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Local Dynamos highlight the successes of homegrown emerging-market companies.
Tuesday, 15th July 2014
Source : Boston Consulting Group (BCG)

Growing, ambitious, and focused on their home markets, these companies are winning against multinationals and global challengers;

Twenty countries are represented by the 50 local dynamos, covering seven emerging-market regions: China; Africa; India; Latin America; the Middle East and Turkey; Russia; and Southeast Asia.

4Hoteliers Image LibraryChina has 10 companies on the list, the highest out of the countries and the emerging-market regions covered.

While many emerging-market companies have global aspirations, the local dynamos are winning by catering to the needs of customers in their home market.

Many of them are also developing world-class capabilities rivaling much larger, older companies, and beating both multinationals and local, often state-owned companies, according to the report.

Between 2009 and 2013, for example, the revenues of the local dynamos grew by 28 percent annually. This faster growth has generated even greater returns for shareholders.

Between 2009 and 2013, their total shareholder return has risen 26 percent annually, much steeper than benchmarks composed of similar companies such as the MSCI Emerging Markets index.

BCG first published its list of local dynamos in 2008. "We decided to reprise the list because emerging markets, and the companies within them, have changed so dramatically in the past six years," said David C. Michael, a BCG senior partner and coauthor of the report. "As global growth has slowed, global companies have flocked to emerging markets. The local dynamos have thrived despite rising competition."

The report highlights the six key traits shared by the 50 local dynamos: catering to customers and local conditions, leveraging digital technologies, operating at warp speed, adapting to uncertainty and circumstance, building talent engines, and establishing functional excellence.

Case studies feature companies whose performance is outstanding with regard to each of these key traits. Most of the local dynamos exhibit several, if not all, of the traits. These key traits give local dynamos an edge in their home markets. While these companies may have a long way to go in mastering the traits, their efforts are already starting to pay off in developing a more complete set of capabilities.†

In order to identify the 50 local dynamos, BCG screened thousands of companies in search of innovative business models and approaches to winning in emerging markets. We conducted a broad search for successful private companies that had strong reputations and a domestic focus but did not have traditional sources of advantage, such as government ownership, large land ownership, or a monopoly license.

They are truly dynamic and farsighted. We then narrowed the list to those companies that were succeeding by adapting to the unique challenges of their home markets and were among the leading private-sector companies in their industries.

The report concludes with recommendations for global companies seeking to compete in these markets. These companies need to emulate the local dynamosótheir ambition, localized business models, and their ability to hire top local talentówithout abandoning their own core advantages, such as scale, brand, quality, and capital.†

A copy of the report can be downloaded HERE.

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