Few businessmen would admit to "betting the ranch" but at Davos last week Sir Martin Sorrell, the founder and chief executive of the communications giant WPP, did just that.
The phrase is US business jargon meaning "to devote all or most of a company's resources to a single deal, sector or geographical region". It implies a high level of risk, equivalent to "putting all your eggs in one basket".
"I know businessmen aren't supposed to bet the ranch, but we at WPP are, we're betting the ranch on the faster-growth areas of the world economy, as opposed to our traditional business areas of America and western Europe," he said.
He includes the Middle East, potentially, as one of those global dynamos.
He was speaking at a Davos event organised by the US TV channel CNN entitled "Can emerging markets deliver global growth?" The panel included leading business experts from China, India, the US and Turkey. After the televised debate, he explained in greater detail what he meant, and why the Middle East had the potential to be among the leading economic zones of the future.
"I don't like to call them emerging markets, they are faster-growth markets, and we should drop the old term, it does them no justice," he said.
The faster-growing markets are the Brics countries (Brazil, Russia, India, China and South Africa) identified by the Goldman Sachs theorist Jim O'Neill, plus his new grouping of the Mist economies - Mexico, Indonesia, South Korea and Turkey.
Sir Martin also included some of what Mr O'Neill has identified as the "Next 11" - developing countries such as Nigeria and Vietnam - in his definition of fast-growing economies, but so far no GCC country has appeared in any of the taxonomies of global economic potential. The WPP chief said that could change.
"A couple of years ago I would have classified Gulf countries as faster-growing, but the financial crisis and especially the Arab Spring have had an effect," he said. "The Middle East was the weakest part of our business last year, and this looks similar this year.
"Everyone in the business community is pleased about the positive aspects of the Arab Spring, the removal of oppressive regimes, the greater entrepreneurial freedoms, but it has created some uncertainty too. The worry is that some new governments might be more restrictive, and many executives are going to wait and see."
That uncertainty may have prompted a more cautionary approach to investment and expansion, but it has not prevented WPP from doing deals in the region. Just recently it bought out the majority of its affiliate partner in Jordan, and Sir Martin sees other opportunities too.
"Saudi Arabia is strong and growing, and there are reasonable growth opportunities in the UAE and other Gulf states. I would like to see them all as faster-growing markets again, and believe they can achieve this," he said.
Sir Martin's customary bravado may lead him to describe the strategy as betting the ranch, but the strategy is rather more gradual, and less risky, than the term implies. "At the moment, our business breaks down roughly to 35 per cent each for America and Europe, and 30 per cent for the rest. We want to increase the Brics and others to 35 to 40 per cent," he said.
Some countries within the new expansion zone are likely to outperform. "The analysts are forecasting between 5 and 6 per cent revenue growth for WPP this year, we've budgeted for 4 per cent. But Turkey is likely to grow at 10 per cent for us," he said.
He was critical of those, especially in the West, who harbour fears about a slowdown in Asian economies. "It's far too picky to point to falling growth rates in China, India and Brazil after the extraordinary progress those countries have made in recent years, especially as the West has been lagging behind."
The overall strategy for WPP is to invest and expand in new markets, new media and new consumer areas, and it follows logically from the now-accepted wisdom that economic power is tilting away from the West and towards the east.
"The big issue in global business is whether eastern markets are still coupled with the west, as used to be the case," Sir Martin said.
"The general view is that they are less coupled than they were. Financial markets may still be linked quite closely all round the world, but commerce and trade is much less so. For example, around 30 per cent of Brazil's trade five years ago was with the USA, now it is nearer 12 per cent. It's not just a West-East tilt, but a South-South one as well."
He identified another "new axis" in global business as the relationship between Germany, Poland and Russia.
"The key question in 2012 will be how to manage risk," he said.
"The two big known risks are the euro-zone crisis and Iran, so we just have to put those to one side. Will there be other 'black swans'? Well, by definition you cannot see a black swan coming."
fkane@thenational.ae
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How to protect yourself when air quality drops
Install an air filter in your home.
Close your windows and turn on the AC.
Shower or bath after being outside.
Wear a face mask.
Stay indoors when conditions are particularly poor.
If driving, turn your engine off when stationary.
