I suddenly find that there is a greater appreciation of the business growth in the emerging economies amongst friends and colleagues. With foreign funds bailing out the US financial service giants, we are probably entering a new world order.
UNCTAD is turning its attention to the new shape of global business: investment now flows increasingly from south to north and south to south, as emerging economies invest both in the rich world and in less developed countries. By 2006 foreign direct investment (including mergers and acquisitions) from developing economies had reached $174 billion, 14% of the world's total, giving such countries a 13% share (worth $1.6 trillion) of the stock of global FDI. In 1990 emerging economies accounted for just 5% of the flow and 8% of the stock. Their slice of global cross-border M&A has been climbing. It reached 14% in value terms in 2006 . That year they spent $123 billion in more than 1,000 cross-border deals.
According to BCG, thousands of companies like these are expanding sales and production internationally.The combined revenues of the top 100 emerging giants will reach $3.3 trillion by 2010 and a massive $11.8 trillion by 2015. Their home markets offer several advantages. Rapid growth gives companies scale and spare cash to invest abroad. Costs are low. The difficulties of operating in an emerging market may make managers adaptable and resilient.
The new brigades are fanning out around the world using a selection of five strategies, according to BCG.
- The first is taking brands from local to global.
- The second strategy is to turn local engineering excellence into innovation on a global scale
- The third path to international success is going for global leadership in a narrow product category
- The fourth strategy: taking advantage of natural resources at home, and boosting them with first-class marketing and distribution.
- The fifth strategy is to have a new or better business model to roll out to many different markets.
A new world order is indeed emerging - unnoticed by many.
Labels: Emerging Multinationals, Emerging Trends