Emerging Markets

Strategies for Competing in the Global Value Chain

Robert Grosse

• Publisher: Kogan Page
• Year: 2015
• ISBN:
  9780749474508
• Edition: 1
• Topic: Business
• Subtopic: International Business
• Index: Business

The traditional dominance of international markets by companies from the US, Western Europe and Japan can no longer be taken for granted. Emerging market economies, from the powerhouse Chinese economy (set to pass the US in national income by 2020) to dynamic players such as Mexico, South Africa and Indonesia, are rapidly changing the competitive landscape. Companies that can successfully enter these emerging markets may reap rewards and benefits from cost reductions and market opportunities. By understanding their positioning in the global continuum of companies and customers - the global value chain - businesses can build their strategies for better competition, more effective resource allocation, cost reduction, and a heightened awareness of the risks and benefits. Packed with in-depth case studies of multinationals from both sides of emerging markets, including: Accenture, Walmart, Google, Nike, Novartis, PetroChina, Embraer, Tata Group and FEMSA; Emerging Markets is essential reading for anyone looking to understand the new competitive landscape and how they can maximise the business opportunities available. Online supporting resources include lecture slides that align with each chapter.

03

The time horizon

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What to expect in Chapter 3

When we talk about emerging markets, the relevant countries depend on the time frame. If we consider the past 300 years, then the United States definitely was an emerging market in the early part of that time. If we talk about the past 50 years, then South Korea was definitely an emerging market in the 1960s, but certainly not in the 2000s, when it is clearly part of the advanced post-industrial economy. If we look at per capita incomes, then most of Central and Eastern Europe is much closer to the United States, European Union and Japan than it is to China and India. This chapter looks at both individual (per capita) incomes and also country size (GDP) over a long history – the past 2,000 years.

During the first thousand years of the modern era, India was the largest economy in the world. After that, for most of the past one thousand years, China has been the largest country economy in the world. After the Industrial Revolution the United States overtook China – but not until the 20th century in fact. And now in the early 21st century it appears certain that China will once again become the single largest economy in the world for the foreseeable future. In individual incomes the leading countries have been those who developed technological leadership over their contemporaries, from Egypt 2,000 years ago to the United Kingdom in the 1800s to the United States since that time.

Among emerging markets the Eastern European countries look most likely to challenge the United States and northern European countries for leadership in individual incomes during the 21st century, while India and Indonesia may follow China into world-leading economic size (GDP) in the second half of the century. The reasons for these shifts in global economic power have largely to do with population size in these countries, along with technological catching-up that occurs as they develop furthe...