It's a long-term investment
This is certainly one of the most important things to consider — you shouldn't expect a short-term pay off, and you should get ready for some potential turbulence along the way. An emerging market economy is emerging because of the risk associated with investing in the country's current condition (from political stability to currency fluctuations). An unwelcome change of government or a sudden monetary devaluation may all be par for the course in certain markets.
There is also the issue of getting established and dealing with the local laws and systems to get your business up and running, which is unlikely to be as streamlined as in more developed markets. However, there is evidence that many emerging markets are aware of this barrier to potential businesses moving in, and are trying to make their country inviting for investors and entrepreneurs alike. The frontier market of Argentina is the latest example of an emerging economy trying to entice entrepreneurs onto its shores with legislative reform aimed at getting rid of some of the red tape associated with setting up a business, such as allowing companies to register online in a day.
It takes serious preparation
As an expat, setting up a business abroad already holds a wealth of new issues to consider. From learning the language to figuring out how local business is conducted, it isn't always easy to get started in a new country. However, these issues are all the more prevalent in an emerging market. Furthermore, as an entrepreneur in an emerging market, you are unlikely to be familiar with the lifestyle — notably the lifestyle of your target market. It is a good idea to get involved in the society and, if starting a business, hire residents with knowledge and expertise that will help you understand the market even more.
In addition to preparing yourself for the long-term ups and downs, you also need to be prepared for the intricacies of the market in which you are investing. What sector are you getting involved in? Is this an area that is ripe for development in the market, or are you trying to apply the demands of a developed economy on an emerging one? If you suspect it is the latter, how can you adapt to your new market? Understanding the market through on-the-ground involvement and hiring locally will prepare you and your business to get settled and established.
Finally, another important matter to be aware of is the current trade agreements and status of those trade agreements, if you want to keep your current consumers or intend to grow beyond the borders of your emerging market of choice.
Making it a success
One of the widely agreed benefits of an emerging market economy is the growth of the middle class and the continuing creation of new consumers. With more jobs from new businesses and investment by international stalwarts comes new wealth for local employees and disposable income. For those able to jump into a growing market at this point, there are numerous opportunities to offer innovative services and goods that may not have been previously available. The economy continues to develop and grow, so does the number of local residents with spending power.
Take advantage of the innovations available, as more emerging markets are becoming the birthplace of great businesses, coming up with creative solutions to address specific issues within their own market. As a result, a locally developed online payment method, for example, may be more practical and popular than other international payment methods. Especially if you are planning to expand an existing business, keep in mind that you may not be able to replicate your business in the way that you would be able to do in a developed economy — small or bigger adaptations will be expected and required to attract customers and gain popularity.
Are you ready to take up the challenge?
