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Learn MoreInadequate infrastructure adds significant costs to doing business in many emerging markets. Roads, ports, railways, airports, telecoms and electricity supply help businesses and the economy run efficiently. Yet poor infrastructure can and is being overcome, and can also offer opportunities for business.
The quality of infrastructure is not always aligned with the size of the consumer market. Major emerging markets such as Brazil, Russia and India suffer from poor infrastructure.
Source: World Economic Forum Global Competitiveness Report 2013-2014
Note: How would you assess general infrastructure (e.g., transport, telephony, and energy) in your country? Scores: 1 = extremely underdeveloped; 7 = well developed and efficient by international standards. Mean refers to the average score of 148 developed and emerging and developing countries.
Source: World Economic Forum Global Competitiveness Report 2013-2014
Note: The ranking is out of 148 countries for roads, air and ports and 121 for railroads. Scores: 1 = extremely underdeveloped; 7 = well developed and efficient by international standards.
Russia is by no means alone in its transport infrastructure challenges. Manufacturers, particularly of fmcg products which by their nature need to be easily available to end-consumers, often take control of their own distribution to overcome the challenges posed:
Electricity infrastructure is another key challenge – stable power is needed for running factories and shops and in consumers’ homes if they are to purchase electrical products. In the same WEF report, Qatar, the United Arab Emirates and Saudi Arabia are the highest-ranking emerging and developing countries in terms of the quality of their electricity supply; all are placed above major developed economies including Australia and the USA.
India on the other hand fares badly, coming in at 111th out of 148 countries – placing it between Mali and Mozambique. Urbanisation, an increasing middle class, and economic growth have all put a strain on electricity infrastructure in India. Many businesses have installed their own generators to combat the frequent power outages, but this comes at a cost which in turn affects the bottom line.
From the consumer standpoint, electricity outages also bring problems, added to which, according to the World Bank, 24.7% of the Indian population were without electricity in 2011: this equates to 299 million people – more than the entire population of three Germanys. This clearly has an impact on sales of all sorts of consumer goods. However it also provides opportunities for companies able to innovate to overcome this.
Working towards solving the infrastructure challenge in order to get goods to market is a crucial concern, but the same challenges also provide opportunities in designing market-specific products, like the ChotuKool refrigerator, to help consumers live with the infrastructure deficit.