consumers’ interest in developed & developing markets: implications for responsible business...

Consumers’ interest in developed & developing markets: implications for responsible business

Pradeep S MehtaSecretary General, CUTS InternationalOECD CSR Roundtable Paris, 15th June 2009

Outline of the presentation Variations in consumers’ interest/awareness

between developing and developed countries Large no of contributory factors (externalities)

in developing countries Relationship between law enforcement,

company behaviour and consumer welfare Highlights challenges and traces the road

ahead

Consumer Interests

Developed CountriesDeveloping Countries

Low-levels of consumer awareness Consumers poorly organised, few Cons. Organisations Views of consumers seldom incorporated into laws No involvement of consumers in law enforcement Redressal mechanism ill-developed, cumbersome and costly Bargaining power very low/absent Standards often reflect views of a particular class of consumers

Consumer Interests

Developed CountriesDeveloping Countries

High levels of consumer awareness Consumers play active role in advocacy Play active role in enforcement of laws Redressal process transparent, simple and cost effective Consumers have high bargaining power Consumers play active part in standard-setting, etc.

Contributory Factors (Law & Regulation related)

Developed CountriesDeveloping Countries

• Laws absent; or ineffective if present• Enforcement Institutions resource-strapped• Multiple institutions created but limited capacity on enforcement • Interference of interest groups hamper functions• Consumer standards not observed (goods and services)• Poor governance and weak functions of regulatory institutions

Contributory Factors(Law & Regulation related)

Developed CountriesDeveloping Countries

Effective laws and better enforcement Dynamic process of legislative/regulatory reforms Effective governance mechanism and efficient functioning of regulatory institutions

Contributory Factors(External Factors)

Developed CountriesDeveloping Countries

Policy often inclined to benefit SoEs Monopolies and abuse of dominance by companies Unfair Trade Practices (UTPs) predominant Poor service standards (e.g. after sales service) Bad infrastructural facilities act as dis-incentive for Cos Use of obsolete technology; labour intensive processes

Contributory Factors(External Factors)

Developed CountriesDeveloping Countries

Predictable business environment and rules Markets often competitive (level-playing field) Excellent service standards – high levels of consumer satisfaction Well developed infrastructural facilities Improved technology leading to improved products

Implication for Businesses

Developed CountriesDeveloping Countries

Often extractive, to source raw materials Non-transparent operations, little or no communication with communities/consumers/shareholders Weak enforcement – help avoid actions Low propensity to re-invest in host countries Consumer ignorance used to their benefit Viewed with suspicion by civil society (no dialogue) Large no. of SMEs – little or no incentives by the State Old (often ineffective) marketing practices

Implications for Businesses

Developed CountriesDeveloping Countries

Stern action (precedents) facilitate responsible conduct Transparent policy and operations Close involvement with consumers/shareholders High level of consumer awareness (watch dog) Incentives from the State for responsible conduct Dynamic marketing strategies

Challenges & the Way Ahead

Making relevant information available to consumers in developing countries – enhancing awareness

Promoting cooperation between regulatory institutions and consumers/groups in developing countries

International (donors) community to strengthen regulatory regimes/institutions in developing countries

MNCs to maintain consistent standards of performance across host (developed & developing) countries

Thank You!

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www.cuts-international.org