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Financial Crisis – Chance for new start on emerging markets

Year 2009 – Time of great Financial crisis and hard times for western companies. Indeed many companies are facing hard times and thus economies are suffering too. Many people are talking these days about reforming and reconstruction but nobody really tries to find a real solution to these problems. To cut long story short, nobody really sees an exit, but like for everything in this life, there is a solution. And one that is most reasonable is quite strongly opposed in western countries, and that is moving business abroad and setting it up in less developed countries where labor force is less payed and operating costs are far less. Of course many are going to complain because moving business from home country could do harm to the employees and put their jobs at risk, mainly their jobs who are at the stake. But again like I have already said real solution of the problem is to be pragmatic and not emotional,because emotions lead nowhere in business. Emerging markets are going to be important part of the future World Economy whether some liked it or not.

1. Emerging Markets space and population. And these two factors are key for growth, your product is nothing if you have no one to sell it to. And just that but, all products and services are related, so each other pulls a new one. People in emerging countries are “hungry” for development, just take teh case of telecommunication market in India which has skyrocketed with cell phones. So these people will need even more products and services.

2. Emerging markets have weak infrastructure but that is also an opportunity for construction, telecom and power companies. Imagine just the profit of construction the highways in large countries, and the whole new business wave which will be triggered by that.

3. Western countries markets are oversaturated, they are abundant in services and products, sometimes maybe it’s just enough to export S&P to emerging countries, especially high tech products. Some of the production has to stay in home country.

4. Mostly dominant are thoughts that emerging countries are inhabited with stupid and uneducated people, which is mainly wrong. Many smart and successful managers, engineers and doctors in developed countries have origins from those countries, and main reason for their departure was lack of possibilities for advancement, or shortly there was no job for them, but when their country starts do develop, what do you think they will do?

So clearly this gives you the “big picture”, developed world has no place to expand and grow any more, bu it could take part in development of the other less developed parts and create new economies. And not just that, those who are afraid for their jobs, why would they be? Those Emerging Countries will need also some skilled workers just to train new staff and to keep things moving. Exchanging experiences and know how just could be opportunity for skilled people. When true development kicks in in those countries they will lack in everything.

Maybe it will be good to take example, but let’s not take usual countries from BRIC block, let’s say less known country like Serbia? What you haven’t heard of that small state? Well, very few people have heard for that country, because it was part of Yugoslavia, old socialist state in Europe on Balkan Peninsula, during 90’s country fell apart, and one of member states was Serbia. First of all country is not big, some 88 000 sq.km. and population is not big also 9 mil approx. So what makes that country so special you ask? There are couple of things:

1. Location. Nothing like a good location, you could have great hours but if it is at the middle of nowhere it is not much use from it. Similar thing is with country. Serbia maybe is small country but is located on “pretty busy path” from west to east, or to be more precise Serbia is in the same time knot and gateway from Europe towards Asia, and majority of emerging countries are in Asia. So in some manner Serbia i logical link with those countries.
   Maybe most important part of that story is Corridor 10 which is EU code name for road of great importance for EU. Corridor 10 connects Central Europe with South Eastern Europe and further to Asia, and it is comprised from both highways and railways, and furtunately Serbian section stretches through whole country. Also River Danube is declared to be Corridor 7, and it is flowing through Serbia too, so there are two major pathways running through Serbia, both land and waterways. Latest approval of corridor 10 importance is new credit which was assigned to Serbia for Corridor 10 reconstruction.

2. Neighborhood. Serbia is almost surrounded with European union member states and it is running towards EU membership itself. Simply connections and cooperation within that great union is irreplaceable for business development and economy. Many eastern block countries flourished in every way after entering the union, there is no reason why wouldn’t be the same this time. Just preparations for EU membership had great and positive effect on Serbian economy, so membership by itself should contribute even more.

3. Excellent business potential, because Serbia has free trade agreement with EU and Russia, USA also gave Serbia trading incentive by releasing nearly 4000 Serbian products from customs fee. So that means that Serbia has access to the great and developed markets, and also making it easy to enter other countries markets. Russia and surrounding countries signed free trading zone agreement with Serbia which opens over 160 million people market for business.

4. Excellent development potential. Country has two regions: Vojvodina-flat land excellent for agriculture and food production, but is also excellent for greenfield investments, which are already started to come in this country. Other part of this country is more rural with moderate mountains and hills partially covered with forests, and cut with rivers. Beside food production there, energy business is also developed due to fast and strong rivers, which are harnessed. Also rich history and heritage gave this country many old monuments and ancient monasteries which are under UNESCO protection, which gives excellent potential for tourism.

5. Belgrade country capital and driving engine of Serbian Economy. Situated on junctions of Sava and Danube river, and also on route of Corridor 10 gave it rock solid position for business development. Official data is that Belgrade has 1,5 mil but buy some unofficial data there are almost 2mil. residents. Belgrade and Serbia inherited very well developed infrastructure from old country Yugoslavia which had good connections and relations with Europe, USA and Soviet union. So infrastructure requirements are quite low. Due to the eminent schools and colleges Belgrade was and remained regional center, which resulted that many companies decided to establish their branch offices in Belgrade. Today strong development could be seen on Belgrade street where many projects which could be seen in this gallery were undergoing their construction phase in office and residential space.

6. Even under harsh economy crisis conditions Serbia is holding good it’s position and still keeps to manage and invest in infrastructure, which is believed to be main artery of economy everywhere. Cellular phone networks together with broadband Internet have enormous penetration levels, and user numbers are doubling every year.

Many of the facts presented here are just most important notes regarding Serbia, many more are left to be presented and reviewed, but this article would not be adequate for that, so for those who are more interested maybe it would be the best to visit www.belgradeinvestments.com which is Belgrade and Serbian information portal about latest investments, real estate projects and business guidance, and consultancy services. Until next time,

Greetings.

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