A recent article in the Financial Times stated that ‘Companies in the developed world are increasing their commitment to emerging markets at a faster rate than ever before’. The author argues that multinationals from the US and Western Europe are trying to diversify their operations and, avoiding the stagnation of domestic economies, expand into Asia, Eastern Europe, Latin America and Africa.
The statistics provided in the article indicate that companies have been increasing their share of sales in emerging markets, with such vivid examples of cosmetics company Avon Products (52%) and tobacco group Philip Morris (68%). We may speculate that such leading businesses are setting a standard, and the trend of further globalizing appears to be quite strong.
Global business – global employees? This notion can be supported by the 2011 Brookfield Global Relocation Trends survey, which highlights that ‘international assignments continued to reflect the globalization trend’. The survey results showed the second-lowest number of assignees that relocated to or from the headquarters country in the history of the report, indicating an increase in assignments taking place between the new business locations. The report states that ‘companies that generated more than 50% of revenues outside of the headquarters country also had a higher percentage (47%) of assignments taking place between non-headquarters locations’.
As for international assignment destinations, the United States (20%), followed by China (14%) and the United Kingdom (14%) were cited by respondents as the top locations. Australia, Brazil and Canada were notably moved up in the rankings. The list of emerging locations was topped by China, followed by Brazil, India and Singapore. Compared to last year’s report, Thailand, Azerbaijan, South Africa, Kazakhstan, Austria, Iraq, Afghanistan, Belgium, Italy and Nigeria appeared as the top 20 emerging destinations list newcomers. These emerging expatriation countries seem to support the trend of developed-market companies expanding into emerging markets.
However, the Financial Times article notes that the trend is ‘far from a one way street’. The term ‘global competition’ that we increasingly use today entails not only Western multinationals going global, but increasingly also competitors from the emerging markets. In fact, the author argues that ‘emerging-market groups are becoming leaders in key industries’. Based on this trend we can expect multinationals from these emerging markets to increasingly expatriate employees themselves. Unfortunately no clear statistical data can yet be presented to support this, as available surveys (e.g. Brookfield) do not transparently link the source and destination countries, and emerging-market countries may also be underrepresented in the samples. However, based on anecdotal evidence such as the one reported above, an increase in the opposite direction of traditional expatriate sources and destinations is likely to occur.
Even more than the changes in countries, there is also a change in the volume of expatriates. Several years ago it was few companies sending employees from the US and Europe to the East (and vice versa). Now it’s just more companies and more travelers.
Nadav
With companies competing globally, I hope that 3rd world countries benefit something in return. Globalization means more jobs for poorer countries.