Considering the many different paths and unprecedented
opportunities for companies exploring emerging markets.
accumulated capabilities in production but also in research. By 2010, U.S.
Fortune 500 companies had 98 R&D facilities in China and 63 in India. General Electric’s health-care arm had multiple facilities.
Emerging markets also have inno-
vative firms making new products and
services. Sometimes these are dramati-
cally cheaper than their Western equiv-
alents: $3,000 cars by Tata Motors, $300
computers by Lenovo, and $30 mobile
The label “emerging markets” was
coined by Antoine van Agtmael in the
early 1980s. It remains alluring for in-
vestors, innovators, and governments.
Yet it remains difficult to characterize
them. Our view of emerging markets
has changed over time. Precise under-
standing might help innovators and
business managers compete more effec-
tively. This column explores these claims.
The interest in emerging markets is in
part because they grow fast and have
potential for further growth. Growth
rates have slowed somewhat since
Goldman Sachs started “dreaming
with BRICs,” referring to the emerging economies of Brazil, Russia, India,
2 But as developed economies see little growth in the age of
austerity, emerging markets remain
important destinations for global corporations to sell goods and services.
Fast growth comes because emerging markets provide low-cost locations
for sourcing inputs, processing products, and delivering services. Firms led
by giants such as Foxconn in electronics and Pou Chen Group in footwear
generate wealth and jobs as suppliers
to global brand owners (see my July
2011 Communications column).
firms are part of global value chains
and have been catching up with firms
from advanced economies. They have