Emerging corporate giants to rival west
Far more of the world's largest firms will come from emerging markets by 2025, supplanting rich-world companies, a report says
The number of large companies from emerging markets will surge in coming years and they will become competitors but also customers for rich-country firms, according to a new study.
By 2025, a further 7,000 will have joined their ranks, with seven out of 10 of them based in emerging economies, McKinsey Global Institute (MGI) projects.
Emerging markets have fallen out of favour with investors this year because of worries over the sustainability of China's economic model, slower growth in India and Brazil and worries about the ability of the likes of Indonesia and Turkey to attract funds to plug their current account deficits.
MGI director Richard Dobbs said there would be hiccups along the way but he saw little to stop the rise of the big emerging-market corporation.
"Yes, it's going to be a turbulent ride for the next 20 or 30 years as we go through this massive transition. But the rise is going to happen. Some countries may stall, but there are enough emerging markets that there's a degree of inevitability about this," Dobbs said.
The first wave of development in emerging markets was based on cheap labour, MGI said. As wages rise, a second wave has unfurled - selling to newly rich consumers. The third, overlapping wave is breaking as companies bulk up, propelled by urbanisation, income growth and exchange rate appreciation.