Lessons from Emerging-Market Leaders

Investment manager Antoine van Agtmael advises learning fresh branding and marketing strategies from non-Western nations

By Reena Jana

Nearly three decades after Antoine van Agtmael, a senior executive at the World Bank Group, coined the term "emerging markets," China, India, and others are flexing their financial muscle on the global stage.

Van Agtmael went on to found the International Finance Corporation Emerging Markets Index and Data Base (now owned by BusinessWeek sister company Standard & Poor's), and later Emerging Markets Management, the investment firm where he now serves as chief investment officer.

Van Agtmael has now written The Emerging Markets Century: How a New Breed of World-Class Companies is Overtaking the World (Free Press), a book of 25 case studies from emerging markets. He traces corporations in Asia, Latin America, and Russia as they have become regional and global leaders in their sectors, from consumer electronics and software, to wine and cement. And he indicates how international companies can learn from their growth strategies.

Van Agtmael's list of 25 companies to watch range from obvious, well-known brands such as Korea's Hyundai Motor Company, to relatively unknown companies such as Taiwan's Hon Hai Precision Industry, which quietly produces electronics for Dell (DELL), Nokia (NOK), and Sony (SNE).

Businessweek.com's Reena Jana spoke with van Agtmael about the best practices that have proved so successful for these companies, and what corporations in the rest of the world can learn from them. Edited excerpts from their conversation follow:

What are the key growth strategies of the 25 companies you profile in The Emerging Markets Century?

These companies followed unique strategies, what I call "emerging markets twists." Hon Hai focused on vertical integration. TSMC [Taiwan Semiconductor Manufacturing Co.] concentrated on industry dis-aggregation by building a dedicated integrated-circuit foundry and leaving the design and branding of chips to partners. Brazil's Embraer [the world's fourth-largest airplane maker] turned outsourcing upside down, using developed-world suppliers. What these companies share … is that they thought carefully how to outsmart competitors. One common strategy that I think is overwhelming in its importance is what I call the "south-south strategy," or doing business between emerging markets.

Years ago, I was in Jordan. I like to jog, and everything was sleepy during the hours I would run. The only one place lit up was Hyundai. This emerging-market company was already big in Jordan, in the construction sector. The key is to tap into products or sectors that companies in "the West" might turn up their noses at. This is a good way to build a global name. After all, emerging markets are more than half of the global economy.

Do you suggest that managers in companies outside of emerging markets follow the strategies used by corporations in emerging-market nations to compete with them?

I'll be honest; I'm not just writing for an American audience. I am also writing for business school students in India or managers in Latin America. Right now they're reading U.S.-centric business books like Good to Great. I realize we needed a Good to Great for emerging markets that highlights the superstars in their own countries.

But the book is also for the young entrepreneur in the United States in his or her 30s or 40s. These businesspeople will have to increasingly deal with companies in emerging markets and understand a global business environment. In emerging markets—such as India, China, and Latin America—we're talking about billions of potential consumers. It's more than what we have in the United States, Europe, and Japan combined. I think it's crucial for young executives to know how these companies and these countries work.