Managing Moves into Emerging Markets: the Challenge, the
Preparation, the Requirements
PRESENTERS:
Sharon Leong – Regional Director, Global Client Services, Asia Pac, MSI
Paul Neve – Regional Director, Global Client Services, Americas, MSI
Elaine Phipps – Regional Director, Global Client Services, EMEA, MSI
Michael Ray – Vice President, Emigra Worldwide, LLP.
Diane Fitz-Gibbon – Director, Global Client Services, MSI (Moderator)
Emerging Market Designation
What is considered an emerging market?
> Nations with social or business activity in the process of rapid growth and
industrialization
> Currently, there are considered to be 28 emerging markets in the world, with
the economies of Brazil, Russia, India, China (BRIC) considered to be the
four largest
Emerging Markets 2011 - 2012
BRAZIL
UAE
MALAYSIA
PHILIPPINES
RUSSIA
VIETNAM
COLOMBIA
UGANDA
INDIA
POLAND
MOROCCO
KAZAHKSTAN
CHINA
PERU
CZECH REPUBLIC NIGERIA
MEXICO
S. AFRICA
ETHIOPIA
CHILE
SAUDI ARABIA
THAILAND
EGYPT
IRAN
TURKEY
S. KOREA
TAIWAN
BANGLADESH
Data source: MSCI Barra
Key Business Drivers for Moves into Emerging
Markets
According to the Economist, Western multinationals expect to find 70% of their future
growth in Emerging Markets - 40% of it in China and India alone!
Emerging Market Potential:
> Lower operating costs
o Free trade zones
o Less costly local labor
o Tax incentive for foreign investors
> Corporate Expansion
o New market place
o Growth potential
> Resources – human, mineral, etc.
> Government Joint Ventures – infrastructure, investment
Challenges!
> On its 2010 Ease of Doing Business Index in a possible 188
countries (1 being the easiest), the World Bank ranked
o China 89th
o Brazil 129th
o India 133rd
> Local Market Competition – yes, even in emerging markets!
> Immediate access to crucial resources
> Potential requirements for new business models to
accommodate the needs of the market
CONSIDERATIONS
Key Destination Considerations
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Political Stability & Risk
National Security
Freedom Rankings
Status of Women
Unemployment
Inflation Rate
Safety & Security
Compliant Entry
Housing & Lifestyle
Taxation
Health Advisories
Risk Management
Retaining Talent
Key People Considerations
> Assessment & Selection for assignment
o Ability to overcome barriers to effective operation
o Adaptability
o Family – accompanied/unaccompanied
> Assignment Considerations
o Personal safety and security
o Risk management
o Hardship premium
o Home visits, R&R leave
o Cultural Training
o Language Training
o Spousal/family transition counselling
o Health
o Networks; general support systems
Family Transition Counseling
Home Visits/R&R Leave
Hardship Premium
Key Immigration Considerations
> Lack of Formal Process
o Example: Gabon and Peru- Different each time, timeframe varies
> Work is often non-standard
o Example: Panama – Canal Work
o Example: Sierra Leone - Special Permits
> Lack of Transparency in Government Process
o Example: Democratic Republic of Congo -“Missing” passports
o Example: Laos
> Qualified Council not available
o Example: Dominican Republic, Indonesia
> Unstable Governments or Special Restrictions
o Example: Eritrea -Weekly variances
o Example: Columbia, China, Italy (strikes)
REGIONAL OVERVIEW
The Americas
Brazil
Mexico
Colombia
Peru
Human Development Index
(measures quality of life)
73
56
79
63
Political Risk Index
8
6
7
7
Gender-related Development Index
(measures status of women)
52
46
55
67
Environmental
Issues
Scarce fresh, unpolluted
water; Deforestation; Air
pollution; Widespread soil
erosion
Taxation
Corporate: 15%
Personal: progressive, up to
27.5%
VAT is 18%
Corporate: 28% Personal:
progressive, up to 28%
VAT is 15%
Corporate: 34%
Personal: progressive, up to
34%
VAT is 16%
Corporate: 30 %
Personal: progressive at
rates of 15%, 21% and 30%
VAT is 19%
Economic Conditions
Strong macro-economic
framework; GNP growth:
5.5%
Improvement in macroeconomic policies in recent
years; GNP growth 4.07%;
Very strong economic
fundamentals; GNP growth
2.25%
Strong economic
fundamentals; GNP growth
6.33%;
Safety & Security
Street crime in major urban
areas; Terrorist enclaves;
arms trafficking; money
laundering
Narcotics trafficking and
related violence; money
laundering
Rampant criminal activity
related to narcotics
trafficking, kidnapping and
extortion. High murder rates;
weak judicial system
High crime: Trafficking and
related crimes, theft, armed
robbery, and “express
kidnappings”
Data provided by The World Trade Resource®
Deforestation; Loss of biodiversity; Air pollution; Soil
nutrient degradation
Deforestation;
Desertification; Soil erosion;
Urban air pollution; River
and coastal water pollution;
Overfishing
Deforestation; Loss of biodiversity; Air & water
pollution; Soil nutrient
degradation
Destination Services – The Americas
Brazil
Mexico
Colombia
Peru
Availability of short term
accommodations
Limited; prices increasing
Moderate
Moderate; limited outside
of metropolitan areas
Moderate; limited outside
of metropolitan areas
Availability of acceptable
permanent housing
Limited; prices increasing
Moderate
Moderate; limited outside
of metropolitan areas
Moderate; limited outside
of metropolitan areas
Good – variety of
restaurants and
entertainment
Good – variety of
restaurants and
entertainment
Good – variety of
restaurants and
entertainment
Moderate – better in cities
than rural areas
Education facilities
Public schools low quality;
international & private
schools available, but
have waiting lists
Good – public, private,
religious and international
schools available
Good – public, private
and international schools
in major metropolitan
areas
Public schools - good. IB
program available in
private international
schools
Medical facilities
Good – private healthcare
recommended; free
healthcare via SUS
Good – private healthcare
recommended; free
healthcare via IMSS
Good public healthcare
facilities; private coverage
recommended for expats
Moderate – private
healthcare recommended
Car and driver
recommended; pubic
transport moderate in
cities
Good public transport
infrastructure; car & driver
not a necessity
Car & driver
recommended; Poor rural
road infrastructure
Public transport good in
cities; poor in rural areas
Quality of life; lifestyle
assimilation
Transportation
The Americas
Brazil
Colombia
Mexico
Peru
Immigration Solutions – The Americas
Brazil
Documentation
Time Frames
Process
Red Flags
Mexico
Document heavy; can
take 2-3 months to gather
documents
Colombia
Peru
Document heavy; can
take 2-3 months to gather
documents
All documentation must
be submitted in Spanish
and most foreign
documents must be
legalized
Long government
processing times
Long overall processing
times
Long government
processing times
Many highly specific visa/
permit types; process can
vary greatly from case to
case
Payroll location can affect
process
Personal appearance is
required
Several restrictions on
payroll and salary
requirements
Some job categories may
require additional
documentation and steps,
meaning longer
processing times
The DIGEMIN
(Immigration Department)
will closely examine the
Employer's ratio of foreign
to local workers
The INM (Immigration
Department) will closely
examine the Employer's
ratio of foreign to local
workers
Europe, Middle East, Africa (EMEA)
Russia
The “Stans”
Egypt
Uganda
65
Afghanistan: 155
Kazakhstan: 66
Kyrgyzstan:109
Tajikistan: 112
Uzbekistan: 102
101
143
7
Afghanistan: 2
Kazakhstan: 6
Kyrgyzstan:5
Tajikistan: 4.5
Uzbekistan: 4
4.5 - 5
6
Not ranked
Afghanistan: n/a
Kazakhstan: 61
Kyrgyzstan:85
Tajikistan: 93
Uzbekistan: 86
Not ranked
109
Deforestation; soil erosion;
air pollution; water pollution;
high greenhouse gas
emissions
Air & water pollution;
waterborne disease;
overgrazing; soil
degradation, erosion;
contaminated food sources
Loss of agricultural land; soil
erosion; desertification;
water pollution; waterborne
disease
Deforestation; overgrazing;
soil erosion; draining of
wetlands; extensive
poaching
Human Development Index
(measures quality of life)
Political Risk Index
Gender-related Development Index
(measures Status of Women)
Environmental
Issues
Data provided by The World Trade Resource®
Europe, Middle East, Africa (EMEA)
Russia
Taxation
Corporate: 24%
Personal: 13% (residents),
30% (non-residents)
VAT: 18%
Data provided by The World Trade Resource®
The “Stans”
Afghanistan: little tax
information
Kazakhstan: corporate: 30%
Personal: progressive up to
20%
VAT: 15%
Kyrgyzstan: corporate: 30%
Labor taxes up to 27%
Tajikistan: corporate: 25%
Personal: variable, approx 13%
VAT: 20%
Uzbekistan: corporate: 12%
Personal: progressive, from 13
to 29%
VAT: 20%
Egypt
Corporate: 20%
VAT: 10%
Uganda
Corporate: 30 to 35%
Personal: PAYE system of 4 to
20%
VAT: 17%
Europe, Middle East, Africa (EMEA)
Russia
The “Stans”
Economic Conditions
Economy hit hard by global
crisis; stabilized in 2010;
positive growth outlook for
2011+
Afghanistan: signs of
recovery; GNP growth
8.64%
Kazakhstan: recovery from
sharp declines in 2008 &
2009; GNP growth: 2.4%
Kyrgyzstan: unsettled; high
inflation; GNP growth:
4.61%
Tajikistan: stable; structural
reforms; GNP growth 4%
Uzbekistan: strong
economic growth; GNP
growth: 8%
Impressive economic
performance; resilient
economy; high inflation
Economic growth; price
stability; good fiscal policy;
improvement in living
standards; reduction in
poverty
Safety & Security
Crime rate high – extortion,
kidnapping, narcotics
trafficking; money
laundering; high growth rate
of HIV/AIDS virus
Taliban & al-Qaida terrorism
threat; Islamic militant
organizations; narcotics
trafficking; money
laundering; street crimes;
theft
Low rate of crime; money
laundering concerns;
terrorism threat high;
insurgent groups – Islamic
Group and Islamic Jihad
High rate of crime – theft,
armed robbery, assault;
Insurgent groups; HIV/AIDS
Data provided by The World Trade Resource®
Egypt
Uganda
Destination Services - EMEA
Russia
The “Stans”
Egypt
Uganda
Availability of short term
accommodations
Yes major cities;
Limited rural
Yes major cities;
Limited rural
Good
Yes major cities;
Moderate rural
Availability of acceptable
permanent housing
Yes major cities;
Limited rural
Moderate
compounds
Good
Yes major cities
Limited rural
Quality of life; lifestyle
assimilation
Generally good
Varied
Good
Moderate
Major cities -International
Schools;
Rural - local schools only
Limited
compounds
Good
Kampala only
Varying scale - cities to
rural
Varied
Compounds
Good
Good Kampala;
Limited rural
Urban - good
Rural - limited
Car and Driver
required
Good
Car and Driver
required
Education facilities
Medical facilities
Transportation
Europe, Middle East, Africa (EMEA)
Russia and the ‘Stans’ - Two ends of the scale
Middle East/North Africa
Sub Saharan Africa – Uganda – Captial vs. Rural
Capital
Immigration Solutions - EMEA
Egypt
Documentation
All documentation must
be submitted in Arabic
and must be legalized
Russia
Kazakhstan
Documents may greatly
vary on a case by case
basis
All documentation must
be submitted in Russian
Time Frames
Process
Quota program in place
(process depends on ratio
of foreign to local
workers)
The employee must be on
local payroll with a local
contract and is paid in
Rubles
Red Flags
Work permits are granted
with the understanding
that the foreign national is
training a specific
Egyptian national
“assistant” to fill the same
position. If renewal is
necessary, it must also be
justified why the training
is ongoing
Companies must submit
a forecast of how many
foreigners they wish to
hire for the coming year,
as well as nationalities
and job descriptions
Uganda
Should allow for long
processing times
Should allow for long
processing times
Local position must be
advertised in country for a
period of time
Payroll location can affect
the process.
Can be difficult to find
compliant, qualified incountry counsel
Considered a “remote
location;” processes must
be reconfirmed before
moving forward on any
cases; can have
significant variances
Asia Pacific
China
India
Vietnam
Malaysia
Human Development Index
(measures quality of life)
89
119
113
57
Political Risk Index
7
8
4.5
8
Gender-related Development Index
(measures Status of Women)
64
98
83
50
Environmental
Issues
Air pollution
Forest damage
Water shortage
Deforestation
Soil Erosion
Overgrazing
Deforestation
Soil degradation
Water pollution
Air Pollution
Water Pollution
Deforestation
Taxation
Corporate: 33%
Personal: up to 40%
VAT: 17%
Corporate:40%
Personal: progressive up to
30%;
VAT 12.5%
Corporate: 28%
Personal: up to 40%;
VAT 10%
Corporate: 28%
Personal: up to 28%
Service Tax: 10%
Economic Conditions
Fastest growing economy in
the world; one of the worlds
largest trading countries;
GNP growth 11.03%
One of the fastest growing
economies; sound macroeconomic policies; steady
structural reform; GNP
growth 8.78%
High inflation rate; Industrial
sector shown rapid growth;
GNP growth 6.04%
Transformed from mainly
minerals and agricultural
exports to manufacturing
and services; GNP growth
7.2%
Safety & Security
Extremely safe, but robbery,
mugging, and pick pocketing
are becoming increasing
common in the urban areas
Safe, however there is
narcotics trafficking activity;
Terrorist violence continues
to pose a direct threat
Low crime rate; theft is the
only major crime, with
violent crime rare.
Extremely safe, but petty
theft is evident and caution
should still be exercised at
all times.
Data provided by The World Trade Resource®
Destination Services – Asia Pacific
China
India
Vietnam
Malaysia
Availability of short term
accommodations
Sufficient
Sufficient
Limited
Sufficient
Availability of acceptable
permanent housing
Sufficient
Sufficient
Slight Shortage
Sufficient
Good
Good
Moderate
Good
Available
Available
Some
Available
Many
Many
Few
Many
Car & Driver available
Car & Driver
Available
Car & Driver
Preferred
Car & Driver available
Quality of life; lifestyle
assimilation
Education facilities
Medical facilities
Transportation
Asia Pacific
China
India
Vietnam
Malaysia
Immigration Solutions – Asia Pacific
Documentation
China
India
Vietnam
Malaysia
An employment contract
between the employee
and the local entity will be
required
Several company
documents required;
contract needed with local
entity
Police clearance process
can often cause delays
Documents not in English
must be certified by the
Malaysian government
Application process is
complex
Much of the process may
take place post arrival
In-country approval times
are subject to inconsistent
government processing
Time Frames
Process
Lack of consistent
process; variance s city to
city
Red Flags
Relevant experience is
highly scrutinized
Compliance concerns
within government
Extensive list of restricted
nationals; additional
authorizations required
for these
In Summary
> Financial considerations – allowances, hardship premiums, tax
> Social Issues - Adaptation and expanding comfort zones – can the
employee/family engage and adapt?
> Immigration – plan early; know the constraints of the host country’s process
> Business Practices – unique to emerging markets
> Safety and Security – what are the risks? Are you prepared?
> Healthcare: What medical care facilities are readily available?
> Adequate housing and schooling
> Appropriate time out of country
> HR/business leaders’ due diligence and understanding
THANK YOU!
QUESTIONS?