MNCs up against aggressive local competition – report
Most multinational corporations (MNCs) are facing up against a fast-rising number of agile and aggressive local competitors that are winning market share in many industries, according to Boston Consulting Group (BCG).
BCG on Monday released a report entitled Transformation in Emerging Markets: From Growth to Competitiveness, which looks at the performance of MNCs in emerging markets.
“Emerging-market-based companies now control between 30% and 80% of the global markets for rolling stock, onshore wind-power equipment, coal power-generation equipment, wireless telecommunications equipment, and photovoltaic equipment,” the report said.
According to BMC the competitive prowess of local competitors are rooted in cost advantages due to small overheads, lower wages, and lower R&D costs; a deep understanding of local markets and strong relationships with local stakeholders, including both customers and suppliers; and a nimble and aggressive corporate culture, which enables quick decision-making and significant risk-taking.
The number of companies with more than $1bn in annual revenues has double in Africa to a total of almost 700. The nature of growth and competition is changing in emerging markets, says the report.
The Brics are no longer synonymous with broad-based rapid growth, BMC says, adding that China’s GDP growth is slowing to 6.5% with “South Africa eking out a percentage point or two”.
The global management consulting firm advises that despite the slowdown it is not the time for MNCs to retreat and it may be a “good opportunity for re-engagement”.
“Some 300 million additional households will enter the consuming class in emerging markets during this decade. The populations of less developed countries are still growing four times faster than those of their developed counterparts: by 2020, 6.4 billion people (out of 7.5 billion worldwide) will be living in emerging markets,” the report said.