The report, Risk & Reward: Doing Business with Emerging Markets, is based on a survey of 51 board executives at UK companies within the FTSE 500. The purpose of the report was to reveal what opportunities British executives perceive to exist in these markets and what they are looking for to facilitate them.

Respondents rated China and India as the most attractive markets, followed by Russia and then Brazil. More than two-thirds of respondents are already operating in China, with more than half in Russia and India, and just under half operating in Brazil.

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Looking specifically at China, despite the apparent enthusiasm for doing business there, UK businesses appear to be behind the curve in their more risk-averse attitude to direct investment. Except in a few restricted industries, China now allows foreign investors to set up wholly owned subsidiaries. However, two-thirds of the respondents agreed that UK companies would choose lower risk strategies such as joint-ventures and alliances for the Chinese market.

Real tension is highlighted in the report between globally set standards and local practices – with ethics and dealing with corruption very high on the agenda of UK PLCs and a major challenge in all markets, especially Russia. Business executives are concerned about their liability in the light of heightened corporate governance standards (such as the Sarbanes-Oxley regulations in the US), coupled with anti-money laundering measures and the need to ensure that requirements of various industry regulators are fully met.

UK businesses anticipate strong competition from all the BRIC markets, especially China and India. Competition is expected both within those countries and in the UK market. However, respondents acknowledge that Western arrogance can be a hindrance, causing UK businesses to over-estimate their own strengths on entering a new market and under-estimate local competition.

Investors are also very positive towards BRIC markets, and there are concerns that investors might be over-confident or unrealistic in their expectations.

Intellectual property (IP) and brand protection issues are the predominant concerns for businesses. This feeling goes across the board and includes concerns about giving away IP to joint-venture partners, without protecting it adequately, through to criminal activities, such as counterfeiting goods.