Emerging Market Multinationals: New Giants on the Block

It has for some time been a truism that if you want to see the division of world power, you need to look beyond the map of nation-states. A slew of multinational corporations have annual gross incomes that exceed the GNP of entire nations. Moreover, though they don’t have a seat at the United Nations, these corporations arguably wield much greater power than many nations on the world stage.

Emerging-Markets-RuleThe familiar story of the rise of multinational corporations focuses on the usual suspects: longstanding powerhouses, mostly based in the United States and Western Europe, like Walmart, IBM, General Electric, Exxon, BP and Volkswagen. Japan’s massive post-WWII investment in modernization allowed it to become a leader in the automobile and electronics industries.

In the last twenty years, that story–and the multinational map of corporate power, as it were–has undergone a fundamental shift: away from established companies in the developed world and toward ambitious upstarts in the developing world. In their book Emerging Markets Rule: Growth Strategies of the New Global Giants, Wharton management professor Mauro Guillén and co-author Esteban García-Canal shine needed light on this new twist in the story, one that has been largely underreported in the mainstream press.

When Forbes first published its Global 2000 list in 2003, the United States, Japan and the United Kingdom dominated. By 2012, emerging markets had broken that stronghold in a big way, in many cases leapfrogging established players like AT&T, Gulfstream and Sara Lee. Emerging market multinationals (EMMs) are now at the top of markets as varied as household appliances, ready-mix concrete, seamless tubes for oil drilling, regional jets, meat, bread and candy. Yet recognition of this trend has been spotty at best. In 2010, for example, the Chinese battery and electric automaker BYD topped Bloomberg Businessweek‘s Tech 100 list. Warren Buffett was so impressed he took a 10% stake in the company. Yet a March 2012 search of the previous year turned up only one mention in the New York Times, while the 98th-ranked firm, California-based VMWare, showed 1,100 results for the same period.

Originally Published July 17th, 2013 in Knowledge@Wharton 

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