By Efrat Peled, Chairman and CEO of Arison Investments
At Fortune’s Most Powerful Women Summit this fall, I exchanged observations on emerging markets with some impressive political experts and financial analysts. The question on many minds was how to be successful in these markets now that the “hype” is over. With growth rates in the BRIC countries slowing down, the ripple effect is being felt around the globe. In India, for example, growth rate dropped from 11 percent in 2010 to 4 percent in 2012.
Such fluctuations can give investors pause about whether they can succeed when conditions change drastically. A significant portion of Arison Investments’ portfolio companies operate in emerging markets, and we’ve found that succeeding in these economies requires one thing – being focused on creating mutually beneficial long-term business partnerships.
The experiences gleaned from our global companies, some of which are established leaders of over 90 years in the areas of water efficiency, finance and infrastructure, provide a number of lessons. We have found that a values-first business approach – one that considers more than one bottom line and ensures that all participants can profit – creates success even when uncertainty is on the rise. There are three key ingredients:
In the Philippines, for example, government spending increased 17 percent in a year, with major investments in innovation and efficiency, the two pillars of our water efficiency business, Miya. Partnering with Maynilad, the local private water utility in Manila, we designed and implemented a comprehensive solution using new technology to solve an old infrastructure problem. We combined special software with human ingenuity to identify, monitor, and repair leaks in old pipes. As a result, about 600 million liters of water per day have been saved, and today an additional 2.6 million people now receive a consistent flow of fresh water from the municipal system. Instead of producing water, we operated to realize the value of abundance and maximize the world’s existing fresh water resources, together with the local authorities.
We are upbeat about the prospects for emerging markets. The middle class in these economies is enormous and 65 to 70 percent of the population is under the age of 35. In emerging markets as a whole, by 2025, there will be $30 trillion of consumption. Our observations of what works are just some of the pieces to the puzzle of how to create a thriving business environment in emerging markets. We are convinced, though, that a commitment to long-term, values-based strategies is universal: they have helped us not only do good business, but also do good for the global economy, environment and society.
Efrat Peled is Chairman and CEO of Arison Investments, which spearheads values-based business activity worldwide. It creates long-term business investments that combine substantial financial results with sustainable moral responsibility. Arison Investments' diversified portfolio is estimated at over US$2.5 billion in finance, real estate, infrastructure, renewable energy, and water, in more than 40 countries across five continents, with some 27,000 employees.
[Image credit: Shikun & Binui]