Saturday, July 29, 2006

The Next Wave

For almost half a century we have been used to associate multinational corporations to American Companies, whit the later inclusion of Japanese companies – of course. However – which companies are going to drive the new wave? Even if American companies have been quite resilient in maintaining their status and even enhancing it – just think of Apple and Google – new threats are in the horizon. And probably these threats don’t come from old Europe or even from the soviet satellites but from countries from the so called third world. A company needs a gigantic advantage to go from being a small or medium local corporation to a multinational. This type of advantage was the one that Americans got after second world war, Japanese and Germans after their country was totally defeated and destroyed … But what is the leverage now? Take some facts. A mobile phone call in India costs about 2 cents per minute and in western countries around 15-30. Medecines that there cost 50 cents, you buy them in western countries for $50 or more … and on top these companies earn money and lots of money with a grow rate of 30% or more. And take a look at a different dimension: the power of the market. Korea and Japan have mastered the use of the market as leverage for their companies and their economies – contrary to Europe … Even USA with a complete open approach brought competition inside that help them a lot to stay on top and continue being a world leader in almost every market segment. Who has this leverage nowadays? – China on-line gaming market is estimated in two billion for 2010 – just forget South Korea J What is going to happen when these companies, used to make money with extremely low prices manage to land in Europe and States and maintaining their industrial bases there operate here ? Companies that can grow at more than 30% with an slash in price of 10x or 100x in some cases. Think of these high margin sectors like pharmaceuticals, banking, telecom, being transported to India’s and China’s prices … This is not distant future, Lenovo is already here and some Chinese phone manufacturers are just at our doors … (Even so Nokia is the absolute leader phone company in India …). Just think of Ikea on steroids !!