Summarise the author's arguments against market concentration. Are there any benefits? Can the process be prevented? What solution does the author advocate?
READING AND SPEAKING II
Read the text and answer the questions that follow.
Emerging market multinationals eclipse competitors
Emerging multinationals from developing countries grew three times faster than their mature market counterparts in the five years to the end of 2014 as a burgeoning middle class consumer helped to boost earnings, according to a study by BCG, a consultancy.
The total revenues of the top 100 companies – both from the developing and developed world - in 63 business sectors worldwide was $43tn in 2014, up from $33tn in 2009. The contribution to these total earnings supplied by emerging market multinationals rose to 25 per cent in 2014, up from 18 per cent in 2009, according to data compiled by BCG.
The increasing contribution to the total provided by emerging market companies derived from a compound annual growth rate of 13 per cent over the 2009-2014 period, three times faster than the 4 per cent recorded by developed world multinationals, BCG said in a report published on Monday.
The BCG report recognised the headwinds encountered by several emerging markets as GDP growth slows, commodity prices languish and capital rushes out of some emerging economies.
However, BCG said, key advantages such as buoyant spending from middle class consumers in many developing countries has kept the outlook broadly positive.
“We are bullish on the long-term growth of many of these markets and even more so on the homegrown companies they have produced,” the BCG report said. “Global challengers know how to win in volatile and uncertain times.”
Indeed, the easing growth trajectory in some emerging markets is forcing several emerging multinationals to compete ever more fiercely for international earnings, ramping up competition with established multinationals.
In terms of country of origin, China and India have led the way in nurturing a new generation of challengers to traditional multinationals. Out of 100 emerging market “challenger” companies identified by BCG, 28 come from China and 16 from India, while a further 23 originate from countries in Latin America.
The speed of emergence in some cases is startling. Xiaomi, a Chinese smartphone maker, was founded as recently as 2010 but already sells more phones in China than Apple and is expanding aggressively into India and Indonesia.
Airlines in emerging markets have experienced a tripling in their revenues between 2005 and 2014, according to BCG. China Eastern Airlines has ridden the rise of the global Chinese traveller to expand into Europe and the US and offers flights throughout Southeast Asia. Pegasus Airlines, the largest low-cost airline in Turkey, has also been growing more quickly than mature market counterparts.
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Other companies in sectors such as food and pharmaceuticals are benefiting from a rapidly growing middle class that is generally young and optimistic in nature.
BCG estimates that pharmaceutical companies based in emerging markets have managed to boost their revenues to a total of $80bn in 2014 from $8bn in 2005. Sun Pharmaceuticals and Lupin Pharmaceuticals, both of India, have completed acquisitions to round out their portfolios.
Alicorp and Gloria, both of Peru, are two consumer goods companies that are expanding their footprint throughout Latin America, while Universal Robina is one of the largest food and beverage companies in the Philippines that has expanded into Southeast Asia and in 2014 bought Griffin’s Foods, New Zealand’s largest snack maker. Such companies have helped swell the ranks of the “global challengers”, or multinationals that have home bases in emerging markets.
The superior earnings performance posted by this cohort of emerging “challengers” has been reflected in stock prices over the years, even in spite of the downturn that stock markets in the developing world suffered during 2015.
USEFUL TERMS AND EXPRESSIONS
· toeclipse – затмевать, заслонять, оттеснить
· mature – зрелый, развитый, исчерпавший потенциал роста
· counterpart – коллега, аналог, противник, конкурент
· toderivefrom – проистекать, происходить, вытекать
· compound – совокупный, составной
· headwind – встречный ветер, препятствие, проблема, сдерживающий фактор
· buoyant – оживленный, активный, динамичный
· outlook – прогноз, перспектива
· bullish – имеющий тенденцию к повышению
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tobebullish – быть оптимистично настроенным
· to ramp up – увеличивать, наращивать
· tonurture – выращивать, лелеять, способствовать развитию
· tooriginatefrom – происходить из, брать начало
· to expand one's footprint – зонувлияния
· to swell the ranks – пополнитьряды
Answer the questions.
1. How do emerging market multinationals compare with their counterparts from the developed world in terms of revenues / economic growth?
2. What, according to a BCG study, accounts for the recent robust growth of emerging market multinationals?
3. What are the main challenges faced by emerging markets after the crisis?
4. What countries do most challengers originate from?
5. What industries and sectors are the challengers most successful in?
6. What, according to the author, is the evidence of the emerging challengers’ growing footprint?
READING AND SPEAKING III
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