Investments and new markets

The current process of globalisation is merely the beginning of a more integrated world in which products and services can be combined and sourced from many different parts of the world. Companies that invest in developing countries today will be the winners of tomorrow.

Globalisation is not merely a process of change and development; it can also be a tool to improve your company’s profitability or the benefit you offer your customers. Not all companies in Sweden have yet appreciated the opportunities that globalisation presents.

The high standard of living reached by Sweden in the 20th century was partly a result of Sweden’s exports. Sweden exported with great success to the then new markets, Europe and USA. Swedish companies opened plants and offices abroad in order to take advantage of the opportunities provided by emerging markets and move closer to their customers. They had great confidence in the future and the wheels of commerce turned ever faster. Today all those countries are members of the OECD. Their markets are mature, growth rates are moderate and competition is tough.

Now, however, Sweden is losing market share to competing countries on export markets in developing countries and large emerging economies.

Today’s growth is taking place in today’s developing countries
Today’s new markets, i.e. those that we now regard as developing countries, are not members of the OECD. By 2030 global GDP is estimated to have doubled and 80 % of the growth will be taking place in today’s developing countries, where the energy intensity of their GDP is at present around three times as high as in the OECD countries. The new growth markets are in today’s developing countries. The world is constantly changing and we have to keep up. Still, the 10 countries that were Sweden’s biggest export markets 10 years ago are still Sweden’s 18 biggest export markets. 70 % of Swedish export is to Europe and some 90 % is to the OECD countries. Many Swedish companies are missing out on today’s growth markets. New markets are growing remarkably fast, and they are in great need of advanced environmental and energy-saving technology. This opens up major opportunities for companies that specialise in these particular areas.

Companies that invest in today’s developing countries will be tomorrow’s winners. Companies that appreciate the significance of this trend and are already investing in new markets, far outside the OECD, will be tomorrow’s winners. Apart from the largest Swedish companies, Swedish industry is still underrepresented in developing countries, while many companies from competing countries are already well established there. For example, there are surprisingly few Swedish companies in Russia, our closest and largest overseas market, where the economy is developing very strongly. The situation is similar in China and India and in countries south of the Sahara, or in Central America, to name just a few. Swedfund would like to help change this situation.

In all the regions mentioned there are markets that are growing strongly and where the economy is driven by a growing middle class. We at Swedfund are convinced that the development of these regions will accelerate in the future.

Early establishment paves the way for successful business
There are often two main reasons for moving into a new market: a high growth rate or low-cost production. For many companies it’s enough if just one of these reasons exists. In several of the new markets that Swedfund is interested in both reasons apply.

Another positive effect is that Swedish companies that enter new markets also experience rapid growth. Breaking into foreign markets leads to higher productivity in Sweden, with more employees and exports from Sweden.

Swedfund is experienced in new markets
Swedfund specialises in investing in developing countries. We can help Swedish companies to move into emerging markets all around the world with the object of running profitable businesses there. Swedfund would like more business leaders to recognise these opportunities.

After 30 year’s of investing in emerging markets, Swedfund has accumulated a great deal of competence in providing what companies need for a successful venture into new and challenging markets. Swedfund has local networks, contacts and references that industrialists can rely on. Swedfund can also help with financing. As a shareholder, Swedfund plays an active role on the board. In our experience, with Swedfund as a co-investor contacts with authorities and institutions become that much easier.

New markets offering profitable business opportunities are out there, if one is ready to take the plunge.