In today's global economy, it makes sense for business owners to consider exploring foreign markets.
But not every market will work for your business. After all, some countries are arguably oversaturated with American brands.
That's why you might want to consider taking root in emerging foreign markets instead.
You can, of course, make an argument to stay away from up-and-coming foreign markets because of the surprises that can come from uncharted territory. But an emerging foreign market may have less competition, which may make it easier for your company to stand out and make its mark.
If you're looking for ideas, you may want to consider expansion in these parts of the planet. But remember: It's a big world, and the following are hardly the only emerging foreign markets out there.
1. Drop in on Northern Africa.
North Africa is a region that's growing and has a strong middle class with money to spend, says Bill Chemero, executive vice president of Wayback Burgers. The company was the first American brand to reach Khartoum, Sudan and there's also a location in Casablanca, Morocco.
Americans weren't always able to enter this foreign market. For about 20 years, there were sanctions that prevented Americans from doing business in Sudan, but that changed last fall. Wayback Burgers had a head start over American competitors, as it was already in the midst of building its first restaurant in Khartoum. (A master franchisor based out of Saudi Arabia had the rights to set up shop in Sudan.)
Chemero wasn't able to do any meaningful work with the franchisee because of the sanctions. But when the sanctions ended, the owner of the Sudan franchise was able to come to the United States to train shortly before opening the restaurant.
According to Chemero, North Africa is a part of the world that likes American culture. There's a lot of enthusiasm for American brands, he says, especially right now when finding an American restaurant or store is still a novelty.
While Wayback has little, if any, competition among American brands in the country, Chemero says that won't be the case for long. The company is looking into expanding into Egypt (now that the unrest has settled down) and also Tunisia, thanks to its improving economy.
2. Add Bahrain to your list of emerging foreign markets.
Much of the Middle East is open for American businesses, and Bahrain is among the best of them, according to Dan Tarantin. (He's the CEO of Harris Research, Inc., which owns Chem-Dry, a carpet, rug and upholstery cleaning service.)
Why should Americans consider expanding into Bahrain when looking into foreign markets? The country has been successful at diversifying from oil, so they're open to having more industries come onto the island nation, Tarantin says.
—Dan Tarantin, CEO, Harris Research, Inc.
“The tourism industry has grown tremendously, and they've also become very business friendly, which has brought in more capital, investment and tax revenues," he says. “Another reason [to consider expanding here] is the emergence of women's rights and ability for women to get financing."
Yet there are always challenges for any business entering foreign markets. In Chem-Dry's case, Tarantin says that the company—which is in over 50 countries—has had to be flexible with their business model “based on the needs and opportunities within the country."
There are plenty of homes in Bahrain with carpet, but many residents have stone or tiled floors. Chem-Dry has had to become more of a surface cleaning company in Bahrain than a carpet, rug and upholstery one.
Tarantin says that it's also paramount to learn and understand Arabic culture.
“It just takes a commitment to learning about the cultural differences and a willingness to adapt your plans to present your brand in the most positive and appropriate light to the local consumers," he adds.
3. Set up shop in Southeast Asia.
Anna Knezevic is the managing director of M&A Solutions, a consultancy based out of Hong Kong that specializes in helping small and medium-sized businesses get situated in developing countries.
When asked what emerging foreign markets in the region she would suggest to an American business, she says Thailand would probably be her first choice.
“Vietnam and Indonesia as a hidden second," she adds. “My main criteria [with these suggestions] is that you don't have to struggle against the local populace’s perception of your nationality. It works to your advantage."
“Thailand is open to Americans and Canadians," Knezevic says, citing the Treaty of Amity. The treaty is officially called the U.S.-Thai Treaty of Amity and Economic Relations of 1833 and was amended in 1966. It gives special rights and benefits to American citizens who want to establish a business in Thailand.
Of course, establishing a business in Thailand and expanding to it are two different things, but Knezevic's point is that Americans are welcomed in Thailand.
And the reasoning behind her hidden second choices of emerging foreign markets?
“Vietnam and Indonesia have high-quality labor," Knezevic says. "They get the abilities and skills that would fetch a high price for a fraction of the costs. Regulations can be tough, however. People in both are very nice in a different way. […] Generally if you are perceived as a friend, you will be treated well.
“The great thing about all three," she adds of these foreign markets, "is the ease of building your connection network beyond just expats."
4. Pack your bags for China.
It's no wonder any American business would want this to be somewhere on their emerging foreign markets list. There are kind of a lot of customers.
“China has a population in excess of 1.4 billion," says Maurice Levine. Levine is based out of Shanghai and is a master franchisee of the American gym Anytime Fitness. He also owns the rights for Singapore, Malaysia and the Philippines.
According to Anytime Fitness, Anytime Fitness recently became the first American-based fitness franchise to have locations in China. Levine says that they hope to have between 300 and 500 gyms open in China by 2020. Currently, they're at 11.
Levine sees great opportunity in the market. But starting an American business in China is not easy.
“You need to practice a lot of patience," Levine says, adding that it took the company three years to get registered in China.
Part of the problem that Anytime Fitness ran into, according to Levine, is that “franchising is in its relative infancy in China as compared to the United States. So many of the investors need to become familiar with the franchising proposition, and they need to understand and appreciate that they have to work within the strict guidelines of our proven business model."
Another challenge—as it can be in many countries—is real estate.
“The China economy is growing and in certain cities it is booming. The battle for good real estate is an ongoing challenge and competition to get the best locations is fierce," Levine says.
Levine says the rewards of doing business in rising foreign markets outweigh the hassles. But he does have a suggestion for any Western business owner who thinks expanding into this country won't be all that difficult.
"Overall, business owners must go into China recognizing early that things are done differently here," he says. "And then, as they say in China, be prepared to 'walk through the river by feeling the pebbles underneath.'"
It's never easy to navigate an expansion into any country. After all, it's hard enough to run a business in one's own country, let alone one in foreign markets that are unfamiliar.
But for those businesses that can do it, it may help make them stronger. For instance, Chemero says that doors are opening because of Wayback Burgers being in Sudan and Morocco.
“We now have investors interested in Algeria and Egypt because they've been to the restaurants or have a relative or friend who have been and are raving about the food," he says.
Going into emerging foreign markets doesn't just mean that the country you're doing business with is growing. It means your own business is emerging, too.
Read more articles on planning for growth.