The challenges of breaking into emerging markets

The emerging markets are generally developing at faster rates than the developed countries do, which means the population in these countries are becoming richer and richer. When people become richer, they can afford more goods and services, so companies can potentially sell more goods and services in these countries. China is a great example, when the Chinese economy has expanded to become the world second largest, companies can earn enormous profits from a share in the Chinese market. However, not all companies can enter an emerging market successfully, there are several potential challenges.
First, the cultural difference between the emerging markets and the developed world can be very wide that misunderstanding could easily lead to a huge business failure. For example, people from different countries can have different tastes and habits, popular items in one country may not be popular in other countries. We do not even need to talk about he difference between the emerging markets and the developed world that the UK and the USA, which are the sister countries, have different cultures and consumer behaviour. Best Buy failed in the UK and Tesco failed in the USA but both of the two companies are successful in their original countries. Secondly, in the emerging markets, some local incumbents can be more competitive than the multinational companies, because the local incumbents sometimes have stronger links to the local resources via social networks. For example, the multinational dairy companies fail to continue their successful stories in India where the milk production is the biggest in the world. Thirdly, although emerging markets are fast growing, it does not mean that emerging markets have all sufficient infrastructure to make everything possible in the developed world also possible in the emerging market. Fourthly, the average income for ordinary people in the emerging markets may not be high enough to have similar demands like what people demand in the developed world. This is why Apple has not gained a significant market share in the smartphone market in India.
Overall, these challenges often exist when companies are trying to break into new markets. Usually if a multinational company fails to break into a new market, it can just leave since it is already making huge profits elsewhere in the world; however, if a multinational company fails to break into the emerging markets like India and China, it will lose huge potential in its business comparing with the successful companies.