Winning in Emerging Markets

China, India and Vietnam present attractive and growing markets for consumer packaged goods and retail companies. To achieve high performance, however, these companies must build distinctive capabilities based on a thorough analysis of the emerging multi-polar world.

To receive more Research & Insights, sign up for My Outlook, your single e-mail source for all of Accenture's latest ideas and innovation, personalized specifically to your business interests and the industry issues you face.

Accenture's High Performance Business research has shown that emerging markets will be the key battleground for consumer packaged goods and retail companies; the ability to be in the right place at the right time and dominate these markets will distinguish the industry's high performers.

With fast-growing economies, China, India and Vietnam will provide significant opportunities for consumer packaged goods and retail companies. The Chinese market for consumer packaged goods is set to grow at 9 percent, while in India 6 percent growth is projected. Vietnam is likely to experience growth of around 16 percent from 2006 to 2010.

Three factors stand out as drivers of future growth:

• Evolving consumer needs of health, convenience and indulgence as the middle class grows.
  
  
• New category entrants, such as working women and youth as demographics and lifestyles change.
  
  
• Rapidly rising penetration of organized retail.

The new world order is characterized by multiple centers of economic power and activity—Accenture calls this the multi-polar world. There are five dimensions to this emerging world in which business implications must be considered by manufacturers and retailers of consumer packaged goods.

These dimensions are:

• Winning talent. Despite large native talent pools, multinationals are not yet adequately nurturing talent excellence to support high performance on a global scale.
  
  
• The flow of capital. Increased government liberalization has led to a sharp rise in foreign direct investment in these economies. At the same time, Indian and Chinese companies are investing in global capacity as well.
  
  
• The battle for resources. China and India are faced with the challenge of balancing growing energy demand with the relative shortage of domestic energy resources. For example, oil prices in India and China have increased by 50 to 70 percent over the last five years.
  
  
• Emerging consumers and innovation. China and India will together have more middle-class households than the United States by 2020. This implies enormous demographic and lifestyle changes in all three countries.
  
  
• Unique value chain. For consumer packaged goods manufacturers, supply chain issues predominate. For retailers, loosening government regulations mean that the number of retail formats is rising rapidly.

To address the implications of these multi-polar trends and drive high performance, consumer packaged goods manufacturers will need to build certain distinctive capabilities:

• Consumer-driven strategy. An aligned and adaptive operating model capable of rapidly responding to and taking advantage of evolving sources of value creation across the global base.
  
  
• Demand fulfillment. Customer service and fulfillment excellence, and supply network configuration are both required.
  
  
• Workforce transformation. In a global economy, companies need to build aligned and specialized networks of skills in an integrated talent management framework.