Strategies for R&D in emerging economies

ICIS has run several roundtables recently where innovation has risen as a topic, particularly the growing move by chemical majors to carry out innovation in places like China and the difficulties encountered. Now consultancy McKinsey has carried out an industry survey to assess the current situation.

It finds that many companies have not even addressed the issue of doing research and development in emerging economies like China, India and Brazil, even though these are the markets with vibrant growth prospects and the need for localised innovation in products that meet market demands.

McKinsey found that "fully one-third of executives around the world say their companies are not doing any R&D work in emerging economies." However, the good news is that companies that are active are addressing local needs, and not just attempting to shift innovation for developed markets to low cost regions.

Says McKinsey: "Of the two-thirds of respondents whose companies pursue such efforts, the largest shares say their R&D is focused on either global product platforms or local innovation in emerging economies, as opposed to R&D for developed markets only, which respondents say is not a major focus of emerging-market R&D operations. Moreover, companies appear to be aligning their goals, whether it’s seeking lower development costs or gaining better access to customer insights, with their specific R&D focus in emerging economies."

You can read the full report here.