend data is available for: France, Germany, Greece, Ireland, Italy, Netherlands, Poland, Spain, Sweden, Turkey and the UK, while 5 year trend data is available for Australia, Canada, Hong Kong, India, Japan, Mexico, Singapore, South Africa and the US.
Grant Thornton International will donate US$5 to UNICEF for every completed IBR questionnaire. In 2007 this will result in a donation of over US$35,000.
The research was conducted by Experian Business Strategies Limited and Harris Interactive. All figures were correct at time of going to press. To find out more about IBR and to obtain details of IBR reports and results please visit www.internationalbusinessreport.com.
About Grant Thornton International
Grant Thornton International is one of the world's leading organisations of independently owned and managed accounting and consulting firms providing assurance, tax and specialist business advice to privately held businesses and public interest entities. The strength of each local firm is reflected in the quality of the international organisation. All Grant Thornton International member firms share a commitment to providing the same high quality service to their clients wherever they choose to do business.
Grant Thornton International is a non-practising international umbrella organisation and does not deliver services in its own name or otherwise. Each member and correspondent firm in Grant Thornton International is a separate national firm. These firms are not members of one international partnership or otherwise legal partners with each other (with the exception of certain limited instances), nor is any one firm responsible for the services or activities of any other.
For further information please contact:
Neil Bird
IBR project manager
Grant Thornton International on:
T: +44 (0)870 991 2706
Contact us
To find out more information about Grant Thornton International contact us.