Corruption main risk in emerging markets: Study

A new report highlights the concerns of European businesses around international trade with emerging economies.

The report’s findings ‘Risks in trading with emerging economies’ show that corruption is seen as the main risk in trading with Russia by 33% of potential buyers compared to 27% of companies already trading with Russia.

Nearly a third (32%) of potential buyers cite a lack of information on creditworthiness as their main concern compared to 18% of those already involved in trading. Political influences are seen as the main risk for 29% of potential buyers which compares to 24% of those already trading in Russia.

“Recent political events in Russia and the findings of this report will be a worry for many companies given that growth strategies will often involve harnessing overseas trading opportunities.

Shaun Purrington, regional director of Atradius

In trading with China, 24% of potential buyers view political influences and interventions as a risk compared to 19% already trading with China. Twenty two per cent of potential traders with Brazil also cited political influences as a major risk compared to 14% of those already in trading relationships. A slow and weak legal system is given as a significant risk for potential traders with both Brazil and China at 23% and 26% respectively. For companies thinking about trading with India, their main concern (20%) is poor protection of creditors by law.

Shaun Purrington, Regional Director of Atradius, who conducted the research, UK and Ireland, commented: ‘Recent political events in Russia and the findings of this report will be a worry for many companies given that growth strategies will often involve harnessing overseas trading opportunities.’

‘It is important to manage the risks associated with those opportunities in order to safeguard cash flow from late payment and default. Exporters need to ensure that they know who they are doing business with, agree credit terms up front and have strict collection procedures. By making use of credit information, credit insurance and international collections services, businesses can help protect themselves from all of the risks inherent in global trade.’