When your standard marching orders are to grow the company's emerging market business, what's to be done with sudden political crises like those we've seen in Russia? Since Vladimir Putin decided to help himself to part of Ukraine, the Russian economy has seen $70 billion in capital flight (slightly more than all of 2013), leading to stagnant growth and fears of inflation. Investors and business managers are less concerned with a few Black Sea ports than they are with precedents like annexing ethnic enclaves and shutting off oil spigots to Ukraine or Europe.
Seasoned emerging-market veterans will see the rising tension between
Russia and the West for what it is - part of the cost of doing business
in a market with inherent political risks. As the Russian oligarchy and
its pugnacious leader engage in riskier behavior, executives in tech,
pharma, and a number of other industries might decide to make their big
moves elsewhere. However, it's worth noting that business growth in
Russia (and other politically risky emerging markets) has been fairly
robust for almost 20 years, and though the oil-and-gas gravy train may
be slowing, most of the other engines are on track: the middle class is
growing, demand for consumer products and services is soaring, and
there's room for growth in many industries.
With the exception of a few industries, business leaders who worry about
getting in bed with robber barons have a few mitigating factors to
consider. Technology has a democratizing effect, education and
healthcare help the masses, financial services spread the wealth, and
agriculture puts food on the table. By focusing on trends, not on the
crisis, companies can identify long-term opportunities that merit the
complex navigation through political storms. There will be opportunities
in Russia after Crimea, in India after the elections, in Brazil when
the debt bubble bursts. When choosing the "wait and see" approach, don't
stop asking the man on the street what he's going to do with all that
hard-earned cash when the dust settles.