Today, giant companies from rapid-growth economies are transforming the makeup of global business. Companies based in emerging markets already account for 26 per cent of the Fortune Global 500; according to McKinsey, by 2025, they will make up almost half of it. China alone boasts 89 companies in the Fortune 500, and three of Forbes magazine’s most innovative businesses on earth in the shape of Baidu, Henan Shuanghui Investment & Development and Tencent Holdings, which might itself be unfair to Huawei, Haier and Lenovo.

From India, there’s Tata Group, Mahindra, Marico and Bharti. The Philippines has Unilab, and that’s before we get to Malaysia, Nigeria, South Africa and others in the group. We look at the six characteristics that have powered the success of emerging giants – and how they can ensure these traits remain a huge competitive advantage.

1. Finding opportunity amid chaos and uncertainty
   Solid infrastructure, dependable distribution and supportive regulation: emerging giants often grow in markets where none of this can be taken for granted. They’ve achieved success by being street smart, adapting to changing circumstances and filling gaps in the market as quickly as they appear. They know that distribution can be everything, and that a brand’s profile and success often depend on how visible and accessible it is on the shelf. They’ve evolved rock-solid relationships with retailers of all shapes and sizes to deliver that distribution – and through those relationships they’ve evolved an intimate understanding of their markets.
   
   Emerging giants don’t just understand the concept of Power in the Market; they live and breathe it. This equips them superbly for the challenges and opportunities of rapid-growth economies in other regions. Bharti and Orascom have proved highly successful at exporting their distribution expertise to Africa, for example. As economic uncertainty grows in previously stable markets such as those of Southern Europe, their ability to spot opportunity in unlikely places could prove equally invaluable there too. Research repeatedly shows that distribution and product availability can exert similarly powerful influence over brand growth in developed markets.
   
   The key to emerging giants’ future success is how quickly they can build up a detailed picture of other dynamic markets to match their knowledge of their home turfs. 
   
   
   
2. Insight on local needs – and improvisation to meet them
   Partly because they are less tied to dominant hero products, emerging giants have frequently outperformed established multinationals when it comes to innovating to meet local needs. As a homegrown brand, Jollibee (a fast-food restaurant chain based in the Philippines) has proven that it understands the Fillipino palette far better than McDonalds; Asian food chain Kung Fu Catering is taking similar bites out of the same brand in China.
   
   Meanwhile FlipKart has built a $1 billion e-commerce business in India by quickly grasping the local need for cash on delivery. There is no reason why the new giants should lose this grasp of cultural nuance once they move into new markets – but to export it successfully, they need consumer insights that can build up a picture of emotional and functional needs for those markets.
   
   
   
3. Launch and learn - The license to speculate 
   Today’s local giants have perfected the art of launching and learning, going to the market with products that they believe have a high probability of success, and then acting rapidly to improve, optimize, or simply withdraw and replace them.
   
   There is little appetite for delaying launches to fine tune them, or second-guess how the market will respond; it is better to get the product out there and let experience show what needs fixing. A lack of public ownership and freedom from investor scrutiny may be partly responsible for this license to speculate, but emerging giants use it with panache – and to great effect.
   
   As they expand, they will require research that reflects this mindset: insight that focuses on understanding the consumer landscape and identifying the spaces most worth exploring; and less on sizing opportunities in detail and proving their value ahead of launch. Once a new product is launched, they will need rapid insight on whether customer experience matches its promise, and actionable recommendations on how to optimize to ensure that they do.
   
   
   
4. Identifying entry points precisely 
   Contrary to some popular perceptions, emerging giants don’t try to dominate markets from the outset. They know that they can start small, focus on their strengths and then expand their footprints from there. In developed markets, this entry point often takes the form of a price sensitive segment whose needs are not being met. Compact, low-cost refrigerators gave Haier an entry point into the US market from which it could expand; Samsung first made a name for its brand in developed markets by focusing on printers before moving onto laptops.
   
   Identifying a market’s unmet needs can hold the key to giants establishing a foothold for their brands in even the most competitive landscape.
   
   
   
5. Entrepreneurial cultures
   Western multinationals have found themselves struggling to recruit top talent in markets such as China – and with good reason. Graduates know that they are far more likely to be given freedom to make their mark in homegrown giants – and far less likely to be judged on a single quarter’s performance as well. Emerging giants need to ensure that they retain this entrepreneurial culture as their workforce expands and more mature markets suggest different measures of success, and this means maintaining a longer-term view of brand value and performance.
   
   
   
6. Acquiring for access and not for efficiencies 
   Emerging giants often take an acquisition-led approach to developed markets, but they are typically extremely precise about the purpose of their acquisitions: buying to gain access to customers rather than to create economies or efficiencies by taking over the running of a business.
   
   Tata Group’s acquisitions of Jaguar, Land Rover and Tetley Tea is a prime example: it has established a strong foothold for its Motors and Tea businesses both in the UK and across the world, and it has confounded critics by leaving the day-today running of the companies to existing management in the brands’ home market. In Africa, Tiger Brands has taken a similar approach to meeting the infrastructure challenges of markets to which it expands from its South African base.
   
   As emerging giants seek to expand to markets further from their heartlands, a full understanding of the strength of each prospective acquisition becomes vital. When customers are the core value that you are seeking to acquire, understanding the strength of customer relationships in the competitive context should be a key focus for due diligence. Better intelligence about companies’ strength can only increase the success rate of emerging giants’ acquisitions
   

In conclusion: Learning from the new giants
Once upon a time, huge multinational companies all looked much the same: publicly owned businesses with a common approach to management culture, decision making and growth strategies. The emergence of this new generation of giants is shaking things up by proving that there are new ways to achieve global expansion whilst still holding true to core principles around innovation, local market understanding and precision thinking. There is little reason to expect that emerging giants’ approach to global markets will change as they grow. Indeed, in their expertise at learning-by-doing and rapid optimization, there is so much more for established businesses to learn.

Article Source: STOrai Magazine