25th June 2014
The BRICS - Brazil, Russia, India, China and South Africa - are powering ahead in new business creation, a new study shows. These countries posted the highest growth rate in new enterprises between 2007 and 2011, according to an RSM International report, which shows that their net new business creation was over seven times greater than the G7 countries.
In 2012, new business growth in the BRICS was 4.9 per cent, generating 1.2 million new businesses. G7 nations saw growth of 1.9 per cent, with just over half a million new firms created.
France shone out among developed nations, however, as it recorded the strongest growth rate in business creation from 2011 to 2012 with an increase of 16.7 per cent thanks to the government’s Auto Entrepreneur startup scheme.
China led the BRICS with a 9.1 per cent rise in new businesses over the full five-year period, meaning it is now home to the most active enterprises on the planet, with more than 13 million in operation. In fact Brazil was the only other of the five to post a rise in businesses - South Africa, India and Russia all posted falls.
Jean Stephens, chief executive officer of RSM International, says: “Entrepreneurs all over the world are continuing to start businesses, the most active sectors being wholesale and retail trade, and professional services, which have relatively low barriers to entry.”
However, she notes that nearly a third of the countries saw a decline in the number of active enterprises. Canada registered the largest loss, with a 13.6 per cent fall in enterprises.
“Creative destruction and the reallocation of capital to more efficient existing and new businesses will have a large part to play in this process but the global economy remains fragile,” adds Ms Stephens. “The watch phrase for the next year must be no more than cautious optimism as individuals and companies respond carefully to government actions and macro indicators.”