by Amy Antenora
CHICAGO — Mirroring similar comments made earlier in the day at the 2008 Global Automotive Aftermarket Symposium, Ernst & Young’s (E&Y) Mike Hanley stressed the importance of respecting cultural norms when looking to do business in another country. This was just one of the many recommendations he made during his presentation on the “mega trends” facing the global automotive industry today.
One of the most talked about ‘mega trends’ today is entering the so called emerging markets of Brazil, Russia, India and China (BRIC) and Mexico. According to a survey E&Y conducted last year that asked aftermarket execs what risks were having biggest impact on business, 66 percent said emerging growth strategy. Fifty-nine percent of the companies named to the AASA Top 100 Aftermarket Suppliers list are already doing business in Mexico and 50 percent are already in China.
Another E&Y survey found that most of the business opportunities (75%) in emerging markets are self-generated. “You having your people on the ground seems to be generating the most opportunities in those markets,” Hanley said. 
Private equity deals are also very prominent today, Hanley noted. E&Y is seeing more of its clients work on a ‘private equity strategy’ focusing on a number of aspects, not just how to sell your business, but also how to buy businesses through private equity. Equally important, Hanley said, is understanding how to partner with private equity. It can even be as simple as learning from private equity. “Is [a particular] private equity [business] successful because it is improving the business it bought, and if so what can you learn from what that company is doing?” Hanley asked.
Hanley broke down the key challenges and opportunities available in each of the emerging markets and addressed important legislative, cultural and social differences that must be considered when investing in an emerging market. For example, in Brazil, one of the big issues is the tax area. There are multiple taxes with fast changing legislations, new tax laws are instituted on a whim and you must stay on top of the changes in order to be successful there. Brazil is also on the leading edge of environmental sustainability and regulations, so presenting an environmentally conscious business plan in Brazil is helpful as well.
Regardless of which emerging market your company is looking to enter, there are five key things you must get right, Hanley said: strategic alignment, compliance with laws and regulations, clear understanding of financial picture, governance and control, and a realistic expectation of time to close.
