UK Companies Behind Europe in Emerging Markets Experience

November 10, 2016

LONDON, UK (November 2016) –  UK businesses are lagging behind their European rivals in appointing emerging markets to the very top of their boards, with only 17% of current FTSE 100 CEOs having this type of experience, says DHR International, the global executive search firm. 

DHR International says that the UK is behind:

  • The Netherlands- 32% of CEOs in the AEX 25 have direct experience in emerging markets
  • Germany - 30% of CEOs in the DAX 30
  • France- 18% of CEOs in the CAC 40 

Over the last decade FTSE 100 businesses have, however, increased the percentage of CEOs that have direct experience working in emerging markets from 13% in 2006 to 17% (see table below).

DHR International says that currently emerging markets make up 40% of Global GDP*, highlighting the importance of these markets for UK businesses.

By matching their European peers in senior level emerging markets experience UK businesses may improve their chances of success in these fast-growing markets. Access to markets outside the EU is expected to become increasingly important for UK companies, if the recent Brexit vote does make European markets harder to access.

Dutch companies, in comparison, have a far higher percentage of CEOs with emerging markets experience. The percentage of AEX 25 CEOs with this direct emerging markets experience has risen from 16% to 32% in the last 10 years – reflecting the growing importance placed on emerging markets by Dutch companies.

In France and Germany, the percentage of CEOs with direct emerging markets experience has fallen within the last 10 years, going from 43% to 30% of CEOs of the DAX 30 in Germany, and from 20% to 18% in the CAC 40 in France.

Examples of FTSE 100 CEOs with overseas include Nicandro Durante, the Brazilian/Italian CEO of British American Tobacco, who joined British American Tobacco’s Brazilian subsidiary Souza Cruz in 1981 and Ivan Menezes CEO of Diageo, who started his career with Nestle India in 1981.

Frank Smeekes, Managing Partner at DHR International says; “It is a surprise to see UK businesses lag behind some of their international competitors on this measure. With a relatively small home market UK businesses have traditionally looked overseas for expansion.”

“Whilst hands on experience of a CEO or other board members in emerging markets are, by no means, a guarantee of success in emerging markets, it is a sign of intent.”

“With economic growth across the UK and much of Europe still anaemic, the argument in favour of expansion into the emerging markets remains robust. In fact with the Brexit raising questions over the ease of access for UK companies to their biggest market – the EU – boardroom experience in emerging markets is likely to be priced at an increasing premium.”

Frank Smeekes adds that actual boardroom experience of operating in emerging markets is especially important because so many failed investments in emerging markets by Western companies have been blamed on a lack of operating experience within that geographical market.

“Working with a local joint venture partner can help but it’s no substitute for having that experience on the board.”

The UK is behind the rest of Europe in terms of their experience in emerging markets

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*According the the IMF