SOURCE: Booz & Company

Booz & Company

February 04, 2014 11:00 ET

Which Emerging Market Companies Have the Chops to Sustain Strong Growth and Profits Through the Emerging Market Cooldown?

Too Many Emerging Market Giants Haven't Developed the Tools -- Innovation, Operations, Brand Management -- to Compete Effectively When Hyper-Demand Softens, Says Booz & Company

NEW YORK, NY and SHANGHAI--(Marketwired - Feb 4, 2014) - The cool-down and expected uneven growth in emerging markets, particularly China and India, beg a question: Which emerging market "giants" that soared during high-growth periods will continue to do so as these markets slow down?

Many won't, according to Booz & Company research.

"Emerging markets first movers went after fast top-line growth at all costs, acquired technologies by all means and sometimes copied products and processes of developed market companies. They dominated the local business landscape and exceled at serving customers just joining the consumer economy. However, in the rush to get ahead, many of these companies put off building a foundation for profitability in a slower environment," said John Jullens, Partner at Booz & Company and author of the recent article "How Emerging Giants Can Take on the World" in Harvard Business Review and "How Firms in Emerging Markets Can Play Catch-Up" in strategy+business.

"What emerging giants need now are capabilities that create value, are hard to copy and can be translated to profits. They need to change their marketing efforts from luring wide-eyed consumers to winning over competitors' customers. They must also deal with the fact that developed-world multinationals have learned a lot about emerging markets and have become formidable players there too," he added.

Jullens and his colleagues at Booz & Company have explored...

  • Why emerging market giants like Chinese automakers BYD and Chery have faltered and made hard landings.
  • What automotive supplier Wanxiang, automaker Great Wall and China International Marine Containers are doing to ensure global success and staying power.
  • Lessons from China's Haier, now the world's leading manufacturer of household appliances.
  • What tried-and-true organizational and planning styles of established multinationals will NOT work for emerging market players.
  • Criteria by which to evaluate emerging market players and their readiness for a tighter market. (There are four stages -- "seize the moment"; "build strength"; "scale and consolidate"; and "move up and out" -- that companies must go through to be capable of competing as markets mature, according to Jullens.)
  • What the U.S. manufacturing resurgence means for emerging market players.

"Typical emerging-market firms are not true startups but latecomers to already established industries. They should initially focus primarily on learning the business, while taking advantage of such emerging market and latecomer advantages as low costs and the ability to leapfrog to new technology standards. Emerging market firms that underinvest during this stage tend to run into challenges later when industry growth slows, labor costs rise, competition intensifies, and the country continues its transition to a more market-based economy," according to Jullens.

To arrange a conversation with John Jullens, please contact Frank Lentini, Sommerfield Communications at +1 (212) 255-8386 / Lentini@sommerfield.com.

About Booz & Company
Booz & Company (www.booz.com) is a leading global management consulting firm focused on serving and shaping the senior agenda of the world's leading institutions. Drawing on the talents and insights of more than 3,000 people in 57 offices around the world, we help our clients achieve essential advantage by working with them to identify and build the differentiating capabilities they need to outperform.

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