The report “When two worlds meet: How high-growth market companies are changing international business” was commissioned by UK Trade & Investment from the Economist Intelligence Unit. It examines the growing international footprint of companies based in fast-growing emerging markets and the ways in which firms from Western Europe and North America are responding to a phenomenon that is redefining the global economy.

Commenting on the report, Nick Baird, chief executive officer of UK Trade and Investment, said:

“Although the outlook for the global economy remains uncertain, high-growth markets, and their fast growing multinational companies, offer huge potential and rewards for UK companies who can rise to the challenge. It is encouraging that the UK continues to be a highly attractive investment destination for such companies.”

The key findings of the report are:

• Western executives see benefits and opportunities in the expansion by companies based in high growth markets. 45 per cent said that greater outbound Foreign Direct Investment (FDI) from high-growth markets will contribute to economic growth in Western economies. 37 per cent said it will add to consumer choice, and 36 per cent said that it will help developed markets become more competitive.

• The main benefits cited of partnering or engaging with a high-growth market MNC were: better access to emerging markets (43 per cent), providing a source of new business growth (35 per cent) and providing a way to reduce operating costs (25 per cent).

• Almost one-half of manufacturing executives in the survey – compared with 29 per cent of respondents from services – say the rise of high-growth market firms has given their own companies a lifeline by, for instance, opening up access to new markets.

• Whilst a majority of survey respondents admit competition is becoming increasingly intense, more so in emerging markets than in their home or developed markets, Western firms see their edge in technology and innovation as their greatest competitive advantage. 54 per cent of executives said that this was where developed world companies can add the most value to their relationships with high-growth market MNCs.

• Two in five survey respondents say their companies plan to invest in innovation, research and development, 36 per cent will introduce new products and services, 35 per cent will expand into new markets and 32 per cent will adapt their business strategy.

• North American and European executives anticipate a flurry of cross-border merger activity after an initial period of collaboration or partnership with companies based in high growth markets. Currently, 40 per cent of survey respondents partner or do business with a high-growth market MNC, and 17 per cent of those who do not plan to do so within the coming year.

• Markets which feature highly in the plans of Western executives are China, India, Brazil and Mexico, with significant interest also in Russia, Singapore, Hong Kong, Argentina, Indonesia and South Africa. These markets make up the top ten most frequently cited among businesses surveyed.

The full report can be downloaded from the UK Trade & Investment website – www.ukti.gov.uk/highgrowthmarkets