World domination

Americans are used to foreign cars 8212; nearly half of us, after all, drive on...

Americans are used to foreign cars 8212; nearly half of us, after all, drive on 8212; but no American has yet seen a vehicle bearing the brand name Tata Motors tooling along the highway. So when, a few weeks ago, news broke that this same Tata Motors, an Indian auto company, was close to buying Jaguar and Land Rover, the first reaction of many was 8220;Who?8221; The implausibility of the bid was magnified when Tata rolled out its newest product, a tiny, stripped-down car that will sell for a mere twenty-five hundred dollars. The spectacle of a low-end specialist trying to buy a couple of established luxury brands looked to some like a cubic-zirconium peddler making a play for Tiffany.

There8217;s no denying the audacity of Tata8217;s bid 8212; the company has never sold a car in the US 8212; but there8217;s also no denying Tata8217;s distinguished pedigree8230;. Today, Tata is a huge conglomerate 8212; ninety-eight companies producing everything from tea to steel and solar power 8212; with annual revenues of around thirty billion dollars and a chairman whom Fortune recently named one of the twenty-five most powerful people in business.

If Tata is so powerful, why have so few Americans heard of it? In large part, because so much of its fortune has been made selling to its home market and to other developing countries, rather than to the US and Europe. Historically, developing-country firms that have become global power houses 8212; like Japanese companies decades ago or, more recently, Korean companies like Samsung 8212; were companies that, in addition to dominating their domestic markets, were heavily oriented toward exports to the West. Tata-with some exceptions, such as its steel and consulting businesses 8212; has taken a very different approach, becoming tremendously rich while selling to people who are still pretty poor8230; As the business professor C.K. Prahalad argues in his book 8220;The Fortune at the Bottom of the Pyramid,8221; even the poor in these countries constitute a market worth trillions of dollars. Twenty years ago, few people in India could have afforded even a twenty-five-hundred-dollar car. Today, tens of millions can8230;

Now, a huge wave of what you might call developing-country multinationals 8212; companies like Mittal Steel, Lenovo, Chery Automobile 8212; and Cemex 8212; have recently begun to move aggressively into Western markets. These are the advance guard of what8217;s been called 8220;the emerging-markets century8221;8230; Globalisation, it once seemed, was mainly going to give companies in the US, Europe, and Japan billions of new customers and plenty of cheap labour. But it has also meant that these companies have had to face many more real competitors than they once imagined. When we persuaded developing countries to open their doors to us, we also opened our doors to them. Now they8217;re walking through.

Excerpted from James Surowiecki8217;s 8216;Tata Invasion8217; in the January issue of the 8216;New Yorker8217;