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In a Cutthroat Environment, Challengers Are Formidable Competitors

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In This Article
  • Challengers understand how to tailor products for emerging markets.
  • As the digital divide shrinks in emerging markets, challengers are connecting with consumers in new and novel ways.
  • Africa, Southeast Asia, and Latin America are nascent battlegrounds for multinationals and global challengers.

2013 BCG Global Challengers

The 2013 BCG global challengers—100 fast-growth, globally expansive companies from emerging markets—are catching up and sometimes surpassing multinationals. They are expanding their business portfolios, reaching the rapidly expanding consumer class in emerging markets, exploring new businesses based on the rising connectivity of the emerging world, and moving into underserved fast-growing markets.

Moving into New Businesses

Many challengers are expanding into new businesses and across the value chain. In 2011, Wipro enhanced its sector expertise by acquiring the oil-and-gas IT practice of U.S.-based Saic, and in 2012, Wipro acquired Promax Applications Group, an Australian analytics company specializing in trade promotion, a promising opportunity for growth as consumer spending rises in India. Meanwhile, Mindray has broadened its product line and entered the health-care-IT space through acquisitions.

Captivating the New Consumer

Many challengers have learned to cater to consumers across emerging markets. VimpelCom, a telecom provider founded in Russia that generates 40 percent of its revenues in the country, and Naspers, a South African media company, are two fast-expanding services companies that were born in countries traditionally driven by commodities.

Indian companies Bharti Airtel and Godrej Consumer Products have leveraged their insights from the challenging Indian market to expand into other developing markets—notably, Africa. Bharti Airtel began its domestic mobile-phone service in 1995, when India only had 1 million phone lines—all of which were landlines. It is now the nation’s largest mobile provider and an emerging force in Africa. Godrej allows local managers in Africa to set local marketing and sales strategies and to tailor their offering, such as top-selling hair products, to local needs.

Emerging markets frequent require products tailored for local conditions. One example is the chotuKool—an inexpensive, environmentally friendly, and portable refrigerator made by a sister company of Godej Consumer Products. ChotuKool, which means “little cool,” weighs less than eight kilograms and addresses the rural Indian market and its intermittent power supply. It is battery-operated, consumes less than half the power used by a regular refrigerator, and uses high-end insulation to protect its contents if the batteries die.

Challengers are also experimenting with innovative banking and financial services. Alibaba Group, the Chinese e-commerce player, has created Alipay, an escrow-payment system. The buyer does not release payment until he has received and validated the merchandise. Alipay helped unleash explosive growth in e-commerce by overcoming mistrust in online transactions and low credit-card adoption. In 2010 Alipay surpassed PayPal as the world’s largest online third-party payment, ranked by number of users.

Meanwhile, in Mexico, mobile telecom provider América Móvil has partnered with BBVA Bancomer to offer banking services through its mobile network, much like mobile operator Safaricom did in Kenya with M-Pesa. Elsewhere, VimpelCom has partnered with Google to offer Google Play content. Charges are debited from consumers’ prepaid accounts, circumventing the lack of credit card availability in developing countries.