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Emerging Markets Reshaping Globalization

The Emerging Markets Institute at Cornell University publishes the Emerging Market Multinationals Report (EMR) written by Lourdes Casanova and Anne Miroux, which monitors the rise of Emerging Multinationals and reflects on the growing role of China and Emerging Markets in this new phase of globalization.

Emerging Markets Report 2018: Emerging Markets Reshaping Globalization

Lourdes Casanova, Senior Lecturer, Director Emerging Markets Institute, Cornell University

Anne Miroux, Faculty Fellow, Cornell University


The Emerging Market Multinationals Report (EMR), a series published since 2016 by the Emerging Markets Institute (EMI) at the S.C. Johnson College of Business at Cornell University, reviews the growth of emerging markets and explores the expansion of enterprises from emerging economies, the so-called emerging market multinationals (eMNCs). The report delves into this issue and its broader implications on the global economy. Using data from Standard & Poor’s Capital IQ, Financial Times fdiMarkets, United Nations Commission on Trade and Development (UNCTAD), the World Bank’s World Development indicators, company reports and interviews with company executives, it establishes a broad panorama of the overseas expansion of these eMNCs and the ecosystems of their home countries. In the latest edition, the authors, Lourdes Casanova and Anne Miroux, look at how Emerging Multinationals continue growing and conquering the world.

The New Champions of Globalization

To illustrate the inroads made by emerging markets in the global economy, the EMR examines a group of twenty top emerging markets (the E20) selected on the basis of their Gross Domestic Product, demographics and how they influence global trade and investment. E20 countries are Argentina, Brazil, Chile, China, Colombia, Egypt, India, Indonesia, Iran, Malaysia, Mexico, Nigeria, Philippines, Poland, Republic of Korea, Russia, Saudi Arabia, South Africa, Thailand and Turkey.

While acknowledging their economic performance, the EMR 2018 also highlights the risks they face as a result of the drastic changes in the global economic environment over the past eighteen months. Beyond economics, the report explores the growing soft power of emerging economies acquired through newly created multilaterals, like the Asian Investment and Infrastructure Bank (AIIB) led by China and the New Development Bank (NDB) led by the BRICS countries and initiatives such as the Chinese Belt and Road Initiative (BRI). In this context and while the U.S. is embroiled in the so-called trade war with China, China and other emerging markets have come forward as the new champions of globalization. The EMR’s third edition features a detailed analysis of the investment programs planned by the AIIB and the NDB, as well as what they portend by way of lending activity, capitalization and infrastructure development.

Emerging Multinationals conquering the world

Building on the findings of previous years, the 2018 report examines the growing presence of emerging market multinationals on the global stage and compares their performance with other firms from advanced economies. Regarding growth, the numbers speak for themselves as emerging multinationals account for 30% of the 2018 Fortune Global 500 while they were only 7% in 2005 (see Figure 1). The Chinese lead the way with 111 (excluding Hong Kong). As an example, the Chinese electricity company, State Grid is the second one by revenues after the American retailer, Wal-Mart. These companies have become leaders in major industries, like banking where four out of the five biggest banks by assets are Chinese, or like Engineering and Construction where the five biggest are.

Figure 1: Number of Emerging Market Multinationals and U.S. Companies in the 2018 Fortune Global 500 ranking. Source: Authors based on data from 2018 Fortune Global 500 ranking.

The EMR 2018 also focuses on eMNCs’ role as global acquirers, highlighting the leading role of China in that respect. As the second biggest economy in the world, China leads the investments overseas among emerging markets. By total value, in 2017 it became number two in the world in announced mergers and acquisitions. Its acquisition spree took off after the 2008 Global Financial Crisis, which provided an opportunity for China to buy firms in both Europe and U.S. Western firms had lower valuations, while China wanted to acquire technology and brands and accelerate its global expansion. China’s buying spree intensified in 2015 and 2016, but since then has been faced with policy headwinds both at home and abroad. At home, measures have been taken to rein in the surge of capital outflows; abroad, host country governments are increasingly scrutinizing Chinese acquisitions.

Figure 2: China and selected Emerging Markets total volume in outbound M&A deals (US$ millions). Source: Authors based on data from Standard & Poor’s Capital IQ.

The EMR 2018 also explores the extent to which eMNCs are moving beyond cost leadership to focus on branding and product differentiation. The research shows that Emerging Multinationals continue to compete on price because of several reasons. First, emerging markets still maintain low labor cost: the minimum wages, prices of gasoline and electricity are the cheapest in countries like India, China, Brazil or Mexico. Second, the lower purchasing power of emerging markets is far below that of consumers in U.S. or Europe. When you design a product or service in an emerging market, it needs to be affordable for your customer base. And third, eMNCS suffer from a lack of international brand. Consumers in the developed world still tend to associate their products, even white goods, computers or smartphones, with lower quality and are ready to purchase them if they have lower prices than their American or European counterparts. The report acknowledges, however, that this is changing – as illustrated by the progress made by a number of eMNCs in international brands rankings √ź and explores those eMNCs which are becoming global acquirers and pursuers of further brand and product market differentiation.

EMR as a collaborative effort with OECD and EMRN

The Emerging Market Institute has developed collaborations with a number of universities and international organizations. The EMR reflects this collaboration: four chapters are special contributions by the OECD Development Center and by members of the Emerging Market Research Network (EMRB), a network of which EMI is a founding member.

  1. The OECD Development Center ‘s contribution√Ďa regular feature of EMR√Ďexamines the impact of digitalization on business in emerging markets, a chapter by Lorenzo Pavone, Director of the Emerging Market Network at the OECD Development Center.
  2. √íDigital Transformation in Emerging Markets: Strategies and Internationalization of Digital Companies from Latin America,√ď is the product of a partnership between Fernanda Ribeiro Cahen, Assistant Professor of Management at FEA (School of Economics, Business and Accounting) and Moacir Miranda de Oliveira Junior, Professor of Management at FEA (School of Economics, Business and Accounting) both at the University of S¬čo Paulo.
  3. √íCorporate Governance and Corporate Citizenship in Colombia: A Lever for Global Competitiveness?,√ď is produced thanks to the collective authorship of Veneta Andonova, Juana Catalina Garc¬ía Duque, and Andr¬és F. Mej¬ía, Associate Professors of Management at the Universidad de Los Andes.
  4. √íResearch on the Development Process of Entrepreneurship Education in Chinese Universities,√ď is the net-result of the contributions of Shi Yongchuan, Wang Hongxin and Barron Zuo, Researchers at Wenzhou University.

The EMI welcomes contributions from other business schools in emerging markets, especially in Africa and frontier markets in general.

 width=Lourdes Casanova, Senior Lecturer and Director Emerging Markets Institute, Cornell S.C. Johnson College of Busines, Cornell University, formerly at INSEAD, specializes in international business with focus on emerging markets multinationals. Awarded in 2014 and 2015 one of the 50 most influential Iberoamerican intellectuals and in 2017 one of the 30 most influential Iberoamerican women intellectuals by Esglobal. Faculty Fellow at the Atkinson Center for a Sustainable Future. Fulbright Scholar with Master degree from University of Southern California and PhD from University of Barcelona. Taught, directed executive programs at INSEAD for senior managers including Telef¬ónica, BBVA and Cemex and Brazilian Confederation of Industries. Member of Latin America Global Agenda Council and the Competitiveness in Latin America taskforce of World Economic Forum, B20 Task Force on ICT and Innovation in G20 summit, Los Cabos (2012), responsible at INSEAD of Goldman Sachs 10,000 women initiative. Board member of Boyce Tompson Institute, start-up Documenta, founding Board Member of the Societ¬é des Amis du Chateau de Fontainebleau and member of the Advisory Council of the Tompkins Public Library. Founding board member Emerging Multinationals Research Network. Co-founder of the Ithaca Hub of World Economic Forum’ Global Shapers network. Visiting professor, Haas School of Business, University of California at Berkeley: Judge Business School, University of Cambridge and Latin American Centre, University of Oxford; University of Zurich, and Universidad Aut¬ónoma de Barcelona. Consultant Inter-American Development Bank.

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 width=Anne Miroux is Faculty Fellow at the Emerging Market Institute, Johnson School of Business at Cornell University. She has over thirty years of experience in international trade and finance. She began her career in the United Nations Centre on Transnational Corporations in New-York where she was involved in the negotiations on the UN Code of Conduct on Transnational Corporations. In the mid-1980s she joined the United Nations Conference on Trade and Development (UNCTAD) where she specialized in issues related to developing country debt, foreign direct investment and transnational corporations, and technology and innovation policies. For several years she led the organization’s work on Foreign Direct Investment (FDI) statistics and directed the World Investment Reports (WIR). She served as the Editor of the UN Transnational Corporations Journal. Until late 2015 Anne was the Director of the Division on Technology and Logistics in UNCTAD, in charge of the organization’s work on technology and trade logistics. She was the Head of the Secretariat of the United Nations Commission on Science and Technology for Development (CSTD). She is a member of the Advisory Board of the Technology and Management Center of the Department of International Development at Oxford University. She is also a member of the Board of NetExplo. Anne Miroux has an MBA from HEC – Ecole des Hautes Etudes Commerciales (Jouy-en-Josas, France) and a diploma from IEP (Institut d’Etudes Politiques √ź Paris). She holds a PHD in Economics from University of Paris I – Sorbonne.

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