Emerging markets need to find their own direction
It is interesting how firms and individuals in emerging markets want to emulate their counterparts in the western 'developed' markets. Recently, the CMD of a leading Indian bank made the statement that he wanted to emulate a US bank, by selling new products to existing customers to increase profitability. The irony is that this particular US bank was fined US$85 million in July 2011 by the US Federal Reserve, which claimed that the bank steered borrowers into costlier loans and also falsified data in mortgage applications. It has been asked to compensate around 10,000 of its borrowers and also fired 16 of its employees in this regard. The Indian bank in question has been one of the most successful banks worldwide. It has seen a profit growth of at least 30% in the last ten years. It has succeeded in areas such as consumer and credit card lending where most of its public sector, domestic private sector and foreign counterparts have failed. Probably it should be held up as an example to its global counterparts rather than the other way round. I believe the global financial crisis should teach an important lesson to firms and countries in developing world/emerging markets, which is that there is no particular path they can follow to become more successful or developed. They have to find their own direction, and try to avoid mistakes others have made along the way. This would involve stepping into the unknown, but with the confidence that they are as good as anybody else and not lacking in anything.