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Six Tips for Working with Emerging Market Data

October 12th, 2017

With emerging and developing markets expected to account for almost 70% of global gross domestic product (GDP) in 2030 (in purchasing power parity terms), and accounting for almost two-thirds of global growth in consumer expenditure, opportunities for consumer goods companies remain strong. Yet quantifying the opportunity and building a strong strategy, founded on hard facts, is not easy. When researching and using data from emerging markets there are numerous things to consider, some that are challenges anywhere – standardising definitions, understanding methodological differences, and some more specific to countries with weaker governance and challenging business environments.

In Euromonitor International’s global market research, we abide by six key guidelines to ensure our data quality is of the highest standards. Learn our six tips to working with emerging market data below.

  1. Question quality

Unfortunately national statistics are not often the priority of cash-strapped governments. Quality of data can be questionable – because of outdated methodologies, a lack of technology or political bias or corruption. For a business looking to evaluate markets and to lessen risk this adds complications and uncertainty to the decision-making process.

For instance in Argentina, inflation figures became widely discredited from 2007 following changes to the methodology. The series was suspended entirely in December 2015 before being reinstated, with a methodology which is more accurate, in April 2016. Many organisations between 2007 and 2016 had to create their own inflation estimates, or rely on other private forecasters.  In cases like these a judgement needs to be made as to whether the data are usable. One way to do this is to compare the figures against countries with a similar demographic and economic profile. Does the data make sense compared to neighbouring countries? If the data seem suspicious, then it might be better to create your own estimates.

Sometimes an impasse is reached. For example, the National Bureau of Statistics of China does not report migration data. Having population, live birth and death statistics, means that net migration can be easily calculated. However it looks suspiciously low, with the most likely explanation being that it doesn’t take into account illegal migration. Based on other countries migration data, the UN estimates that it might be much higher.

Working with a market research provider may assist you in determining which data-sets are of the highest quality and most reliable.

Demographic Data in China: 2000-2016

Population on 1st January, ‘000 Live births, ‘000 Deaths, ‘000 Net migration (calculated), ‘000 Net migration (UN), ‘000
2000              1,257,860                    17,715                      8,144 -0.8 -326.7
2001              1,267,430                    17,017                      8,178 0.6 -226.0
2002              1,276,270                    16,466                      8,207 1.4 -227.2
2003              1,284,530                    15,989                      8,246 -3.3 -278.9
2004              1,292,270                    15,929                      8,321 2.0 -366.9
2005              1,299,880                    16,166                      8,487 1.1 -443.8
2006              1,307,560                    15,850                      8,928 -2.2 -473.6
2007              1,314,480                    15,946                      9,133 -3.5 -473.2
2008              1,321,290                    16,081                      9,352 0.8 -463.4
2009              1,328,020                    15,909                      9,425 -3.2 -439.8
2010              1,334,500                    15,919                      9,511 2.4 -391.0
2011              1,340,910                    16,035                      9,597 1.6 -317.6
2012              1,347,350                    16,343                      9,657 4.1 -256.0
2013              1,354,040                    16,397                      9,719 1.7 -240.5
2014              1,360,720                    16,876                      9,768 -7.8 -269.1
2015              1,367,820                    16,551                      9,749 -1.3 -288.0
2016              1,374,620                    17,860                      9,770 0.0 -253.4

 

Source: Euromonitor International from the National Bureau of Statistics of China and UN

  1. Think proxies

Data availability is often poor. Therefore when the desired data is not available (or of questionable quality) it’s worth considering proxies to help you gain better context of a market.

For example, data on possession of durables, urbanisation and education can be a good proxy for income data when trying to size the middle class. Conversely, a low proportion of population with access to improved sanitation facilities or a high share of urban population living in slums may point to the population living below the poverty line. Annual disposable income may be approximated using GDP or consumer expenditure. A low share of expenditure on meat within food expenditure might be an indication of the proportion of vegetarians in the population.

We can also use data as the building blocks of missing figures. For instance, there is a huge lack of data on the percentage of households having access to broadband Internet. However, reliable estimates can easily be constructed using high-quality and widely available data on broadband internet subscribers.

  1. Be wary of timeliness

Surveys may be carried out sporadically. This can be a particular problem when trying to obtain information about a fast-growing and evolving emerging market. What was true in 2014 might be extremely different to the situation in 2017. Again, comparing against similar countries, or against related datasets, can help here – enabling data to be extrapolated. For instance, a lack of recent data on population by education in country X could be eradicated by looking at enrolment or completion rates (generally widely available) and the growth in population by education in neighbouring countries. We apply this very approach at Euromonitor International; our analysts spend a large amount of time and effort making their own estimates in order to create a comprehensive and timely dataset.

  1. Go granular

Remember regional variations in emerging markets as these can be extreme. If researching the data as a prelude to market entry, it could be worth trying to find city-specific or region-specific data or urban data rather than national figures. Euromonitor International researches all of these geographic breakdowns and differences can be stark. In the case of Colombia, Cameroon and Peru, urban consumer expenditure per capita is double that of rural spending.

Difference in Consumer Expenditure Per Capita in Urban v Rural Areas: 2016

Source: Euromonitor International from national statistics

 

  1. Never forget the importance of definitions

Cross-country comparability of definitions is always a challenge no matter the level of development of an economy. However, it can be magnified in emerging markets. For instance, a seemingly straight-forward indicator such as “Possession of Washing Machines” might include a range of definitions – including manual washing machines which don’t use electricity; air conditioners might cover simple fans or ventilators, cookers – could include various rice cookers, bread cookers, etc., which aren’t typical across a wide range of countries. This matters for a client manufacturing ovenware or ready meals. When researching household facilities for one project, we were surprised to find that the percentage of households with a toilet was astonishingly high in some emerging markets. After checking definitions and methodology, it appeared that the data of some countries is about whether a household has any toilet of shower and even the use of bucket means yes. When in developed countries the percentage of households with access to a toilet means a flush toilet: A flush toilet is an installation provided with piped water that permits humans to discharge their waste and from which the waste is flushed by water. On the other hand, in some countries it was suspiciously low – for instance Thailand, where our source suggested a possession rate of around 10%, compared to 60% in Vietnam. Upon further investigation this was because the Thai figures (erroneously) did not include squat latrines as it hadn’t been clear in the source that these were with flush.

Households by Toilet Facility in Vietnam: 2012

households by type of toilet facility Vietnam 2012

Source: Living Standard Survey

 

Households by Toilet Facility in Indonesia: 2010

households by type of toilet facility Indonesia 2010

Source: Household Socio-Economic Survey 2011

Carrying out this kind of due diligence is imperative when comparing new markets to ensure that accurate data are being compared and that decisions are based on hard facts.

  1. Consider practicalities

A number of statistics offices only provide the data in pdf reports, or charts and can be nearly impossible or completely time-consuming to enter the data into statistical software. The data can also be hard to search for if it is in a pdf. Statistic office websites can be extremely slow with lots of dead ends and error messages. There are also language barriers – alleviated by translation software – but still posing a challenge when trying to understand precise definitions. In addition, a number of countries only stock publications in hard copy. In Uzbekistan for instance, researchers have to visit the office in person. Working with a market research provider allows your business the opportunity to utilise its network of in-country analysts who can gather this type of information. For example, Euromonitor International’s in-country analysts visit statistics offices in-person and do store-checks within the country they research.

When researching data from emerging markets we need to constantly question the data – assess the potential for quality issues, for political bias, the clarity of the definition, the accuracy of the methodology and so on. When comparing markets these challenges are multiplied, and the task may seem onerous, but the cost of basing future plans and designing strategy on unreliable data is even higher. Working with a market research provider who is well-nuanced in the world of emerging market data can ensure reliability, definitions, cross-comparability, and so-on. To learn more about how Euromonitor International can help you with accurate emerging market data, contact us or request a demo of our Passport syndicated research database.

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Sarah Boumphrey

Sarah has 15 years’ experience in economic and consumer research. In her role as Global Lead of Economies and Consumers, she focuses on translating economic and consumer trends information into useful insight. Sarah leads the development of our macroeconomic and consumer trend content, with a special interest in emerging markets.

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