Media Advisory: Experts Available on Upstart Companies from Developing Countries to Watch out for in 2008

CHICAGO--(EON:Enhanced Online News)--Established industry leaders are facing up to the reality that companies from rapidly developing economies (RDEs) pose an urgent threat. With that backdrop, The Boston Consulting Group (BCG) has identified 17 additional RDE-based companies whose competitive advantages will become even clearer in 2008.

“The 2008 BCG 100 New Global Challengers: How Top Companies from Rapidly Developing Economies are Changing the World”

The additions to the roster of “new global challengers” are discussed in the just-published report “The 2008 BCG 100 New Global Challengers: How Top Companies from Rapidly Developing Economies are Changing the World.” (The ongoing research was initiated in 2006, when the initial set of challengers was identified.) BCG’s report is based on a detailed screening of more than 3,000 companies from 14 RDE countries.

Overall, the 100 BCG New Global Challengers represent $1.2 trillion in annual revenues and $500 billion in yearly purchases. BCG estimates their combined revenues will reach $3.3 trillion by 2010 and $11.8 trillion by 2015. Further, the group has grown nearly three times as fast as the S&P 500 since 2004, earned a higher average return on sales and created far more shareholder value. While these companies stand out because of their impressive organic growth, they’re becoming aggressive and adept at acquisitions. The average size of these transactions grew five-fold in a recent five-year period.

Seventeen Upstarts to Watch in 2008

The 17 new 2008 Challengers include:

• Chery Automobile (China), the leading Chinese exporter of cars, with $2.4 billion in 2006 revenues. It’s currently building plants in Eastern Europe, the Middle East and South America.
• Grupo Bimbo (Mexico), a food and beverage company with $5.9 billion in 2006 revenues with market-leading brands in Brazil, Mexico and the U.S.
• Changhong Electric (China), a home appliances company with $2.4 billion in 2006 revenues and subsidiaries in Australia, Europe, Southeast Asia and the U.S.
• CSAV (Chile), a global top-10 shipping carrier with 2006 revenues of $3.8 billion and subsidiaries in Brazil, Hong Kong and Uruguay.
• JBS-Friboi (Brazil), Latin America’s largest beef and pork processor. Its $1.8 billion in 2006 revenues are expected to jump to $13 billion in 2008 because of its purchase of U.S.-based Swift & Co.
• PKN Orlen (Poland), an oil and gas company and the largest Central European company by sales -- $17 billion for 2006, 46% of which were generated offshore.
• Suzlon Energy (India), the world’s fifth-largest company for installed wind-energy capacity. It had 2006 revenues of $1.8 billion. It manufactures in China, Europe, India and the U.S.
• VTech Holdings (China), the market leader in Europe and the U.S. for educational video games and an innovator in cordless phones. 78% of its $1.2 billion in 2006 revenues come from offshore.

“Industry leaders need to understand these emerging rivals and act quickly,” said Hal Sirkin, a Chicago-based BCG senior partner. “For those who move fast, the challengers could become key customers, suppliers and even strategic partners. For those who don’t, the challengers will represent fierce competition and, in time, become potential acquirers.”

“Executives at incumbent multinationals might not be able to pronounce all the challengers’ names,” said Jim Hemerling, a San Francisco-based BCG senior partner. “But it’s essential that they develop strategies for dealing with these ambitious upstarts. Never before have so many potential competitors and customers arisen so quickly on a global scale.”

“All 100 are growing fast, globalizing aggressively and reshaping global industries,” added Hemerling. “To say they are changing the world is no exaggeration.”

Mr. Sirkin and Mr. Hemerling are available to discuss the 2008 New Global Challengers – the 17 new ones and the 83 other formidable competitors from rapidly developing economies – as well as the trends giving rise to them. (To schedule a conversation and/or receive a list of the challengers and a full copy of the report, contact Alexandra Corriveau at Sommerfield Communications, Inc. at 212-255-8386 or alexandra@sommerfield.com.)

During a conversation, the BCG experts can elaborate on:

-- What makes these companies remarkable - stand-outs in the global economy.

-- Superior value creation. The total shareholder return (TSR) for the 100 companies between January 2002 and June 2007 was 418%, compared with 221% for the MSCI emerging markets index and 47% for the S&P 500 index.

-- Revved-up revenues. From 2004 to 2006, total revenues for the 100 grew at a CAGR of 29%, three times the rate of the S&P 500 and Fortune 500.

-- Strong profits. During 2006, the 100 companies generated operating margins of 17%.

-- Huge purchasing power. The companies' combined 2007 purchases will total $310 billion to $330 billion for raw materials and energy, $80 billion to $100 billion for parts and components and $65 billion to $80 billion for services. The companies' purchases grew at a CAGR of 29% from 2002 to 2006.

-- Aggressive M&A activity. The average size of the 100 companies' M&A deals is $981 million. Some deals are quite large. Tata Steel from India acquired the Anglo-Dutch steelmaker Corus for $12 billion, the largest outbound M&A deal in India's history.

-- The range of industries in which there are new challengers and threats to incumbents. The BCG 100 includes 34 industrial-goods companies; 17 resource-extraction companies; 14 consumer-durables challengers and 14 in the food and beverage and cosmetics industries. The remaining companies are in such industries as shipping, telecommunications and IT services, and business process outsourcing.

-- Why these challenger companies are globalizing. The companies know being big in their home markets isn't enough to ensure long-term viability. So they're going global to gain access to new growth and profit pools.

-- The 14 countries that spawn these new challengers. Circumstances in Argentina, Brazil, Chile, China, Egypt, Hungary, India, Indonesia, Malaysia, Mexico, Poland, Russia, Thailand and Turkey that are enabling them to develop the next wave of global industry leaders.

-- The challengers' globalization strategies. They include: taking their brands global; turning their RDE engineering capabilities into global innovation; aiming for global category leadership; monetizing RDE natural resources; rolling out new business models to multiple markets, and acquiring natural resources.

-- How the up-and-comers are handling key challenges. The BCG 100 have become increasingly adept at handling issues that all RDE companies face. Those include dealing with a talent shortage, learning how to operate on a truly global scale, dealing with risks like currency and energy and raw materials prices, the need to "internationalize" top management and figuring out how to manage image and brands in the global spotlight.

-- What incumbents can do to "challenger-proof" their business models. Current industry leaders need to consider how to "attack" challengers on their home turf, acquire fast-growing RDE-based players and make challengers partners and customers.

About the Methodology for Selecting the 2008 BCG 100

Produced by BCG's Global Advantage practice, the report – “The 2008 BCG 100 New Global Challengers: How Top Companies from Rapidly Developing Economies are Changing the World” – is based on a detailed screening of more than 3,000 companies from RDEs. First, the BCG research team ensured that the candidate companies were truly RDE-based. Next, it homed in on large players – generally those with $1 billion in sales or greater. Finally, it looked at three years of financial data and scored the remaining companies using five globalization criteria: international presence of the company; major international investments pursued in the past five years; the company's access to capital for financing international expansion; the breadth and depth of its technologies and intellectual property; and the international appeal of its offerings and value propositions.

About The Boston Consulting Group

The Boston Consulting Group (BCG) is a global management consulting firm and the world’s leading advisor on business strategy. We partner with clients in all sectors and regions to identify their highest-value opportunities, address their most critical challenges, and transform their businesses. Our customized approach combines deep insight into the dynamics of companies and markets with close collaboration at all levels of the client organization. This ensures that our clients achieve sustainable competitive advantage, build more capable organizations, and secure lasting results. Founded in 1963, BCG is a private company with 66 offices in 38 countries. For more information, please visit www.bcg.com.

To receive a copy of the report, “The 2008 BCG 100 New Global Challengers: How Top Companies from Rapidly Developing Economies are Changing the World,” or to schedule a conversation with BCG experts, please contact Alexandra Corriveau at Sommerfield Communications, Inc. at 212-255-8386 or alexandra@sommerfield.com.

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