26 September 2008 | Andy Allen
Lord Digby Jones, UK trade and investment minister, has identified Vietnam, Mexico, the UAE and Ukraine as the most exciting high growth markets of the future.
The minister was speaking to launch a new report on emerging markets, based on a survey of more than 560 executives. The report highlighted lower costs as a major factor in shifting investment patterns. It pointed out while BRIC (Brazil, Russia, India and China) markets remain important to many companies, increasing costs would change investment patterns.
Vietnam was seen as the most attractive emerging market beyond the BRICs because of its low-cost base and sizeable population. For Mexico, proximity to the US and integration into US supply chains were noted as positives, while low taxes, minimal restrictions on trade and foreign exchange, and an excellent location were highlighted as draws of the UAE. The Ukraine's high level of education and skills, its low wages and its position as the most populous market between Russia and Germany were noted as benefits. However the report adds: "The growing determination of the Russian government to prevent further Westernisation will heighten the risk environment."
Nearly half of survey respondents, however, still saw strong potential within the BRIC markets. A total of 49 per cent say that China is a priority for future expansion, while 42 per cent choose India. Yet the report foresaw a move away from established business centres such as Beijing and Shanghai in China.
"Companies that depend on a low-cost base may be most susceptible to relocation. While two-thirds of manufacturers in our survey currently operate in Beijing, this number will decline to a mere 14 per cent in 10 years' time," said the report.