How Companies in Emerging Markets Are Winning at Home

2014 BCG Local Dynamos
How Companies in Emerging Markets Are Winning
at Home
August 2014

2014 BCG Local Dynamos slideshare v7 LZCF .pptx 1
Copyright©2014byTheBostonConsultingGroup,Inc.Allrightsreserved.
BCG has been the leading source for information about
global and regional challengers since 2006
2006
China's Global
Challengers
2009
The 2009 BCG 100
New Global
Challengers
2009
From Crisis to
Opportunity
2006
The New Global
Challengers
2008
The 2008 BCG 100
New Global
Challengers
2011
2011 BCG New
Global Challengers
2008
The BCG 50 Local
Dynamos
2010
The African
Challengers
2009
The 2009 BCG
Multilatinas
2012
2012 BCG
Southeast Asian
Challengers
2013
2013 BCG Global
Challengers
2012
The 2012 BCG 50
Chinese Global
Challengers
Source: BCG analysis.

The latest addition to the series is 2014 BCG Local Dynamos:
How Companies in Emerging Markets Are Winning at Home
Emerging markets remain global growth
engines. The newest local dynamos excel at
converting the constraints of those markets
into profitable opportunities.

Emerging markets continue to present strong growth
prospects
Population
Growth
Emerging markets
are growing four
times faster than
mature markets
• By 2020, 6.4
billion people will
live in emerging
markets
• South Asia and
Africa contribute
the most growth
Consumption
Growth
By 2020, emerging
markets will add 730
million middle- and
affluent-class
consumers
• These consumer
will account for 35
percent of
spending
• Nearly half of the
emerging-market
population will be
middle-class or
affluent
Urbanization
By 2020, emerging
markets will add 600
million urban
dwellers
• About 40 percent
of the world's
population will
live in these cities
• Emerging-market
cities will grow
ten times faster
than mature-
market cities
Trade
Liberalization
More than 350 free-
trade agreements are
in place today
• The free-trade
movement has
been especially
strong in the past
decade
• The Trans-Pacific
Partnership
and Regional
Comprehensive
Economic
Partnership talks
are ongoing
Sources: International Monetary Fund; BCG analysis.

Multinational companies have high aspirations for growth in
emerging markets
0
25
50
75
100
Significantly gain
market share
Gain market share
Keep pace with market
Percentage of those that expect
to gain share in emerging markets
92
56
22
14
%
Performance in emerging markets
81
35
22
24
Source: BCG Globalization Readiness Survey.
Note: The sample size = 156.
78%
78% of multinational companies aspire to gain market
share in the future

But local competitors constitute the largest threat in
emerging markets
For each type of competitor in this emerging market,
how big is the competitive threat?
Local companies are much more
aware of market trends and
nuances, much more agile in terms
of response. There is greater focus
and investment by the competition.
There are simply too many
attractive market opportunities
around the globe. Multinational
corporations are therefore spread
thin while locals are very focused.
Local competitors are far more
effective at scaling their business
in terms of ramping up headcount,
decision making, and execution.
Source: BCG Globalization Readiness Survey.
40
50
73
0
10
20
30
40
50
60
70
80
Multinationals based in
developed markets
Multinationals based in
emerging markets
Locally based companies in a
specific emerging market
%

Meet the 2014 local dynamos
Based in
RDEs
Located in rapidly developing economies
Local Focused primarily on their home market
Private sector Are not government owned and do not enjoy monopolistic privileges
Innovative
Have deployed formidable business models to master the challenges of their
markets
Successful
Market performance is very strong when compared with multinationals and
established local incumbents
Note: RDE = rapidly developing economies.
The five characteristics of local dynamos

A three-step framework helped identify the 2014 local
dynamos
Note: RDEs = rapidly developing economies.
Select the
final set
of dynamos
The RDEs were divided into seven regions on the basis of location and
size: Africa, China, India, Latin America, Middle East and Turkey, Russia,
and Southeast Asia
Companies in each region met the following criteria:
• They were successful and domestically focused, with strong market
positions despite lacking traditional bases of incumbency
– The were not owned by the government
– The did not have privileged access to resources or the market
• They succeeded by adapting to the unique challenges of their home
markets and are regarded as outstanding successes by local analysts
and industry peers
Companies chosen for the final set offered the following:
• Interesting business models or compelling stories
• Representation of a wide range of industries and regions
• Variation in size and profitability
• Lessons for multinational corporations
Create a short list of the
best companies within
each region
Steps Criteria
2
3
Divide RDEs into
regions
1

The 2014 local dynamos represent 20 countries
• China Minsheng Bank
• Dalian Wanda Group
• HaiDiLao Hotpot
• Home Inns & Hotels
Management
• Jia Duo Bao
• Jiangsu Hengrui Medicine
• S.F. Express
• Tingyi Cayman Islands
Holding Company
• Xiaomi
• Yonghui SuperstoresBrazil
• Cielo
• Enalta Inovações
Tecnológicas
• GranBio
• Magazine Luiza
• Ourofino
Chile
• Banco de Crédito e
Inversiones
Colombia
• Quala
Mexico
• Banco Mercantile del
Norte
• Cinépolis
Kenya
• Equity Bank
Morocco
• Douja Promotion Groupe
Addoha
Nigeria
• Guaranty Trust Bank
South Africa
• Discovery Health
• Woolworths
Zambia
• Zambeef Products
• Bashneft
• Mail.Ru
• Ozon.ru
• Tinkoff Credit Systems Bank
Saudi Arabia
• Abdul Latif Jameel
• Almarai
Turkey
• Abdi Ibrahim
• BIM
• LC Waikiki
United Arab Emirates
• Air Arabia
Indonesia
• Bank Rakyat Indonesia
• Wings
Malaysia
• RHB Banking Group
• SapuraKencana Petroleum
Philippines
• SM
Thailand
• Bangkok Dusit Medical Services
Vietnam
• Masan Group
• Amara Raja
• Bennett, Coleman &
Company
• Flipkart
• IndiGo
• Jubilant FoodWorks
• Micromax
• Narayana Health
• Shriram Transport Finance
China (10)
India (8)
Southeast Asia (7)
Russia (4)
Latin America (9)
Africa (6)
Middle East and Turkey (6)

Blank.potx 9Draft—for discussion only
A high proportion of the 2014 local dynamos are in the
consumer goods and financial services industries
22
20
16
12
10
10
6
4100
80
60
40
20
0
Consumer goods
Financial services
Industrial goods and energy
Retail
Internet and technology
Health care
Travel
Entertainment and media
%
Sector Industry Business type
44
8
26
22
100
80
60
40
20
0
%
B2C
B2B
Mixed
Other
62
3880
0
60
40
20
100
Services
Manufacturing
%
Note: B2B = business to business; B2C = business to consumer.
Most dynamos operate in the services sector and conduct
business with consumers directly

The new local dynamos grow faster than their peers
Annual revenue growth, 2009–2013
3
5
11
28
0
10
20
30
%
MSCI Emerging Markets
Index companies
MSCI World Index companiesBCG local dynamos S&P 500 companies
Sources: Bloomberg; BCG analysis.

The new dynamos also create stronger value than their peers
0
100
200
300
400
1/1/20141/1/20131/1/20121/1/2010 1/1/20111/1/2009
Index of total shareholder return
2009–2013 (base=100)
MSCI Emerging Markets IndexMSCI WORLDBCG local dynamos S&P 500
Sources: Thomson Reuters Datastream; BCG analysis.
Note: The index of total shareholder return for BCG local dynamos is based on publicly traded companies.

Catering to customers and local conditions
Leveraging digital technologies
Operating at warp speed
Adapting to uncertainty and circumstance
Building talent engines
Establishing functional excellence
Key success factors
Capabilities that are
specific to the
business models that
dynamos deploy to
thrive in emerging
markets
Strengths and skills
commonly found in
multinational
companies
Competitive
advantages
BCG identifies the six key success factors of the new local
dynamos

Key success
factors Example Case study
Bank Rakyat Indonesia Indonesia's most profitable bank brings the bank to the customers. It sends
employees with handheld devices into 2,300 busy markets and bazaars to serve
street vendors and merchants, who have limited time for bank transactions.
Xiaomi Xiaomi has skyrocketed to success by capturing the enthusiasm for the Internet
among young people in China. The company relies solely on e-commerce to sell
devices and solicits design ideas from customers online. In 2013, it sold about
18.7 million smartphones in China, outselling Apple.
Home Inns & Hotels
Management
Home Inns saw an opportunity in the underserved and fragmented budget-hotel
market in China and moved aggressively to fill it. Using a combination of
acquisitions and franchising, the company grew fourfold in five years.
Equity Bank Equity Bank successfully serves customers in rural Kenya by using a combination
of agents and mobile banking, eliminating the need for customers to travel long
distances to reach a bricks-and-mortar branch.
Cinépolis Cinépolis cultivates both internal and external talent. Dedicated recruiting, two-
year management training, MBA sponsorship, and Cinépolis University are all
available to employees, while members of the public are invited to attend the
SeedCamp program to enhance customer experience.
Narayana Health Narayana Health provides affordable health care in India by leveraging economies
of scale. They build "health cities" with high numbers of beds at each site,
resulting in high asset utilization, greater bargaining power with vendors, and
highly trained physicians.
Each of the key success factors is illustrated in the local
dynamos' unique path to success
Catering to
customers and
local conditions
Leveraging
digital
technologies
Operating at
warp speed
Adapting to
uncertainty and
circumstance
Building talent
engines
Establishing
functional
excellence

More information about BCG’s 2014 research on global and
regional challengers
Authors of this analysis
Vincent Chin
Senior Partner and Managing Director
BCG Singapore
David Michael
Senior Partner and Managing Director
BCG San Francisco
2014 BCG Local Dynamos
How Companies in Emerging Markets Are Winning at Home
A report by The Boston Consulting Group
July 2014
2013 BCG Global Challengers
Allies and Adversaries
January 2013
The 2011 BCG Global Challengers
Companies on the Move: Rising Stars from Rapidly Developing
Economies Are Reshaping Local Industries
January 2011
The African Challengers: Global Competitors Emerge from the
Overlooked Continent
A Focus by The Boston Consulting Group
June 2010
The BCG 50 Local Dynamos: How Dynamic RDE-Based Companies
Are Mastering Their Home Markets—and What MNCs Need to Learn
from Them
March 2008
To request a more detailed overview of the findings,
please contact BCG-Info@bcg.com.
To request a media interview, please contact Eric
Gregoire at gregoire.eric@bcg.com.
To discuss the findings with a BCG expert, please
contact Belinda Gallaugher at
gallaugher.belinda@bcg.com.
Publications are available on BCG's thought
leadership portal, www.bcgperspectives.com, and
at www.bcg.com.
Highlights from this series

How Companies in Emerging Markets Are Winning at Home

How Companies in Emerging Markets Are Winning at Home

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