The world’s corporate landscape is shifting towards the emerging markets as nearly half of the Fortune global 500 companies are likely to be based in developing countries by 2025,a report by McKinsey Global Institute said.
A related shift is just beginning to gather force,and it has the potential to redraw the world’s business map and rewrite the rule book on global corporate competition,according to the report.
“As Japanese and South Korean companies became formidable global competitors in the past half century,new players from emerging markets such as Chinese telecom networking giant Huawei,Brazilian aircraft manufacturer Embraer and India’s industrial conglomerate Aditya Birla Group are asserting their presence,” it said adding “many more are soon to follow”.
By 2025,there would be 15,000 large companies (revenue of over USD 1 billion),out of which more than 45 per cent could be based in emerging regions (up from 5 per cent in 1990 and 17 per cent in 2010,the report said.
Interestingly,around 40 per cent of the 5,000 new large companies in the emerging world are likely to be based in China.
Currently,the United States,Canada,and western Europe account for 11 per cent of the world’s population but are home to more than 50 per cent of large company headquarters,which collectively account for almost 60 per cent of large company revenue globally.
In comparison,South Asia is home to 23 per cent of the world’s population but only 2 per cent of the world’s large companies and their consolidated revenue.
At present,there are some 8,000 distinct large companies worldwide with revenue of USD 1 billion or more,and three out of four are based in developed regions.
This situation is likely to undergo a sea-change as by the year 2025,an additional 7,000 companies would grow to this size (revenue of over USD 1 billion) and seven out of ten of these new entrants are likely to be based in emerging regions,it added.
According to the report,companies from emerging regions are growing faster than their counterparts from the developed world not only on their home turf but also in overseas markets. It cited the example of the aggressive expansion of India’s Tata Motors into Europe in the past decade.
“This shift will be profound because large companies have an outsized impact on their home economies and even on the global economy through their role in trade flows,” the report said.