The growth opportunities in emerging markets have long been a talking point, however it has typically evolved around natural resources and labour. Whilst these continue to fuel a lot of activity and interest in these markets, what is perhaps underestimated is the proliferation of digital assets and, therefore, opportunities.
It’s easy to assume that emerging markets – by their very name – are gradually evolving and following the same path of development that their mature counterparts took. The reality is that digital has laid a new high speed foundation, that in many instances will see these markets bypass traditional steps, and even leapfrog their mature counterparts in some areas.
An article published in the Wall Street Journal* highlights the fact that emerging markets are becoming more competitive, largely due to the growth of a younger and wealthier middle class. As Gerardo Rodriguez highlights in the article “in emerging markets there has been the idea that [traditional telecom and finance companies] were required to reshape the commerce and finance order in the digital age. But as in the U.S., people are coming to the realization that the revolution can only happen through disruptive innovation coming from new companies.”
This has created an interesting dichotomy as this empowered, younger generation is inspired by greater digital expectations, but is often restricted by limited infrastructure and industry. As a result, there has been a surge in entrepreneurialism in these markets, particularly around e-commerce, as start-ups are created to meet this digital need.
The impact of this is already being felt. CapGemini recently released the findings of a study** which revealed that emerging markets experienced the highest growth rates in digital payments at 6.7 per cent. China has now surpassed the UK and South Korea to become the 4th largest country by volume of non-cash transactions. At current growth rates it’s likely to surpass the Eurozone by 2021, placing it second only to the United States.
So for those that still view emerging markets as shadow that will simply follow in the same footsteps as their mature peers, you are in for a rude awakening. Emerging markets are already demonstrating what new paths can be forged in a digital age where information, inspiration, and a smart phone is all you need to succeed.
For Australian companies, there are some valuable lessons to be learnt from this experience. For one it highlights the power of digital and what can be achieved, but perhaps most interestingly it shows that the traditional path isn’t always the best one, and a fresh thinking can deliver truly disruptive innovation.
Marcelo Dantas, Chief Technology Officer, Automic