Where in the world is it easier and cheaper to do business?
The world is changing rapidly. The political and economic situation of states is changing. Countries previously profitable for investment are now experiencing stagnation. And money loves silence and understandable game conditions. Therefore, recently, global investors have shown increased interest in emerging markets. Are these countries ready for an influx of investors?
Previously, investments in BRIC countries seemed very risky, but in times of crisis, global investors consider them increasingly profitable. KPMG recently published a study that compares the costs of doing business in developed and developing countries. A study on business opportunities was conducted in 14 countries and more than 110 cities. The KPMG study provides an analysis of business conditions in different countries in the following sectors of the economy: industry, R&D, digital technology, etc.
The study examined a number of factors that influence the assessment of the attractiveness of different places for doing business. The main focus was on the costs of doing business, but factors such as the demographic situation and the population, skilled labor and education, innovation, infrastructure, the legal framework, economic conditions, cost and quality of life were also evaluated.
For the first time in this publication, there were BRIC countries: Russia, Brazil, India, China and Mexico. The remaining nine countries are developed markets: Canada, Australia, France, Germany, Japan, Italy, the Netherlands, the United States and the United Kingdom.
As the results of the KPM study show, in terms of costs, it is most profitable to conduct business in the Netherlands and the UK. Among the rapidly developing countries, China and India offer the most favorable conditions. The advantages of these states are due to low labor costs, with enterprises in the industrial sector having the lowest costs in China and companies providing various services in India. The level of salaries in Brazil and Russia is higher than in India and China, but almost twice as low as salaries in developed countries. This study showed that Russia occupies a leading position in terms of attractiveness among rapidly developing countries in terms of gas and electricity costs.
But not all types of costs in rapidly developing countries were lower than in developed ones. For example, rental of production facilities in the USA and Canada is lower than in China, Brazil or Mexico. But in Russia, the most expensive rental of industrial premises among all the countries that took part in the study.
The KPMG study also compares business conditions by industry. The costs of implementing activities in the field of digital technologies are the lowest among developed countries in Canada, the UK and the Netherlands, and among the rapidly developing countries in this sector, the lowest total costs are observed in China, India and Russia. Canada, China, France and Australia have set the lowest income taxes on businesses that operate in the digital technology sector.
In terms of R&D costs, the most attractive developed countries are the Netherlands, France and Canada, and among the rapidly developing countries are India, China and Mexico. The least attractive conditions for providing corporate services are offered by Brazil and Russia. Among developed countries, low costs for the provision of such services are noted in Canada, the UK and the Netherlands.
The costs of industrial production are the lowest in the UK, the Netherlands and France (from developed countries). However, the lowest costs are still at industrial enterprises in China. This country has long been the largest exporter in the world. The lowest corporate income tax is set in China, Canada, Russia and the UK.
Experts noted that many companies are interested in emerging markets. They come to them to create and ensure the efficient operation of a global supply chain. These markets have several advantages. Due to the active development of production capabilities, technologies and professional development of specialists, these markets are becoming popular places for international business. However, companies in these countries may face various difficulties – from taxes to personnel management, so the success of work in these markets directly depends on a carefully thought out business strategy.
Recently, the 4th investment forum “Russia is Calling!” Was held in Russia. Vladimir Putin also spoke at it, which called on domestic and foreign investors to cooperate more actively with Russian regions. He said that the government will continue to take all measures in order to protect the state’s economy from sharp jumps.