Insights on Challenges of Scaling in Emerging Markets

Scaling a business in emerging markets presents an enticing yet intricate opportunity. These regions offer fast-growing consumer bases, increasing digital connectivity, and gaps in supply chains that businesses can fill. But that upside doesn’t come without friction. Business leaders expanding into these areas often confront structural inefficiencies, unpredictable regulatory systems, and cultural or operational misalignments.

Emerging markets—ranging from parts of Southeast Asia and Latin America to sub-Saharan Africa—often represent a critical stage in global strategy. Multinational companies and scrappy startups alike pursue these territories with the hopes of tapping into the next wave of consumer demand. For some, like Jumia in Africa, the market potential inspired entirely new business models tailored to local logistics. Others, like Ambev, the Brazilian brewing giant, grew by mastering how to scale operations across regional challenges and varying levels of economic development.

The complexity comes in striking the balance between vision and reality. Strategies that work well in developed economies often misfire when copy-pasted into places with different consumer behavior, infrastructure quality, and regulatory oversight.

Infrastructure Limitations and Logistical Barriers

In many emerging markets, infrastructure development lags behind business potential. Roadways, power grids, water systems, and broadband networks may not have kept pace with population or business growth. For companies that rely on supply chains, real-time data, or physical delivery of goods, this becomes more than a mild inconvenience—it can delay scaling efforts or inflate costs.

Take Mercado Libre, the Latin American e-commerce giant. To meet the logistics needs of its rapidly expanding customer base, it invested heavily in its own fulfillment centers and delivery networks. This move gave the company more control in regions where last-mile delivery and warehouse access weren’t reliable. However, most businesses don’t have the capital to replicate that level of vertical integration.

Digital infrastructure can be equally unpredictable. In rural parts of Asia or Africa, internet penetration and smartphone access can vary widely. Businesses reliant on cloud-based systems, mobile apps, or online customer engagement may need hybrid models—part digital, part analog—to stay relevant in the short term.

Navigating Local Regulations and Bureaucracy

Regulatory challenges in emerging markets aren’t just about red tape—they often reflect shifting policies, opaque enforcement, or politically influenced decision-making. Businesses must move cautiously, sometimes investing in relationships and lobbying just to gain a foothold.

In India, for example, foreign direct investment rules and data localization policies can complicate the operations of global firms. Paytm, a homegrown digital wallet and financial services company, rose rapidly in part because it understood and adapted to the domestic regulatory environment, even as foreign players like WhatsApp Pay faced headwinds.

Many business professionals underestimate the time and cost of compliance in emerging markets. Licenses may be required from multiple ministries. Tax codes may be applied unevenly. In some cases, judicial systems may not be reliable for dispute resolution, meaning that legal agreements offer less practical security.

To scale effectively, companies often need local advisors or regional partners who are plugged into how things actually work—not just what’s on paper. Building this type of intelligence is time-intensive but helps avoid costly missteps.

Talent Acquisition and Workforce Readiness

Human capital plays a central role in scaling, and in emerging markets, workforce issues are often double-edged. On the one hand, labor tends to be more affordable. On the other, gaps in training, experience, or cultural compatibility can delay growth.

Startups and SMEs in these regions often struggle to find management-level employees with the experience to scale operations. Language barriers, educational disparities, and unfamiliarity with global business norms can add layers of complexity. Companies that provide strong internal training programs or work with universities can build talent pipelines but should be prepared for a longer ramp-up.

Safaricom, the telecom provider in Kenya, succeeded in part by focusing on local training and empowerment. Their mobile banking platform, M-Pesa, became widely adopted not just because of its technology, but because the company knew how to educate the public and its own team on its use and value.

Cultural Sensitivity and Consumer Behavior

Cultural missteps are a frequent cause of failure for businesses entering emerging markets. Western marketing strategies or leadership styles may alienate local consumers or employees. Even product design needs to reflect local tastes, habits, and purchasing power.

In markets like Vietnam or Nigeria, consumer loyalty is often built through direct relationships, community ties, or word-of-mouth far more than through aggressive digital marketing. Businesses that emphasize trust, service, and local relevance tend to perform better.

For example, Capitec Bank in South Africa found success by offering simplified banking services with a human touch, which appealed to consumers often overlooked by traditional financial institutions. Capitec’s approach of listening and adapting to local feedback allowed it to become one of the country’s fastest-growing banks.

Understanding cultural cues is equally important when managing teams. Leadership styles that might work well in New York or London could come off as abrasive or disconnected in Manila or Jakarta. Sensitivity to local customs and communication styles is more than a courtesy—it can be the difference between success and stagnation.

Managing Risk and Building Trust

Emerging markets come with higher degrees of perceived and actual risk. Currency instability, political turnover, and corruption concerns can scare off investors or delay projects. Businesses need strategies for risk mitigation, such as currency hedging, diversified supply chains, and localized governance models.

At the same time, businesses that build trust—both with customers and within their supply chain—are better positioned for long-term stability. In some cases, transparency in pricing, return policies, and labor practices helps build customer loyalty in regions where distrust of corporations is high.

Take Yoma Strategic Holdings, a company investing in real estate, agriculture, and transportation in Myanmar. Amid political uncertainty, Yoma has remained operational by being viewed as a local stakeholder rather than an outsider. Their strategy of hiring local leadership and maintaining long-term projects through economic turbulence has helped them maintain credibility even when broader business sentiment in the region has faltered.

Adaptability as a Competitive Advantage

Adaptability is one of the most critical capabilities for scaling in emerging markets. Companies that stick rigidly to their original business model or rely too heavily on strategies from mature markets often fail to gain traction.

Whether it is shifting from online to offline channels, adopting different financing methods, or sourcing materials locally to bypass import taxes, businesses that can pivot are more likely to unlock growth. It’s not about abandoning a core mission—it’s about recalibrating how that mission is executed based on what works in each context.

This mindset is evident in companies like OYO Rooms, which began as a hospitality startup in India and expanded globally with mixed success. In some markets, OYO had to adjust its pricing models and property standards after facing backlash from both hotel owners and customers. While the road was rocky, the company’s willingness to experiment and recalibrate has kept it in the conversation.

Similarly, consumer-facing companies that treat each market as a clean slate often outperform those that approach expansion as a one-size-fits-all playbook.

Final Thoughts

Scaling in emerging markets is not just a matter of ambition—it’s a test of flexibility, humility, and resilience. While the potential rewards are undeniable, businesses must invest time in understanding the full context: the infrastructure gaps, the cultural nuances, the regulatory hurdles, and the market-specific customer expectations.

Those who succeed often treat the expansion less as an extension of what already worked elsewhere, and more as an opportunity to build something suited to a new reality. That takes longer, requires more listening than talking, and involves risk. But it also opens the door to sustainable growth in regions where economic momentum is shifting fast.

Entrepreneurs and business owners who are considering entering these markets should be prepared to learn as much as they plan to teach—and to operate with both strategic patience and tactical speed. Emerging markets are complex, but they are also shaping the future of global business.