OREANDA-NEWS. May 11, 2010. The competitive landscape is set to be transformed over the next decade as Chinese and Indian multinationals lead the way in seeking new markets abroad, and are joined by an array of companies from Singapore, Russia, Malaysia and South Korea, says a new report from PricewaterhouseCoopers LLP (PwC), reported the press-centre of PwC.

The number of companies from emerging markets choosing to set up operations abroad has increased in the last five years, in part due to the rapid pace of globalisation and the revolution in information and communications technologies. This trend is expected to continue over the next 15 years, as new multinationals from emerging economies rise in prominence on the global economic stage.

Some of these new multinationals will become the international powerhouses and will require services all over the world, for example, in order to support their IT and telecoms networks, says the report entitled Emerging multinationals: The rise of new multinational companies from emerging economies.

PwC used econometric techniques to project the amount of new multinationals that will arise from a representative sample of 15 emerging economies over the next 15 years. The countries analysed were: Argentina, Brazil, Chile, China, Hungary, India, Malaysia, Mexico, Poland, Romania, Russia, Singapore, South Korea, Ukraine and Vietnam.

India is expected to produce the most new multinational companies, overtaking China as the emerging world’s largest source of new multinationals. Over 2200 Indian companies are projected to open operations outside the country over the next fifteen years. The South American countries in the sample (Argentina, Brazil, Chile and Mexico) are expected to be a relatively smaller source of new multinational companies while the export-orientated South East Asian countries (Malaysia and Singapore), along with oil-rich Russia and the newly industrialised South Korea, are expected to continue to produce large amounts of new multinationals. 

In recent years, the number of multinationals from Russia has been one of the most significant among fast-growing economies. Having joined the global economic community, Russia not only enjoys direct foreign investment, but also invests in foreign markets itself.

Despite the severe impact that the recession had on the Russian economy, Russian companies’ expansion into global markets fell slightly compared to other countries in the sample. Russia will remain fifth in terms of number of new multinationals among emerging economies. Over the projected period (2010-2024), the foreign operations of Russian companies will resume due to the strong bounce back in GDP growth and expected investment expansion. According to the PwC forecast, 930 Russian companies will set up their first foreign operations over the next 15 years.

From 2005 to 2009, Russian companies joined a global trend specific to emerging countries by significantly increasing their activity in the developed markets of the EU and the US. This was the result of Russian companies' seeking to diversify their traditional distribution markets, such as the CIS, and gain access to new technologies. In addition, while several years ago Russian companies mostly focused on resource extraction industries and metallurgy, there has recently been a shift towards higher value-added services and manufacturing sectors; this trend may be set to continue in the future, given the measures to diversify and modernise the Russian economy.

The research also provides an insight into the evolution of new multinationals from emerging economies.

Yael Selfin, PwC’s head of Macro Consulting, said:
“More new multinationals are moving straight into developed economies as opposed to setting up their first foreign operation in a neighbouring emerging economy. These new multinationals are increasingly likely to be in business services or higher value-add manufacturing sectors as opposed to the more basic natural resource extraction sectors.”