Global Champion from Emerging Market

pions from emerging marketGlobal champions from emerging markets

Sinha, Jayant McKinsey Quarterly, 00475394, 2005, Issue 2 Developing economies have become an invaluable springboard for Conventional wisdom holds that companies in emerging markets face daunting obstacles when trying to expand internationally. According to this view, the same factors that make them successful at home — privileged relationships and assets, high tariff walls, and a captive market of local customers — inevitably work against them abroad. So what explains the rise of the emerging world's true global leaders, which operate diverse businesses profitably, at scale, and in a wide range of geographies? Are HSBC, Ranbaxy Laboratories, and Samsung Electronics merely the exceptions that prove the rule? In reality, emerging markets, far from being a handicap, actually provide an invaluable springboard. The combination of demanding yet price-sensitive customers and challenging distribution environments can help determined companies develop the distinctive capabilities they need to compete successfully elsewhere. Consider the example of Ranbaxy Laboratories, India's leading pharmaceutical company, which became a top global producer of generic drugs after cutting its teeth under a unique patent regime that encouraged Indian companies to manufacture patent-protected drugs and make them affordable to the country's vast population of poor people. Thanks to that experience, Ranbaxy has succeeded in becoming a leading generics producer in both the United States and Europe. Another global competitor, Samsung Electronics, had to please its customers in tech-savvy South Korea and thus cultivated design strengths that help it beat international competitors to market. HSBC had to cope with the relatively small deposits of its customers in Hong Kong, so it learned to operate with a cost-to-income ratio lower than that of its US and European competitors (Exhibit 1). These companies followed similar paths to...