flat world starting to tilt
[speaking of imperial reversals…]
“Flat” world is starting to tilt By Brian Moss Sat May 26, 12:00 AM ET
NEW YORK (Reuters) - Antoine van Agtmael was ahead of the curve in
1981, when he saw the potential rewards of investing in the Third
World countries. He also was clever enough to rename those places
“emerging markets.”
In his new book, “The Emerging Markets Century” (Free Press, $28),
van Agtmael predicts companies from emerging markets will replace
familiar names like IBM (NYSE:IBM - news), Ford (NYSE:F - news), Wal-
Mart (NYSE:WMT - news), Japan’s Honda (7267.T) and Switzerland’s
Nestle (NESN.VX) as the world’s most influential companies.
Van Agtmael writes that if “the world is flat” — as Thomas Friedman
argued in 2005 in his best-selling book of that name — now it is
“tilting away from its former owners.”
“The Emerging Markets Century” profiles 25 companies that are either
the leader in their industries or well on their way there. Among
them, Hyundai (005380.KS), Lenovo (0992.HK), and Samsung (005930.KS)
are well known.
Less familiar ones on his list include Taiwanese-owned Yue Yen
Industrial Holdings (0551.HK), which makes athletic shoes in China
for companies like Nike and Adidas; Taiwan’s Hon Hai Precision
Industry Co. (2317.TW), which designs and builds electronics for big
Western brands; and Brazil’s Aracruz Celulose (ARCZ6.SA), which
produces pulp from eucalyptus trees for the paper industry.
Van Agtmael says that even some sophisticated investors are unaware
of how advanced these world-beating companies are. It’s not only that
they are located where labor is cheaper. They have genuine
technological, manufacturing and marketing prowess that has led to
consistent growth and profits.
How successful are these companies? The Samsung brand, he says, is
“better recognized than Sony’s, its research and development budget
is larger than Intel’s and its 2005 profits were higher than those of
Dell, Nokia, Motorola, Philips or Matsushita.”
Mexico’s Cemex (CMXCPO.MX) (which has offered to buy Australia’s
Rinker Group Ltd. (RIN.AX) for $14 billion) “has become the largest
cement company doing business in the United States, the second-
largest in Britain, the third-largest globally and the leader in many
other markets.”
His analysis of the 25 companies finds their success is no accident.
“The secrets of becoming world class,” he writes, “boil down to bold
ambition, discipline, adopting a global mind-set, and making
adaptability a core capability.”
The growth of these companies presents challenges and opportunities,
van Agtmael says. The challenges will be faced by corporate
competitors and the people who work for them.
They also will be faced by governments, whose policies can be
tailored to help its nation’s companies compete better, or can be
designed so poorly and with such unintended consequences that they
end up working to the advantage of competitors.
The opportunities fall to investors, even small investors, who van
Agtmael says can judge whether an emerging market contender will end
up as a strong player on the world stage or as a faded company that
never realizes its potential.
“Those who do their homework, dig deep, don’t jump to conclusions,
are not easily scared or overenthusiastic but keep a cool head, read
everything … with interest but healthy skepticism, diversify their
choices, have patience and learn from their mistakes can’t go far
wrong and have a chance to do better than the ‘market’ or the average
investor,” he writes.