Expanding into emerging market IT channels presents both immense opportunities and significant risks for technology vendors. From navigating complex local regulations to handling currency fluctuations, supply chain disruptions, and legal disputes, businesses face numerous challenges. However, a new wave of channel finance solutions is helping vendors overcome these barriers, facilitating smoother expansion into these high-growth regions.
Emerging Markets: A Key Driver of Global Growth
Emerging markets continue to outpace mature economies, with an average growth rate of 4.2% per year, compared to just 1.7% in developed nations, according to the International Monetary Fund (IMF). These markets now contribute nearly two-thirds of global economic growth.
Countries like India are heavily investing in their technology sectors, while China is modernising healthcare through digital solutions. Brazil is advancing its green energy ambitions, and African nations are rapidly adopting mobility technologies. Digital transformation is a key enabler of this growth, making emerging markets an attractive prospect for IT vendors.
“For decades, technology sales were concentrated in a few global hubs,” explains Boris Todorov, Executive Vice President of WeFi’s Client Solutions Group. “However, we are now witnessing IT vendors establishing a direct onshore presence in multiple countries to support local channel programmes and strengthen their market positions.”
The Complexities of Emerging Market Expansion
Despite the promising outlook, entering emerging markets is not without challenges. Vendors must navigate regulatory hurdles, tax systems, currency risks, and compliance requirements, all of which can change frequently and impact business operations.
“Operating in these markets involves import regulations, local banking laws, credit risks, and contractual complexities,” Todorov adds. “Each of these factors is interconnected, making expansion a resource-intensive and often risky process.”
For vendors to succeed, their channel programmes must be tailored to handle these intricacies. This includes implementing robust credit assessment systems, managing legal agreements, mitigating currency fluctuations, and ensuring efficient payment and receivables processes.
How Channel Finance Reduces Emerging Market Risks
A new generation of fintech-driven channel finance providers is addressing these challenges, offering structured solutions that simplify vendor expansion. Companies like WeFi have developed managed channel finance programmes, incorporating essential services such as credit access, legal frameworks, local currency management, buyer screening, and receivables forecasting.
“Our approach eliminates many of the uncertainties surrounding channel finance in emerging markets,” says Todorov. “By providing vendors and resellers with access to extended credit terms and larger credit limits, we reduce reliance on insurance and collateral. This makes expansion more feasible for IT vendors while minimising financial risk.”
Technology-Powered Financial Solutions
Channel finance solutions increasingly leverage technology platforms to enhance efficiency and accuracy. WeFi’s IZZI platform, for example, integrates advanced data analytics and automation to streamline credit assessments, monitor market trends, and predict future demand.
“In 2024, we’ve financed numerous large-scale AI-driven deals spanning both developed and emerging markets,” Todorov notes. “These transactions require longer repayment terms, customised credit structures, and a deep understanding of end-user risk. By collaborating closely with vendors, we ensure that our channel finance solutions remain adaptable and tailored to their evolving needs.”
As emerging markets continue to drive global economic growth, the role of innovative channel finance providers will be crucial in enabling IT vendors to navigate risks and capitalise on new opportunities.