While conferences and reports discuss how the BRICS (Brazil, Russia, India, China, South Africa) economies will reshape the world, Western business leaders seem to have very little knowledge about these emerging markets, reveals a Datamonitor survey. For example, 88 percent directors surveyed could not name the currency of Brazil and 14 percent believe that Vodka is the main product of Russia (See Chart 1)!
Moreover, respondents to the survey (directors of American, British, French and German companies) do not largely feel comfortable doing business in Russia, citing a relatively new free market and lack of legislation as the main deterrents (See Chart 2). Russia has had a free market economy for less than 15 years, and its trade policies still have a Soviet legacy. Its telecommunication is underdeveloped compared to Europe’s, and its insurance market recently underwent turmoil. On the positive side, the government is taking active steps to bring in transparency — calling for a reconciliation of Russian accounting standards with the international financial reporting standards (IFRS) for listed companies is only one such measure.
American companies are also resistant to doing business with Brazil despite the geographical proximity between the two countries.
India, on the other hand, expectedly, is perceived as the most comfortable BRICS economy to do business in — even more than China. Almost half of all the U.S. respondents rated India as the most favored BRICS economy for doing business. This was followed by China (24 percent), South Africa (17 percent), Brazil (11 percent) and Russia (6 percent) (See Chart 3).
Moreover, American and European companies with revenues in excess of $1 billion are the most active in the BRICS economies, looking at them to enhance sales and minimize costs. At the same time, over 40 percent companies polled that have a presence in the BRICS have less than $10 million revenue.
Chart 1
Chart 2
Chart 3
