The document summarizes a survey conducted by the Economist Intelligence Unit of 150 senior executives around the world about factors influencing decisions on entering new markets and establishing regional headquarters. Proximity to large markets and the availability of skilled local labor were cited as the two most important considerations. Over 90% said access to global markets was important for growth. While cheap labor was viewed as less important, strong local skills were seen as more vital. Technological skills of the workforce and access to international talent were also highly important technological factors.

1. Where next?
Commisioned by:
The search
for growth
in 2013Opportunities and risks for
institutional investors
A report from the Economist Intelligence Unit
Sponsored by
EXECUTIVE SUMMARY
AN EXECUTIVE SUMMARY FROM THE ECONOMIST INTELLIGENCE UNIT

2. © The Economist Intelligence Unit Limited 2015 Where Next? 2
nn The Economist Intelligence Unit surveyed executives of
multinational companies about the factors guiding decisions on
entering new markets and building new regional headquarters
nn Proximity to large markets ranked high for new regional hubs
nn Skills were more important than low-cost labour
How do multinationals pick their next markets? What factors influence
decisions over building new regional headquarters? On behalf of
Dubai Tourism, the Economist Intelligence Unit surveyed 150 senior
executives around the world to identify the most influential factors
guiding their choices over where to lay down new roots. Proximity
to large markets, and strong local skillsets, stood out as two key
considerations.
Over 90% said ‘ready access to global markets’ was ‘important’ or ‘very important’
to their growth, and proximity to large markets was ranked ‘high’ or ‘very high’ as a
factor influencing location decisions by 75% of responders.
Sizing new markets remains a tough challenge, though. It is partly down to old
fashioned number-crunching: population growth, demography, and income trends.
It also needs a careful assessment of your business in the new landscape: has this
product or service range been tried before? If it has tried and failed, do you under-
stand why? Are there local competitors who might have a better understanding of
the local consumer? Companies need to think about concept-testing, pilots, focus
groups or qualitative interviews. Even here, the process requires a delicate balance
of following the data versus gut instincts. Many of the most successful companies
in the world, most notably Apple, profited by making millions of consumers desire a
product that they didn’t previously think they needed.
Proximity is becoming increasingly essential for companies who realise that they can
no longer rely on simply exporting a home product or service globally. Companies
need to be in or near to large new markets to develop tailored offerings, draw from
Over 90% of respondents said that ready ac-
cess to global markets was ‘important’ to their
business growth.

3. © The Economist Intelligence Unit Limited 2015 Where Next? 3
local skills and deploy effective products. In part, they are learning the lessons of ex-
perience. The rise of Alibaba, for instance, came as a surprise at a time when eBay
was the world’s pre-eminent online commerce brand. But lack of familiarity with the
Chinese market, spanning cultural factors and behavioural trends, was one reason
the eBay Goliath was eventually defeated in the lucrative Chinese market.
Understanding local culture and social norms feeds into the marketing strate-
gy through which a company will need to connect with a new audience, and
strengthen their ability to adapt quickly to shifts in demand and preferences. For
manufacturing and trading firms, supply chain management efficiencies may also
drive the location decision - being closer to another manufacturer in the value
chain and the end-consumer allows for just-in-time production. Companies may
also enjoy economies of scale in terms of lower overall storage and logistics costs.
Fiscal incentives
How would you rate the following in terms of their importance as factors
guiding where to locate a regional headquarters?
Security & stability
Educated &
skilled workforce
Diversity of
workforce
Logistics
Business condu-
cive legislation
Proximity to a
large market
Connectivity
0 20% 40% 60% 80% 100%
1 Very high
2
3
5 Very low
4

4. © The Economist Intelligence Unit Limited 2015 Where Next? 4
Skills, not cheap labour, key factor for multinationals
A second finding of the survey panel was that cheap labour was not a particular-
ly enticing factor in driving expansion plans. On the contrary, our panellists mostly
believed that strong local skillsets were more vital than a ‘cheap’ labour force, and
was viewed by 56% of responders as the most important attribute, after ‘growth
potential’, in guiding decisions about entering a new market. The presence of ‘low
cost labour’ was a dominant factor for just 14% of respondents.
A fast growing & young
consumer base
Presence of low-
cost labour
Presence of
skilled labour
High growth
potential
High Standard
of infrastructure
Natural resource
endowment
Competitor
activity
Capital
availability
Other
0 20% 40% 60% 80% 100%
What are the main factors your firm considers when investing in a new
hub for your future growth markets?
Cheap labour is not viewed as a significant
driver of corporate expansion into new mar-
kets, cited by only 13% of respondents as a
‘main factor’ influencing their decision to in-
vest in a new hub for a future growth market

5. © The Economist Intelligence Unit Limited 2015 Where Next? 5
38%Ease of inter-
national talent
recruitment
25%Availability
of university
graduates
12%Rate of
technological
innovation
and IP
development
9%Technology
has no impact
48%
Technical
skills of the
workforce
55%
Quality of IT &
communications
infrastructure
3% Other
Which of the following technological factors most impact your
firm’s decision to have regional headquarters?
Further corroborating these findings, ‘technological skills of the workforce’, and
‘ease of accessing international talent’ were the second and third most important
‘technology factors’ influencing decisions over regional headquarter formation,
while ‘lack of management skills’ was rated the biggest obstacle to setting up a
headquarters by 54% of survey respondents.

6. © The Economist Intelligence Unit Limited 2015 Where Next? 6
Board member
CEO or equivalent
CFO or equivalent
CTO or equivalentOther c-level executive
Head of department
SVP/VP/Director
Head of business unit
Manager
Other
Which of the following best describes your job title?
Survey was 30% CEO, with the majority of remaining respondents at senior vice president, head of busi-
ness unit, management or board member level.
“Our survey underscores the central role of skills and talent in guiding multinationals’
expansion plans,” said Adam Green, editor at the Economist Intelligence Unit. “This
reflects the continuing shift of the global economy towards knowledge-intensive
industries, which rely chiefly on human capital - not just in advanced markets but
emerging ones as well.”

7. © The Economist Intelligence Unit Limited 2015 Where Next? 7
About us
The Economist Intelligence Unit is the world leader in global business intelligence. It is
the business-to-business arm of The Economist Group, which publishes The Economist
newspaper. The Economist Intelligence Unit helps executives make better decisions
by providing timely, reliable and impartial analysis on worldwide market trends and
business strategies. More information can be found at www.eiu.com or www.twitter.
com/theeiu.
About this survey
Where Next? was an Economist Intelligence Unit survey of 150 executives globally,
focusing on global expansion strategies, new market entry and regional headquar-
ter formation. They were drawn from Western Europe (30%), Asia Pacific (28%), North
America (18%), Middle East and Africa (10%), Latin America (9%) and Eastern Eu-
rope (5%). Responders were CEO or equivalent (30%), senior vice president (12.5%),
head of business unit or manager (10.6% each), board member (9.4%), head of
department (7.5%), C-level executive (6.9%), CFO or equivalent (5.6%) and CTO or
equivalent (1.8%). Percentages may not add up to 100% due to rounding and multi-
ple job titles.

8. © The Economist Intelligence Unit Limited 2015 Where Next? 8
While every effort has been taken to verify the accuracy of this information, The
Economist Intelligence Unit Ltd. cannot accept any responsibility or liability for reli-
ance by any person on this report or any of the information, opinions or conclusions
set out in this report.

9. © The Economist Intelligence Unit Limited 2015 Where Next? 9
Copyright
© 2015 The Economist Intelligence Unit Limited. All
rights reserved. Neither this publication nor any part
of it may be reproduced, stored in a retrieval system,
or transmitted in any form or by any means, electronic,
mechanical, photocopying, recording or otherwise,
without prior permission of the Economist Group.
Whilst every effort has been taken to verify the accura-
cy of information presented in this document, neither
The Economist Group nor its affiliates can accept any
responsibility or liability for reliance by any person on
this information.
Economist Intelligence Unit
The Economist Intelligence Unit (EIU) is
the world’s leading resource for economic
and business research, forecasting, and
analysis. It provides accurate and impartial
intelligence to companies, government
agencies, financial institutions and
academic organizations around the globe,
inspiring business leaders to act with
confidence since 1946.

10. © The Economist Intelligence Unit Limited 2015 Where Next? 10
The search
for growth
in 2013Opportunities and risks for
institutional investors
A report from the Economist Intelligence Unit
Sponsored by
LONDON
20 Cabot Square
London
E14 4QW
United Kingdom
Tel: (44.20) 7576 8000
Fax: (44.20) 7576 8500
E-mail: london@eiu.com
NEW YORK
750 Third Avenue 5th Floor
New York, NY 10017, US Tel: (1.212) 554 0600
Fax: (1.212) 586 0248
E-mail: newyork@eiu.com
HONG KONG
6001, Central Plaza
18 Harbour Road
Wanchai
Hong Kong
Tel: (852) 2585 3888
Fax: (852) 2802 7638
E-mail: hongkong@eiu.com
GENEVA
Rue de l’Athénée 32 1206 Geneva Switzerland
Tel: (41) 22 566 2470
Fax: (41) 22 346 9347
E-mail: geneva@eiu.com