The recent articles that have flooded publications like The Economist and The New York Times about deepening investor concerns in emerging markets simply do not capture the depth or breadth of opportunities to be found in many emerging markets.
I was recently in a room full of leading business leaders and economists discussing growth prospects for 2014. After an hour of analysis focused on growth rates – “China will grow at 6% instead of 7%, India will grow less than its underlying potential suggests it should, but will still grow at 5%, etc.” – it was clear to me that the debate missed the boat.
While growth in emerging markets may be disappointing in aggregate terms in 2014, a simple comparison between Brazil and Nigeria tells a very different story. Although roughly comparable in terms of population and geographic size, the annual market for automobiles in Brazil is close to 4 million units, versus only 50,000 in Nigeria. One could argue that a few right moves could unlock tremendous demand in Nigeria, or conversely, Nigeria’s economy could hypothetically shrink 50% and still support a 1,000 percent increase in the market for automobiles.
To understand the potential of emerging markets, one has to focus less on growth rates, and instead think about pent-up demand, underserviced markets, and raw opportunity. As the CEO of a company that has grown from a $30 million business to a $5.2 billion business in just over a decade, because of our willingness to make big bets in markets our competitors found too risky to touch, I believe that there are game-changing opportunities in emerging markets. Companies and investors just have to have the vision to take a long-term view.