New things are flashy, attracting the most attention but the picture is not always rosy when you dig beyond the surface. I'm talking about emerging markets here. The Wild Wests, the new Babylonia, or whatever name you want to call it.
Emerging markets present unique opportunities to conduct business, build wealth and a general restructuring of the social hierarchy. For example, during the internet revolution of the early 2000s. Technocrats were considered to be the new aristocrats.
Breaking into emerging markets is not an easy endeavor despite it having massive potential upsides. The period of the Wild West in the 19th century was termed ‘unruly’ and ‘lawless’. The same thing applies more or less to current emerging markets, although in another form.
What are the pros and cons of emerging markets? Are they worth the hassle? Let’s take a dive in.
Pros
For many individuals and businesses this is what gets them hooked to the prospect, the positives. Back in the late 2010s, I happened to read about ecommerce and how it was poised to become the standard way of how we do commerce. The argument and projections were convincing, I got sold!Less Regulations and Compliance
Governments are always late to the party. They come with their leashes when things have already made huge waves, gained traction and maturity. For the individual or business, this affords you the opportunity to be unconventional or even radical (remember the ‘unruly’ word?)Also, before the law and order kicks in, revenue and profits tend to be higher!
Little To No Competition
Emerging markets are usually blue oceans. Not infested with sharks or anything. The opportunity here is twofold. If there’s no competition, you will be able to monopolize the market and set your own rates or price.If there is little competition, you can easily break into the market. You can even end up dominating the market if you’re smart about it. Google wasn’t the first search engine but it’s now one of biggest and most known. A market with little to no competition is always a golden opportunity.
Able To Amass A Large Market Share
Seen from a certain perspective, 1% of an empty pie is like owning 100% of the pie. To go from 1% to 100% is just expanding or scaling up, hardly encountering any pushbacks or resistance.At one point, Bitcoin held 100% of the crypto market share. Then others (like Ethereum and the rest) came in and took a piece from it, yet Bitcoin still holds the majority. Some people still consider crypto as ‘emerging’.
Being able to amass a large market share are one time opportunities in every new market. From a financial perspective, it’s the easiest way to accumulate large sums of wealth at a cheap price.
Cons
Let’s now tackle the not so good part after having tackled some of the good part. The challenges that stand in the way of achieving the loot.No Piggybacking
Since it’s new, there are no established models to follow. No built-in systems or infrastructure. Everything has to be build more or less from scratch. This is often time consuming and requires a lot of trial and error. SpaceX is one of the first companies entering the space frontier. Everything they build is new or first of its kind; there are no systems or technologies to piggyback on.
This is one of the major cons of emerging markets. It involves a lot of heavy lifting. Not many companies or businesses have the resources to carry on until a working system is produced.
Higher Chance Of Failure
When something is new or emerging, you tend to have little information about it because there normally isn’t much information about it. Today, a quick Google search about cryptocurrencies will bring in thousands (if not millions!) of results. Whilst in 2009 or 2010, there was probably less than a hundred. What was the chance of someone failing when trying to get into crypto in 2010? Obviously it was high enough.The same thing more or less happens to every other emerging market. In the beginning, the chances of failure are higher because there simply isn’t enough ‘know-how’ to smartly navigate through the market. But the potential reward is also higher. The higher the risk, the higher the reward.
In Conclusion
New or emerging markets are golden opportunities to leap frog both the financial ladder and social hierarchy. However, it’s rarely easy to get into them. There are advantages and disadvantages to it.Before making the decision, it’ll be a good idea to first make a comparison between the two to see which one outweighs the other.
Can you afford to experience some failures before hitting the jackpot? Do you have the resources?
Thanks for reading!
Profile: Young Kedar
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