Consumers’ interest in developed &
developing markets: implications
for responsible business
Pradeep S Mehta
Secretary General, CUTS International
OECD CSR Roundtable
Paris, 15th June 2009
Outline of the presentation
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Variations in consumers’ interest/awareness
between developing and developed countries
Large no of contributory factors (externalities)
in developing countries
Relationship between law enforcement,
company behaviour and consumer welfare
Highlights challenges and traces the road
ahead
Consumer Interests
Developing Countries
Developed Countries
Low-levels of consumer awareness
 Consumers poorly organised, few Cons. Organisations
 Views of consumers seldom incorporated into laws
 No involvement of consumers in law enforcement
 Redressal mechanism ill-developed, cumbersome and
costly
 Bargaining power very low/absent
 Standards often reflect views of a particular class of
consumers
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Consumer Interests
Developing Countries
Developed Countries
High levels of consumer awareness
 Consumers play active role in advocacy
 Play active role in enforcement of laws
 Redressal process transparent, simple and cost
effective
Consumers have high bargaining power
 Consumers play active part in standard-setting, etc.
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Contributory Factors
(Law & Regulation related)
Developing Countries
Developed Countries
• Laws absent; or ineffective if present
• Enforcement Institutions resource-strapped
• Multiple institutions created but limited capacity on
enforcement
• Interference of interest groups hamper functions
• Consumer standards not observed (goods and services)
• Poor governance and weak functions of regulatory
institutions
Contributory Factors
(Law & Regulation related)
Developing Countries
Developed Countries
Effective laws and better enforcement
 Dynamic process of legislative/regulatory reforms
 Effective governance mechanism and efficient
functioning of regulatory institutions
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Contributory Factors
(External Factors)
Developing Countries
Developed Countries
Policy often inclined to benefit SoEs
 Monopolies and abuse of dominance by companies
 Unfair Trade Practices (UTPs) predominant
 Poor service standards (e.g. after sales service)
 Bad infrastructural facilities act as dis-incentive for Cos
 Use of obsolete technology; labour intensive processes
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Contributory Factors
(External Factors)
Developing Countries
Developed Countries
Predictable business environment and rules
 Markets often competitive (level-playing field)
 Excellent service standards – high levels of consumer
satisfaction
 Well developed infrastructural facilities
 Improved technology leading to improved products
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Implication for Businesses
Developing Countries
Developed Countries
Often extractive, to source raw materials
 Non-transparent operations, little or no communication
with communities/consumers/shareholders
 Weak enforcement – help avoid actions
 Low propensity to re-invest in host countries
 Consumer ignorance used to their benefit
 Viewed with suspicion by civil society (no dialogue)
 Large no. of SMEs – little or no incentives by the State
 Old (often ineffective) marketing practices
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Implications for Businesses
Developing Countries
Developed Countries
Stern action (precedents) facilitate responsible conduct
 Transparent policy and operations
 Close involvement with consumers/shareholders
 High level of consumer awareness (watch dog)
 Incentives from the State for responsible conduct
 Dynamic marketing strategies
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Challenges & the Way Ahead
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Making relevant information available to consumers in
developing countries – enhancing awareness
Promoting cooperation between regulatory institutions
and consumers/groups in developing countries
International (donors) community to strengthen
regulatory regimes/institutions in developing countries
MNCs to maintain consistent standards of performance
across host (developed & developing) countries
Thank You!
psm@cuts.org
+91-9829013131
www.cuts-international.org