Abandoning emerging markets now is a recipe for failure. All of the world’s greatest investors made their money buying in gloom and selling in boom.

With the recent sell-off in many emerging markets now approaching 20 percent, the chattering class is wondering aloud if the heyday of the emerging markets has passed.

There’s little room left for doubt that the nature of emerging market growth is changing. After serving as engines of growth and sources of yield for nearly five years, emerging markets are getting a newly skeptical look from investors.

But over the past two decades, emerging markets have undergone healthy transformations, adapting to shifting demographics and implementing radical structural and policy reforms to make their economies more resilient. China has invested heavily to adapt itself to rapid urbanization, Mexico has recently liberalized its energy policies and Indonesia has taken steps to encourage the refining of raw materials within its own borders.

With some degree of foresight, in the run up to the financial crisis many developing nations were investing heavily in building critical infrastructure to support growing demand from the developed world, creating a virtuous cycle that drove economic growth and improved standards of living.

As a result, when the global financial meltdown of 2008-2009 occurred, many emerging market nations were able to provide monetary and fiscal support to their economies during the darkest days of the crisis. As credit grew at double-digit annual rates in India, China and other emerging market leaders, these countries were able to continue growing at above average rates and still attract strong levels of foreign investment.

But now that the developed world economies are returning to health, money has begun flowing out of the emerging markets as investors recognize the growing potential of their home markets. Consequently, emerging market central banks such as those in Brazil, India and Indonesia are turning to aggressive currency devaluations to help support their economies.

Growing Pains

However, rather than being the “crisis” that so many are talking about in the media, these challenges are more a case of growing pains.

The evolutionary process of shifting from a “developing” to a “developed” economy spans decades and, barring a major crisis such as a coup or complete collapse of a currency, that process tends to move forward.

For more than a decade, there’s been considerable emphasis on the growing consumer class in the emerging markets and, in fact, consumer plays have been among our most successful. Their share prices have continued marching higher, even as talk of an emerging market crisis has become increasingly shrill.

So while capital outflows from emerging markets might make some sectors and industries less attractive, such as infrastructure and equipment manufacturers, and push market volatility to levels that haven’t been seen in years, they’re really just accentuating trends that we already knew were in place.

For instance, while China’s latest five-year plan explicitly states that government will focus more on its domestic consumers, this trend has already been in place for years. Slowing gross domestic product growth and lower levels of foreign investment won’t change that, nor will it really hamper investment performance in more consumer-oriented sectors.

It’s also important to keep in mind that this isn’t the first time we’ve seen a currency crisis in the emerging markets—it has just been a while since we’ve experienced one.

In 1997, much of Asia was gripped in a currency crisis caused by exchange rate imbalances, overleveraged banks and high national debt levels. While it admittedly took a few years for the worst effects of the crisis to fade away, over the past 13 years the MSCI Emerging Markets Index has produced an annual total return of about 13 percent. Plenty of opportunities still abound.

And in many cases, the situation isn’t nearly as bleak as some are saying, precisely because the developed world is recovering.

While each emerging market country has to be approached on a case-by-case basis since their fundamentals are different, growth in the developed world is a rising tide that raises most ships. As the economies of the US and Europe continue the slow path of recovery, demand for everything from raw materials to inexpensive consumer goods improves, helping to create stronger growth in the emerging world.

If in fact growth in China does ultimately fall below 7 percent or India’s growth dips below 5 percent, it just means that we have to refocus our attentions. Picking winners won’t be as easy as it has been in years past, but if we continue to focus on domestic demand and countries and sectors tha are modernizing, we will continue to be successful.

Even as emerging market investment becomes more challenging over the coming months, we’ll continue to stay the course with companies such as Hengan International (Hong Kong: 1044, OTC: HEGIF).

Last week, Hengan announced that in the first six months of this year, revenue rose 15.2 percent year-over-year to HKD10.4 billion, while profit attributable to shareholders jumped 14.3 percent to HKD1.9 billion. Earnings per share rose a commensurate 14.2 percent to HKD1.511, helping fund a 13.3 percent increase in the interim dividend to HKD0.85.

Even as China’s economic growth slowed, a stable employment rate and improving living standards continued to drive demand for personal care and family hygiene products, as Chinese tissue sales rose 17.8 percent year year-over-year and revenue from sanitary napkins surged 26.3 percent.

Based on its strong performance in the first half of the year, the company’s revenue growth is likely to come in at around 20 percent for the full year, while earnings growth should fall somewhere between 15 percent and 18 percent.

Hengan International remains a buy up to HKD96.