Consumers

1
Consumers interest in developed developing
markets implications for responsible business

• Pradeep S Mehta
• Secretary General, CUTS International
• OECD CSR Roundtable
• Paris, 15th June 2009

2
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

3
Consumer Interests
Developed Countries
Developing 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

4
Consumer Interests
Developed Countries
Developing 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.

5
Contributory Factors (Law Regulation related)
Developed Countries
Developing 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

6
Contributory Factors(Law Regulation related)
Developed Countries
Developing Countries

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

7
Contributory Factors(External Factors)
Developed Countries
Developing 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

8
Contributory Factors(External Factors)
Developed Countries
Developing 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

9
Implication for Businesses
Developed Countries
Developing Countries

• Often extractive, to source raw materials
• Non-transparent operations, little or no
  communication with communities/consumers/sharehold
  ers
• 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

10
Implications for Businesses
Developed Countries
Developing 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

11
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

12

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