SOURCE: The Boston Consulting Group

December 03, 2007 05:00 ET

New Global Challengers Pose Growing Threat to Established Industry Leaders, According to a New Report by The Boston Consulting Group

17 Companies Join The Boston Consulting Group's List of 100 Emerging Giants in This New Edition for 2008

NEW DELHI, INDIA--(Marketwire - December 3, 2007) - Companies from rapidly developing economies (RDEs) are globalizing so quickly that they pose an urgent threat to industry leaders, The Boston Consulting Group (BCG) warns in the second edition of its report on 100 of the most formidable companies from RDEs. The report -- titled "The 2008 BCG 100 New Global Challengers: How Top Companies from Rapidly Developing Economies are Changing the World" -- is being published today.

The BCG New Global Challengers list comprises 100 companies that are growing fast, globalizing aggressively, and reshaping global industries. With over $1.2 trillion in total revenues(1) and more than a half trillion dollars in yearly purchases, the BCG New Global Challengers are already formidable. But their ambitions are daunting -- according to the report, their combined revenues will reach $3.3 trillion by 2010 and a massive $11.8 trillion by 2015. Meanwhile, hundreds more RDE-based companies will gain critical mass and launch global expansions as well.

"Industry leaders need to understand these new rivals and act quickly," urges David Michael, the report's coauthor and a Beijing-based BCG senior partner. "For those who move fast, the challengers could become key clients, suppliers, and even strategic partners. For those who don't, the challengers will represent fierce competition and, in time, become potential acquirers."

By many measures, the BCG 100 New Global Challengers are already outperforming established industry leaders. In the past five years, the Challengers grew revenues faster than the S&P 500 -- in fact almost three times as fast since 2004 -- earned a higher average return on sales, and created far more shareholder value. "The challengers are increasingly looking for acquisitions abroad," said report coauthor and BCG partner Arindam Bhattacharya. "In 2006 they completed 72 outbound acquisitions, up from 21 in 2000. The average size of these transactions grew from $156 million in 2001 to $981 million in 2006."

"Executives at established industry leaders might not be able to pronounce the names of many New Global Challengers," commented Michael, "yet it is essential for every executive to develop clear strategies for dealing with this group of huge and ambitious companies. Never before have so many potential competitors and customers arisen so quickly on a global scale. Moreover, the challengers have completely different approaches to competition, taking advantage of their bases in emerging markets. Many established industry leaders are frankly unprepared for these new types of competitors. They are also unprepared to capitalize on the sales-growth opportunities presented by selling to these companies."

Of the 100 companies on BCG's list, 41 are from China, 20 from India, and 13 from Brazil, with the rest coming from 11 other rapidly developing economies. In this edition of the report, 17 companies appear on the list for the first time, as they break into the ranks of the leading challengers entering the global stage. Notable newcomers to the 2008 list include Grupo Bimbo of Mexico, Nine Dragons Paper Holdings and Sinomach of China, Suzlon Energy of India, Tenaris of Argentina, Marcopolo of Brazil, and Inter RAO UES of Russia.

The full list, which is part of the report published today, is the result of careful screening of more than 3,000 companies from all of the world's major RDEs. The screening was based on companies' total revenues, their share of overseas revenues, and their degree of global ambition. (See Appendix B for the full list.)

To order a copy of The 2008 BCG 100 New Global Challengers go to: http://www.bcg.com/impact_expertise/publications/request_form.html?report=global_challengers_2007

The report's authors are Marcos Aguiar (Sao Paulo), Arindam Bhattacharya (New Delhi), Laurent de Vitton (Beijing), Jim Hemerling (San Francisco), Kim Wee Koh (Singapore), David C. Michael (Beijing), Harold L. Sirkin (Chicago), Kevin Waddell (Warsaw), and Bernd Waltermann (Singapore).

(1) Figures from 2006, the most recent full financial year data available for comparison

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.

APPENDIX A. The new Challengers

The 17 additions to BCG's 100 New Global Challengers list are

--  Changhong Electric, a Chinese home appliances company (2006 sales,
    $2.4 billion)
--  Chery Automobile, China's leading exporter of cars (sales, $2.6
    billion)
--  COFCO, China's largest manufacturer, importer, and exporter of oils
    and food (sales, $17.9 billion)
--  CSAV, a global top-ten shipping carrier based in Chile (sales, $3.8
    billion)
--  CSIC (China Shipbuilding Industry Corporation), the country's largest
    manufacturer of ships and marine equipment (sales, $8.0 billion)
--  Grupo Bimbo, a Mexican food and beverage company (sales, $5.9 billion)
--  Inter RAO UES, Russia's largest importer and exporter of electricity
    (sales, $1.0 billion)
--  JBS-Friboi, Brazil's largest beef and pork processor (sales, $1.9
    billion)
--  Marcopolo, the world's third-largest maker of bodywork and components
    for buses and vans, based in Brazil (sales, $820 million)
--  MOL Group, Hungary's leader in oil retailing, fuel retailing, and gas
    transport (sales, $13.7 billion)
--  Nine Dragons Paper Holdings, the largest paperboard-packing
    manufacturer in China and one of the largest in the world (sales, $1.0
    billion)
--  PKN Orlen, a Polish oil and gas company (sales, $17 billion)--the
    largest company in Central Europe
--  Shanghai Zhenhua Port Machinery Co. (ZPMC), a leading China-based
    manufacturer of container cranes (sales, $2.1 billion)
--  Sinomach, one of the world's leading machinery contractors, based in
    China (sales, $5.1 billion)
--  Suzlon Energy, the fifth-largest company in the world for wind energy,
    based in India (sales, $1.8 billion)
--  Tenaris, an Argentina-based maker of tubes and pipes for the oil
    industry (sales, $7.7 billion)
--  VTech Holdings, the China-based market leader in Europe and the United
    States for educational video games and an innovator in cordless phones
    (sales, $1.2 billion)
    

APPENDIX B: The full list of 100 companies that comprise the BCG 100 New Global Challengers -- see graphic above.

Also available as PDF at: http://www.bcg.com/about_bcg/media_center/articles/GlobalChallengerslist.pdf

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