Emerging world challenges multinationals

Cape Town - The battle in emerging markets is heating up as competition between multinational companies and firms from the developing world increases, a report said.

According to CNBC, a report published by the Boston Consulting Group found that a new generation of global challengers consisting of 100 fast-growing and fast-globalising companies from the developing world, is on track to becoming global leaders in their respective industries.

To keep up, Western conglomerates will have to know when to compete and when to work together with the new kids on the block.

The report said the global challengers were not "mere curiosities operating in distant regions" but rather were "full-fledge competitors that would shape the global economy in the next decade". 

These global challengers includ South African media giant Naspers [JSE:NPN]; Alibaba, China's largest e-commerce company; Trina Solar, the fourth-largest solar panel manufacturer in the world; Indian carmaker Tata Motors and software group Infosys; Russian firms Lukoil and Gazprom as well as Chile's Latam Airlines. 

"If ever there was a wake-up call for business leaders in the West, this is it," David C Michael, coauthor of the report, was quoted as saying.

"We have been monitoring the rise of global challenger companies for nearly a decade, and the ambition of these companies - what we call the accelerator mindset - has never been stronger," said Michael. 

The report goes on to say that global challengers already outpace their competitors from the developed world in growth, job creation and productivity. 

Their average revenue was $26.5bn in 2011, compared with $21bn for the S&P 500 nonfinancial companies. 

In addition, in the last five years global challengers added 1.4 million jobs, while employment at nonfinancial S&P 500 companies remained flat, the report said. 

Chinese and Indian companies dominate the list of global challengers but companies from Egypt, South Africa, Saudi Arabia and Qatar are fast catching up, with the span of industries also widening. 

The rise of emerging market companies presents opportunities that could be mutually beneficial to both sides, the report said.