Always good to learn something new. I learned that the reputation of emerging market multinationals needs tweaking and I too needed to have a better understanding of them. Emerging market companies are serious business engines to be reckoned with and will soon outnumber multinationals. These companies are not unsophisticated and poorly prepared to deal with this new technological era. They are the new global giants as the title of this new book implies — Emerging Markets Rule: Growth Strategies of the New Global Giants written by Wharton professors’ Mauro Guillen and Esteban Garcia-Canal.
The authors spell out seven basic leadership principles that emerging market multinationals can teach us: “executing before strategizing, catering to the niches, scaling to win, embracing chaos, acquiring smart, expanding with abandon and taking on the sacred cows.” Here are a few facts that I picked up in an interview with the authors:
1. The global playing field is now more level. Emerging markets have many things going for them such as cost advantages in their country of origin and know-how dealing with government regulations.
2. Approximately 41% of new flows of foreign direct investment in the world comes from emerging economies.
3. About 30% of the 100,000 multinational firms worldwide come from emerging economies.
4. Many emerging market companies come from sectors outside low-tech and natural resources (which we tend to think of them as dominating, foolishly). Think Haier (China), Embraer (Brazil), Tenaris (Argentina), Infosys (India), to name a few.
5. They can have interesting new business models such as Cemex (Mexico) with good acquisition strategies.
6. The authors sum it up this way: “They have expanded globally without hesitating much about the sequence of countries to enter or whether they had all of the needed resources at their disposal. What they have done is make a virtue out of necessity.”
The reputation of emerging markets has shifted in my mind, all for the better.