Established industry leaders are facing up to the reality that companies from rapidly developing economies (RDEs) pose an urgent threat. With that backdrop, The Boston Consulting Group (BCG) has identified 17 additional RDE-based companies whose competitive advantages will become even clearer in 2008.
CHICAGO (Business Wire EON) December 11, 2007 --
Established industry leaders are facing up to the reality that companies
from rapidly developing economies (RDEs) pose an urgent threat. With
that backdrop, The Boston Consulting Group (BCG) has identified 17
additional RDE-based companies whose competitive advantages will become
even clearer in 2008.
The additions to the roster of “new global
challengers” are discussed in the
just-published report “The 2008 BCG 100 New
Global Challengers: How Top Companies from Rapidly Developing Economies
are Changing the World.” (The ongoing research
was initiated in 2006, when the initial set of challengers was
identified.) BCG’s report is based on a
detailed screening of more than 3,000 companies from 14 RDE countries.
Overall, the 100 BCG New Global Challengers represent $1.2 trillion in
annual revenues and $500 billion in yearly purchases. BCG estimates
their combined revenues will reach $3.3 trillion by 2010 and $11.8
trillion by 2015. Further, the group has grown nearly three times as
fast as the S&P 500 since 2004, earned a higher average return on sales
and created far more shareholder value. While these companies stand out
because of their impressive organic growth, they’re
becoming aggressive and adept at acquisitions. The average size of these
transactions grew five-fold in a recent five-year period.
Seventeen Upstarts to Watch in 2008
The 17 new 2008 Challengers include:
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Chery Automobile (China), the leading Chinese exporter of cars,
with $2.4 billion in 2006 revenues. It’s
currently building plants in Eastern Europe, the Middle East and South
America.
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Grupo Bimbo (Mexico), a food and beverage company with $5.9
billion in 2006 revenues with market-leading brands in Brazil, Mexico
and the U.S.
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Changhong Electric (China), a home appliances company with $2.4
billion in 2006 revenues and subsidiaries in Australia, Europe,
Southeast Asia and the U.S.
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CSAV (Chile), a global top-10 shipping carrier with 2006
revenues of $3.8 billion and subsidiaries in Brazil, Hong Kong and
Uruguay.
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JBS-Friboi (Brazil), Latin America’s
largest beef and pork processor. Its $1.8 billion in 2006 revenues are
expected to jump to $13 billion in 2008 because of its purchase of
U.S.-based Swift & Co.
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PKN Orlen (Poland), an oil and gas company and the largest
Central European company by sales -- $17 billion for 2006, 46% of
which were generated offshore.
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Suzlon Energy (India), the world’s
fifth-largest company for installed wind-energy capacity. It had 2006
revenues of $1.8 billion. It manufactures in China, Europe, India and
the U.S.
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VTech Holdings (China), the market leader in Europe and the
U.S. for educational video games and an innovator in cordless phones.
78% of its $1.2 billion in 2006 revenues come from offshore.
“Industry leaders need to understand these
emerging rivals and act quickly,” said Hal
Sirkin, a Chicago-based BCG senior partner. “For
those who move fast, the challengers could become key customers,
suppliers and even strategic partners. For those who don’t,
the challengers will represent fierce competition and, in time, become
potential acquirers.”
“Executives at incumbent multinationals might
not be able to pronounce all the challengers’
names,” said Jim Hemerling, a San
Francisco-based BCG senior partner. “But it’s
essential that they develop strategies for dealing with these ambitious
upstarts. Never before have so many potential competitors and customers
arisen so quickly on a global scale.”
“All 100 are growing fast, globalizing
aggressively and reshaping global industries,”
added Hemerling. “To say they are changing
the world is no exaggeration.”
Mr. Sirkin and Mr. Hemerling are available to discuss the 2008 New
Global Challengers – the 17 new ones and the
83 other formidable competitors from rapidly developing economies –
as well as the trends giving rise to them. (To schedule a conversation
and/or receive a list of the challengers and a full copy of the report,
contact Alexandra Corriveau at Sommerfield Communications, Inc. at
212-255-8386 or alexandra@sommerfield.com.)
During a conversation, the BCG experts can elaborate on:
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-- What makes these companies remarkable - stand-outs in the
global economy.
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-- Superior value creation.
The total shareholder return (TSR) for the 100 companies between
January 2002 and June 2007 was 418%, compared with 221% for the
MSCI emerging markets index and 47% for the S&P 500 index.
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-- Revved-up revenues. From
2004 to 2006, total revenues for the 100 grew at a CAGR of 29%,
three times the rate of the S&P 500 and Fortune 500.
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-- Strong profits. During
2006, the 100 companies generated operating margins of 17%.
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-- Huge purchasing power.
The companies' combined 2007 purchases will total $310 billion to
$330 billion for raw materials and energy, $80 billion to $100
billion for parts and components and $65 billion to $80 billion
for services. The companies' purchases grew at a CAGR of 29% from
2002 to 2006.
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-- Aggressive M&A activity.
The average size of the 100 companies' M&A deals is $981 million.
Some deals are quite large. Tata Steel from India acquired the
Anglo-Dutch steelmaker Corus for $12 billion, the largest outbound
M&A deal in India's history.
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-- The range of industries in which there are new challengers
and threats to incumbents. The BCG 100 includes 34
industrial-goods companies; 17 resource-extraction companies; 14
consumer-durables challengers and 14 in the food and beverage and
cosmetics industries. The remaining companies are in such
industries as shipping, telecommunications and IT services, and
business process outsourcing.
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-- Why these challenger companies are globalizing. The
companies know being big in their home markets isn't enough to
ensure long-term viability. So they're going global to gain access
to new growth and profit pools.
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-- The 14 countries that spawn these new challengers.
Circumstances in Argentina, Brazil, Chile, China, Egypt, Hungary,
India, Indonesia, Malaysia, Mexico, Poland, Russia, Thailand and
Turkey that are enabling them to develop the next wave of global
industry leaders.
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-- The challengers' globalization strategies. They include:
taking their brands global; turning their RDE engineering
capabilities into global innovation; aiming for global category
leadership; monetizing RDE natural resources; rolling out new
business models to multiple markets, and acquiring natural
resources.
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-- How the up-and-comers are handling key challenges. The
BCG 100 have become increasingly adept at handling issues that all
RDE companies face. Those include dealing with a talent shortage,
learning how to operate on a truly global scale, dealing with
risks like currency and energy and raw materials prices, the need
to "internationalize" top management and figuring out how to
manage image and brands in the global spotlight.
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-- What incumbents can do to "challenger-proof" their business
models. Current industry leaders need to consider how to
"attack" challengers on their home turf, acquire fast-growing
RDE-based players and make challengers partners and customers.
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About the Methodology for Selecting the 2008 BCG 100
Produced by BCG's Global Advantage practice, the report –
“The 2008 BCG 100 New Global Challengers: How
Top Companies from Rapidly Developing Economies are Changing the World”
– is based on a detailed screening of more
than 3,000 companies from RDEs. First, the BCG research team ensured
that the candidate companies were truly RDE-based. Next, it homed in on
large players – generally those with $1
billion in sales or greater. Finally, it looked at three years of
financial data and scored the remaining companies using five
globalization criteria: international presence of the company; major
international investments pursued in the past five years; the company's
access to capital for financing international expansion; the breadth and
depth of its technologies and intellectual property; and the
international appeal of its offerings and value propositions.
About The Boston Consulting Group
The Boston Consulting Group (BCG) is a global management consulting firm
and the world’s leading advisor on business
strategy. We partner with clients in all sectors and regions to identify
their highest-value opportunities, address their most critical
challenges, and transform their businesses. Our customized approach
combines deep insight into the dynamics of companies and markets with
close collaboration at all levels of the client organization. This
ensures that our clients achieve sustainable competitive advantage,
build more capable organizations, and secure lasting results. Founded in
1963, BCG is a private company with 66 offices in 38 countries. For more
information, please visit www.bcg.com.
To receive a copy of the report, “The
2008 BCG 100 New Global Challengers: How Top Companies from Rapidly
Developing Economies are Changing the World,”
or to schedule a conversation with BCG experts, please contact Alexandra
Corriveau at Sommerfield Communications, Inc. at 212-255-8386 or alexandra@sommerfield.com.
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