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Some key findings in India show that many companies do not tailor their products for India and that R&D operations are expected to increase over the next three years. Deloitte report identifies challenges to be tackled by companies

Our Bureau

Hyderabad , Aug. 5

With India and China reaching new trade heights, global manufacturers in the last few years have had to confront new challenges and opportunities the emerging markets can create.

They are forced to take to more innovative strategies and are poised to step up R&D efforts, according to a Deloitte Touche Tohmatsu study.

Consultancy and advisory services provider Deloitte Touche Tohmatsu in its report "Innovation in emerging markets: Strategies for achieving commercial success," released here, has observed that global manufacturers have responded to the impact of emerging markets with the foresight to source, develop, manufacture and sell their products in these high-growth regions.

More than half of global manufacturers (56 per cent) surveyed expect to substantially grow revenues in the emerging markets over the next three years, with nearly three-quarters anticipating significant increases in China.

Growing revenues

Less than one quarter (23 per cent) was optimistic about the prospects in developed markets, according to the Deloitte study. Better understanding of the local market, faster time to market and lower R&D costs were cited as the top three reasons for conducting R&D in emerging markets.

Mr Gary Coleman, Global Managing Director of Manufacturing at Deloitte, in a statement, said: "the most profitable companies are looking beyond traditional strategies to generate a continual stream of innovative products tailored to the needs of consumers and industrial buyers in emerging markets."

"The most successful manufacturers allow local autonomy while utilising the parent company's governance, business processes and management expertise to offer products at dramatically lower prices that match the lower purchasing power of most buyers in emerging markets," Mr Coleman said.

Opportunity beckons

Mr Kumar Kandaswami, India Manufacturing Industry Leader, Deloitte, said, "most manufacturers are more accustomed to developing products designed to serve existing customer segments in mature markets. But emerging markets offer opportunities to forge innovations that create entirely new markets, often among middle and lower-income consumers who are not being served well, or perhaps at all, by available products. Herein lies a huge opportunity for the industry, waiting to be tapped."

Some key findings in India show that many companies do not tailor their products for India and that R&D operations are expected to increase over the next three years.

Protection of IP

Deloitte has identified challenges that global manufacturing companies must innovatively tackle to achieve success in emerging markets, including building new value propositions to deliver different product offerings that meet the unique needs of emerging market customers. Apart from different talent management approach, it is suggested that they need to build risk-management capabilities to detect, correct and manage the unique profile of risks presented by emerging markets, such as the protection of intellectual property.

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