Emerging Markets Are Starting to Unravel for Some Companies

For Coke, third-quarter consumption contracted in developing markets, where carbonated beverages generally have been soft, as well as developed markets where, increasingly, they’re being blamed for the obesity epidemic. Coke consumption actually contracted in both China and Brazil, long-time growth engines, by 1%, and fell by 3% in its geographic unit, including Russia.

“Exacerbating the problem is the fact Fortune 1000 companies are now competing against emerging market competitors on American soil.”

Exacerbating problems for western CEOs who are depending on these increasingly shaky emerging markets is the fact that many of these global Fortune 1000 companies are now competing on their home turf against competitors from those emerging markets.

Boston Consulting Group recently published a list of 100 rapidly globalizing companies from emerging markets, which it called “global challengers.” It’s the sixth such list since 2006. The consulting firm said that the latest list is characterized by challengers “that are acquiring more sustainable advantages beyond a large home market and low-cost labor.” Also, they are emerging in new consumer categories, such as fast foods, and wine and spirits.

And more of these home-market challengers are becoming overall leaders in their global industries, presenting the greatest type of threat to western-company CEOs. They include Mexico’s Grupo Bimbo, the world’s largest baker, and two Chinese companies, Huawei Technologies, the world’s largest telecom-equipment supplier, and Lenovo Group, the world’s largest PC maker.

Western-company CEOs have plenty of challenges these days. But their emerging-market difficulties comprise an arena of strife that most of them hadn’t bargained for and now have to face.