International Expansion

4 Burgeoning Markets Rife With Opportunity

International ExpansionConsumers all over the globe are increasingly engaged and informed – and ready to hear the message promotional products have to deliver. Here are four burgeoning markets rife with opportunity.

Connected by technology and the Internet, world markets are more open to global commerce than ever before. And, as the 21st Century continues to unfurl, and many consumers throughout the world begin to grow in affluence and acquisitiveness, their tastes and appetites have begun to capture the imagination of American companies – including those in the ad specialty market.

And while many international markets such as China and Brazil have their own governmental and economic challenges, consumers and businesses there have a positive outlook today. Recent research into global consumerism conducted by The Boston Consulting Group reveals that consumers in these markets possess a surprising long-term confidence in the resilience of their local economies, and remain eager to investigate new products.

“Yes, we’re seeing major global ‘generic’ trends within emerging markets (EM),” says Babak Hafezi, founder and Managing Partner at HafeziCapital International Consulting based in Washington D.C. “However, we must be very cautious and not lump EM countries all together based on the continent they’re in. Each EM country is at a different level and thus the needs and demands that they have are very different.”

Knowing whether promotional products and the services that distributors can provide will resonate with international businesses requires some homework, and successful companies need an understanding of what these consumers are looking for.

Companies in these countries that are looking to connect with prospective customers may have yet to discover the efficacy of promotional products. But the consumers in their midst are more aware and engaged than ever, and when the right pitch meets the right product, that’s a message that speaks a universal language.

Made in America, Sold in China
The resurgent appeal of American-made products has drawn a lot of attention in recent years, mostly for its effect on American consumers, but the made-in-USA trend is also something of a phenomenon in China.

In research conducted by the Boston Consulting Group, 60% of Chinese consumers were discovered to have a marked preference for products with the “Made in USA” label, and were willing to pay a higher price for them. Even when the choice is between an American-made and a Chinese-made product of similar price and quality, the research firm found nearly 50% of Chinese consumers polled would choose the American product.

“The appeal is simply the American tradition of high-quality craftsmanship and American value,” says Andrew Royce Bauer, CEO of Royce Leather (asi/52390). “Chinese consumers who are middle class to upper-middle class value American-made goods because they know that Chinese goods have a reputation for poor quality and poor working standards.”

After decades of manufacturing dominance at the expense of quality products and American jobs, there might be some satisfaction in reading those data points and views, but more importantly is the opportunity these trends represent. Peter Mann, CEO of Texas-based Oransi, has had great success selling his company’s brand of high-end air purifiers to Chinese consumers. “There’s an expectation that the quality is better,” agrees Mann, “it’s also almost a status symbol if you can afford an American product.”

The appalling pollution China struggles with is a grim reality for Chinese consumers, perhaps, but also a concern that fuels a need foreign manufacturers might be able to address.

More modest products than Oransi’s might not necessarily share the allure of a high-end appliance, but that doesn’t mean that those expectations only apply to the more expensive goods. John W. Spelich, global vice president of international e-commerce business development for the Alibaba Group, suggests that the “luxury-goods boom” is only the most visible of China’s infatuation with American-made products. A recent survey conducted by Tmall Global, Alibaba’s cross-border e-commerce platform, found that everyday items in the infant care and beauty categories, along with apparel, are some of the most popular products with these “hai tao” shoppers, a term that can be approximately translated to “ocean search.”

“Chinese cross-border shoppers are seeking quality and authenticity,” says Spelich. “Companies that can create an image of authenticity will have the upper hand.”

Spelich cautions that Chinese manufacturers are responding to their somewhat diminished fortunes, however, by improving their own quality. And while this could close the quality gap between products manufactured in China and those made in the USA, the opportunity to break into the Chinese market with high-quality, well-made items is ever present now.

Wellness Doing Well in India
With only a few exceptions, the wellness market is performing robustly throughout the world, and India is an especially strong example of the trend. Extensive research carried out by PricewaterhouseCoopers showed substantial growth in product categories such as “natural” food and beverages, hair and skincare, herbal supplements and “slimming products” all contributing to a 18%-20% rate of growth for the Indian wellness market in 2012.

The research also noted India’s “deeply ingrained traditional wellness culture,” which bodes well for future growth in this sector, and for American companies who offer products that can address this vast market.

“Wellness is an increasing concern for the Indian middle class, and a continuing one for the wealthy,” says George T. Haley, professor of marketing and international business at the University of New Haven in Connecticut. Indians are concerned not just with good health for its own sake, but with the consequences of poor health on their ability to enjoy their advanced years.

“Much more so than in any other major economy, retirement is dependent on savings,” Haley says. “It’s important to maintain health in order to minimize health costs during their older years.”

The target group for these products might be relatively small, but that’s only an issue until one considers the vast numbers involved. “The affluent group – people with household incomes in the range of $100,000 – is likely to be users of Western wellness products,” says Ravi Ramamuti, professor of international business and strategy and director of the Center for Emerging Markets at Northeastern University.

“Although a thin slice of the Indian society, given the size of India’s population, they nevertheless represent about 25 million people and represent a significant opportunity for companies selling wellness products.”

David Bakke, author of the personal finance blog Money Crashers, expects the wellness industry in India to improve by as much as 17% annually through 2015, he says. “More specifically, some of the better selling products are vitamin supplements, health drinks, skin lotions and natural herbal remedies,” adds Bakke. “The main drivers of this growth come from young professionals along with folks residing in first-tier and second-tier cities.”

The persistence of other concerns such as rampant urban pollution should also contribute to a long-term fixation on wellness for the Indian consumer. “The trend is genuine and long-standing,” confirms Haley. “The middle and upper economic strata in India has been very health conscious when it comes to their personal environment, like impure or unpalatable water, and food that has not been properly stored.”

Helping Indians to thrive in challenging environments is one sure way to secure the attention of one the world’s largest pools of consumers.

Latin America Loves Technology
The consumer appeal of technology gadgets is hard to miss, especially if you’ve ever gawked at a line of people snaking around the block for the newest version of a super-hot product. That phenomenon is hardly unique to the wealthy first-world nations, however, and in the wake of a technological revolution, there are countless bubbles of opportunity.

Chris Robertson, Professor of International Business and Strategy at Northeastern University, has conducted considerable research in Latin America that indicates tech accessories to be an underappreciated entry point for American companies looking to plug into this expanding market.

“There’s a massive demand to keep up with North America with respect to tech – and in some cases to jump ahead,” says Robertson. “North American firms feel that Latin America is well behind the curve when it comes to tech,” – a misconception, he explains, that misses the innovation that’s occurring in countries like Chile and Argentina. Within these centers of activity and creativity, Robertson believes products and accessories within this category “would be massively well received.”

Of course, the products that appeal to one region of an emerging market country might not be equally applicable everywhere within that nation’s borders. “I certainly think the larger cities in the more developed Latin American countries have a higher level of appreciation for items such as earbuds, mouse pads, etc.,” Robertson says, listing Santiago, Buenos Aires, São Paulo, Bogota, Lima and Mexico City as the top spots for tech innovation and interest.

A diverse business climate exists throughout Latin America, however, and working within these countries will present a host of challenges specific to each. “Chile, Peru and Colombia have been stripping down trade barriers and encouraging foreign direct investment,” says Robertson. “Whereas Argentina and Brazil have large and strong economies, but many complex regulations.”

Still, the exceptional growth Latin America has experienced in the previous decade has blessed it with a phenomenon that’s crucial to courting new consumers: a large and growing middle class.

“This is good news for the global economy,” Robertson explains, “as millions of new, young, tech-savvy workers enter the workforce each year.” Those millions are a big part of why tech accessories might be a supplier’s entry into the growing, challenging Latin American market.

In a region so large, caveats are sure to be abundant, however. “Comparing Brazil to Venezuela is a mistake,” Babak Hafezi says, “although both are emerging markets and both are in the South American continent, they’re in different growth cycles and development.”

Sun Protection Heats Up in South Africa
Perhaps unsurprisingly, sun protection in South Africa is a big economic sector. Yet, the difficult history of the nation had even affected attitudes toward the desirability of a tan, with the result that once South Africans did begin to adopt the same sun-loving activities as their counterparts elsewhere, sun damage was a risk that was relatively slow to dawn on consumers.

An ongoing push by both local sun-care manufactures and The Cancer Association of South Africa (CANSA) is raising awareness of the dangers of too much of a good thing. Consequently, sun-care products are reaching new levels of popularity and represent a ray of light for ad specialty companies looking for a way into this growing economy.

“My personal experience is that this is definitely a growing market,” says Joan Kahn, founder of Tip Top Products, a South African manufacturer of cosmetics and sun-protection products.

Her view is echoed by Michael Herbst, CANSA’s Head of Health, who shared consumer research showing South African consumers are increasingly interested in higher sun-protection factors, as well as protection against both UVA and UVB rays. This research, conducted by Euromonitor International Ltd., a London-based market research firm, further indicated convenience was a strong factor, with “aerosol sprays, sticks, gels, non-residue and lightweight easily absorbed formulations” being favored by South Africans.

Herbst’s organization is taking a leading role in the promotion of sunscreen, releasing guidelines that recommend a brief 15 minutes of mid-morning sunlight without sunscreen to ensure proper levels of vitamin D, and thereafter to apply a reliable sunscreen. CANSA’s efforts also include outreach to the nation’s schoolchildren, helping to create an awareness of the dangers and in the process fostering positive associations with a very popular promotional product.

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