Cautious optimism was the prevailing outlook during this year’s second annual fDi Forum 2015 in London on September 24. Multinational chief executives and industry professionals convened to discuss the current challenges to companies expanding into new markets, focusing particularly on growth hotspots and emerging-market risk.

India was frequently spotlighted as presenting vast opportunities for businesses, with its booming population and increasing consumer needs, while speakers pointed to China’s economic slowdown as leading the world’s uncertainty in emerging markets.

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“Emerging-market economies comprise roughly half of the world’s economy today, and although they are growing faster than developing world economies, growth is still slower than forecast,” said Chris Giles, economics editor at the Financial Times. He noted China’s sinking stocks and the International Monetary Fund’s warning against rate rises, remarking that stock markets everywhere are having a difficult time. 

Productivity in emerging markets has slowed after rising rapidly and peaking in 2005. Demographics, particularly ageing populations and the drop in the number of people of work age, as well as governance and corruption issues, are contributing factors. As China comprises 16% of the world economy and a third of global investment, its effect is massive.

India was repeatedly cited as a market with enormous potential. While its economic growth is increasing, there are still huge development and consumer needs that can be aided by foreign investors. Healthcare technology was highlighted as presenting exciting opportunities for growth, not merely for India but for other emerging countries.

Forum attendees were quick to note the obstacles facing companies moving into emerging markets. Simply knowing how to enter a market is often the biggest challenge, particularly in the developing world, said Alpesh Doshi, partner at investment firm Redcliffe Capital. “It can be very hard to get through the bureaucracy and set up a business. The systems, the processes, the infrastructure, the governance and regulation often just aren’t there.”

Speakers emphasised the importance of understanding the infrastructural, political, cultural and governance issues of countries into which they hoped to expand. “Before expanding into emerging markets, one has to be more practical,” said Mohammad Zahoor, chairman of Ukraine-based ISTIL Group. “It’s about creating a bulletproof, multi-layered international structure, which will at the end of the day safeguard your investment and help you repatriate your profits and sell your venture.”