Over the past six years, China and India have become the most common targets for multinational corporations looking to expand overseas. Many of the global challengers, however, have expanded their sights to Africa, new growth spots in the Middle East, Southeast Asia, and Latin America.
Africa. With more than 1 billion people and $3 trillion in total GDP, Africa is a larger market than Brazil or Russia. While some global consumer companies, such as Unilever, Nestlé, and Coca-Cola, entered the market decades ago, Africa has become a more recent focus of consumer-oriented challengers. Godrej Consumer Products, for instance, has acquired several hair-care businesses in South Africa and the Tura brand in personal care in West Africa. At Bajaj Auto, Africa accounts for 41 percent of its overseas sales of light motorbikes—exceeding sales in its overseas markets in Asia.
Heavy-industry companies are also arriving in Africa to meet the growing demands of a continent under construction. For instance, Sany Group, the Chinese mining-machinery company, signed its first equipment contract in Africa in 2010. Chinese contractors now account for 37 percent of the African construction market, according to African Business magazine. Nearly 42 percent of the contractors’ overseas revenue now comes from Africa, the magazine reports.
In telecommunications, the global challengers have focused heavily on Africa as it skips fixed lines altogether and goes straight to mobile. Huawei and ZTE—two Chinese equipment makers—have leveraged their experience working with low-income or rural markets at home to develop products for Africa. India’s Bharti Airtel entered the continent by acquiring the African operations of Kuwait’s Zain. It then applied its knowledge of low-cost markets to expand organically through its subsidiary Airtel Africa.
Southeast Asia. Southeast Asia is on the move. For most of the past decade, the region has been enjoying a surging economic renaissance. Nearly 100 million people will enter the consumer class by 2015, most of them in Indonesia, the Philippines, Thailand, and Vietnam, driving projected annual growth of 12 percent in consumer spending.
Latin America. This region is also growing sharply. Strong commodity prices helped such countries as Chile, endowed with remarkable natural resources, expand real annual GDP in excess of 4 percent in the post-2009 recovery. In BCG’s new Sustainable Economic Development Assessment, an approach to systematically assessing and comparing the socioeconomic development across 150 countries, Brazil made the greatest improvement over the past five years. Several other Latin American nations, including Peru and Uruguay, are also in the top 20 nations. Meanwhile, Chile, Colombia, and Peru have forged an alliance that is binding together their financial and commercial markets.
Hot Spots. Though best known for their larger economies, the Middle East and Latin America both have smaller markets with strong growth. Real GDP in Qatar and Colombia, for example, has expanded by more than 4 percent annually over the past five years, outpacing regional heavyweights Saudi Arabia and Brazil. Prospects for both countries remain bright.
Next article: Challengers Are Going Global Through M&A and Partnership »
To Contact the Authors