Emerging Markets: What’s going On? .............................................................................................................. 3

From Imitators to Innovation Leaders .............................................................................................................. 5

Emerging Markets: Different Meanings—Many acronyms ....................................................... 6

Winning in Emerging Markets: The Steps to the Winning Zone ......................................................... 7

Key Considerations in Emerging Markets .................................................................................................... 8

The First Approach to The Winning Zone .....................................................................................................9

Building an Emerging Markets Opportunities Matrix ....................................................................9

Leading trends in Emerging Markets .............................................................................................................11

The Second Approach to the winning Zone............................................................................................. 13

The 5-Step Framework Approach (the second approach) .................................................... 13

About the Author ......................................................................................................................................................... 19

Emerging markets are the “Promised Land” in the 21st Century given their growing

influence in the global economy. Together, these countries will account for almost 55 percent of global GDP by 2019. Gradually, they are dethroning the traditional Western

multinationals. Similarly, from imitators, they are among the top innovators—and in many industries, they are leading the way. They seem to have arrived--but not emerging!

For instance, China is leading the way with 928,177 patent applications in 2014—that is,

a 12.5 percent increase over 2013 numbers. Similarly, China is dominating the trademarks landscape with 30 percent of the application class counts worldwide. In other words,

china’s war chest of trademark applications reached 2,222,680 in 2014—that is, a whopping18.4 percent increase over the previous year (2013).

Also, these countries accounted for approximately 50.4% of global output from

around31% in 1980—in other words, the emerging markets increased their share of world GDP by 0.6 percent per year on average over the past 33 years

Likewise, emerging markets are leading the pack in foreign direct investment (FDI). From 1997 to 2003, companies based in emerging economies engaged in cross-border

investment through M&A deals of $189 billion, or 4 percent of the value of all global M&A investments over that period.

Between 2004 and 2010, that amount

increased to $1.1 trillion—17 percent of the world’s total. Since 2003, roughly 5,000 firms based in emerging markets have established a global presence through 12,516 greenfield

investments of $1.72 trillion. More than one-third of FDI inflows to developing countries now originate in other developing countries: Of the 11,113 cross-border M&A deals

announced worldwide in 2010, 5,623—more than half—involved emerging- market companies, either as buyers or as takeover

targets by advanced-country firms.

Furthermore, three-quarters of the world’s megacities—that is, cities with 10 million

inhabitants or more are projected to be located in emerging countries with 284.9 million urban dwellers—that is, 6.6 percent of the urban population. And many of these

megacities are located in emerging markets—such as Lagos (Nigeria), Dhaka (Bangladesh) and Karachi (Pakistan) and their urban population will grow at an average of 2

percent between 2016 and 2025. Similarly, Indian megacities (Delhi, Calcutta and Mumbai) and Manila (Philippines) are expected to grow faster than those in China,

Egypt, and Turkey.

However, the biggest segment will be urban areas with population more than 1 million but less than 5 million—these cities will account

for 22 percent of the urban dwellers by 2025. Unfortunately, my experience suggests that many Western multinationals (MNCs)compete in the former segment in

emerging markets—with just 6.6 percent of the urban population with little growth prospect and the most competitive!

For starters, what are emerging markets? First, coined in 80s by Antoine Van Agtmael then an economist at the International Financial Corporation (World Bank’ s private

sector arm) to entice investors during his presentation. He used “Emerging Markets” in lieu of “Third World Countries” or

“Developing Countries” as an elevator pitch given the stigma and an image rifle with the negative associations with these countries—but with no specific criteria.

Since then, “Emerging Markets” has been used with many meanings in different contexts. As a result, confusion ensued—given that when you ask executives about emerging

markets you may sometimes hear conflicting definitions!

On one hand, we have several acronyms such

as the BRIC (Brasil, Russia, India, and China) —also, BRICS—that is, the BRIC countries and South Africa. Similarly, we have the BRICET, which is the acronym for BRIC with Eastern

Europe plus Turkey. Sometimes, BRICM, which is BRIC plus Mexico.

Also, we have the MINT—that is, Mexico, Indonesia, Nigeria, and Turkey. And we have

the NEXT ELEVEN representing Bangladesh, Egypt, Indonesia, Iran, Mexico, Nigeria,

Pakistan, Philippines, South Korea, Turkey, and Vietnam.

Furthermore, we have other indices such as the FTSE Emerging Market indices, MSCI

Emerging Market Index, Bloomberg Emerging Markets Index and currencies, and many more. Therefore, as the trends suggest, it is imperative today to have an emerging

strategy to remain competitive in the global economy

The winning zone in emerging countries is where economics and demography meet

intellectual property. Beyond the hype and the glowing headlines, winning in these promising countries present a unique challenge that requires a strategist to demonstrate a well-

developed strategic thinking to answer effectively the question—where to compete?

Above all, the outdated thinking that emerging markets are considered only for labor arbitrage

or natural resources is misleading many executives. My latest survey findings suggest that 53 percent of companies are moving into emerging markets for growth opportunities.

However, just 37 percent moved to these countries for labor arbitrage. As a result, it should be clear by now that most Western multinationals enter these countries for the

growing and potential opportunities in these promising markets.

In this guide, I will take a closer look at the opportunity landscape, the challenges, and

how to enhance the likelihood of winning particularly in the emerging cities (cities of emerging markets). Therefore, to answer this strategic question implies answering three

strategic questions at the same time—that is, given your context, what are the emerging countries that provide the best opportunities? In you countries of choice, what the cities that

provide ongoing opportunities? In those cities, between the rich, the middle class and the bottom of the pyramid, which segment provides the best potential?

For a strategist, the first order of business will basically entail grasping the potential and emerging trends across these countries. In other words, a granular understanding of the

most dynamic areas up until year 2030 regarding private consumption, share of global output by countries, the fastest growing cities in these countries by GDP and

urbanization rate, and which size of the urban area will be expanding the most are some of the most significant trends that must be under

any executive’s radar.

The importance of intellectual properties can’t be understated—it may differ with respect to

each Western multinational given its context and strategy, but it is indeed an important consideration in the global economy. A growing amount of anecdotal evidence illustrates the

point—the intellectual property theft from China alone costs the US $300 billion each year and for European manufacturers, it costs them 20 percent of potential profit.

In fact, in China, for instance, the cities and municipalities have different compensation and win rate. In Beijing, the average compensation with respect to infringement as of 2015 was

186,239 RMB with a Win Rate of 69 percent. Also, in Zhejiang, it was 89,946 RMB with a Win Rate of 76 percent-- in Shanghai, the average compensation was 92,985 RMB with

a Win Rate of 63 percent.

Likewise, in Guangxi, it was 560,891 RMB with a Win rate of 60 percent, and in Hebei,

the average compensation was 111,525 RMB with a Win Rate of 59 percent (for detail see Exhibit 1). Without a clear strategy in light of intellectual properties protection, global

product development may suffer, and innovation will stall. As a result, many innovative firms may lose their leading edge given that many of these countries are pretty much

notorious for copycat rip-offs.

Similarly, a corporate brand is one of its most valuable assets. Thus, it must be strategically managed when considering a foray into

emerging markets given that US multinational corporations' (MNC) intellectual property protection trends abroad between 2008 and 2013 decreased by 3.8% against the Chinese.

However, protecting this strategic asset in emerging market is crucial—given that in 2013, the average brand value of the top 10 brands as a percentage of market capitalization was

30.5 percent of Interbrand, 46.5 percent of BrandZ and 21 percent of Brand Finance in their brand valuation methodologies.

Given the confusion in meanings and

acronyms regarding these countries, the one-size-fits-all approach will be self-defeating. For this reason, you should develop your own criteria with respect to your strategic priorities.

Thus, my experience suggests creating an

emerging market matrix—that is, list the countries of your choosing with respect to

your strategic goals and mode of entry or strategic context. Then, score all of them by ranking each country in all critical dimensions as key success factors (KSF). And be sure that

the sum of the weighting must equal to one (1) —in this way, you will refine your choice in a strategic manner as in the example below.

As the example above shows, by using the emerging countries matrix, you can arrive at

your overall best choice by rating each country out of 10 in an overall weight of 1 (100%) —given the contextual realities in these markets. On one hand, you have countries that

are growing very fast, but with an abysmal record in intellectual property protection and

ease of doing business. On the other, you have countries that are growing moderately

but with good infrastructures, ease of doing business, and an excellent track record of protecting foreign intellectual property. For this reason, I believe that you should build

your contextual matrix!

My research suggests that by 2030, five countries will be leading the pack regarding

the middle class—China will dominate the ranking with 112 million households, followed by India with 90 million households, Indonesia with 20 million, Nigeria with 15

million and the Philippines with 8.4 million.

Also, the world urban population is reported to increase by 84 percent—that is, from 3.4 billion now to 6.3 billion in 2050. However,

the urbanization of cities will be quite uneven as I said in my previous article, three-quarter of the megacities will account for just 6.6 percent of the urban population and will be

located in emerging countries with a population of 284.9 million inhabitants. And almost half of them (9 megacities) will grow by 0.02 percent and just a few of them such

as Lagos (Nigeria), Dhaka (Bangladesh) and Karachi (Pakistan) will increase by an average 2 percent. Therefore, the most promising in light of urbanization!

However, the trends in urban population suggest that the bigger segment of the future

will be in the cities with 1 million or more, but less than 5 million—and will account for more 22 percent of the total urban population. In other words, the highest priority should be

given in this segment in emerging markets!

Also, another kind of the interesting trend suggests that the biggest share of the world middle class will be in Asia Pacific and will

amount to 3.22 billion inhabitants.

Again, the biggest private consumption will be in Asia Pacific and will amount to $32.59 Trillion—that is 59 percent of the global private

consumption will happen in Asia Pacific!

The emerging countries’ GDP estimate provide a broad-brushed picture. Therefore, it

is imperative for strategists to dig deeper into the data to get as far as you can the GDP by cities, provinces/municipalities. Therein lies the real insights into the inner workings of their

economies in light of the Winning Zone. Finding these numbers and trends is imperative in building your framework as shown below. For instance, SABMiller, the

multinational company headquartered in

London moved in the right direction into the Winning-Zone city--Onitsha—a Nigerian city

where it made a greenfield investment of $100 million for a beer manufacturing plant. A clear first mover advantage in this leading Nigerian city! Cities in the Winning Zone

include Dalian, Zhengzhou, Yantai and Tangshan in China, Tangier in Morocco, Coimbatore in India, Bucaramanga in Colombia, etc.

Cissoko Mamady is the author of “Strategy in The Digital Age: How to Disrupt or Respond to

Disruptors.” He holds an MBA from GLOBIS Graduate School of Management—the #1 MBA program in Japan, and 4 Ivy League credentials, including the Johnson Graduate

School of Management at Cornell University.

He is known for his expert insights and their

practical applications he shares in his book(s) that have impacted the lives of thousands of organizations and executives around the world.

Through these real-world solutions, Cissoko Mamady became one of the world’s renown and trusted strategy experts to whom the leading organizations, executives, even

governments turn to for sound advice for many of their most challenging issues. Similarly, he is the go-to expert for what it takes to deliver a high performance consistently in creating and

capturing value--while exceeding the expected digital customer experience from modern organizations.

Cissoko Mamady’s work has been published in many leading publications. Moreover, in other

instances, he has been quoted in business publications for an expert perspective regarding strategic management. Because of his expertise in advising many leading firms in

open banking (PSD2), financial technology (Fintech), digital platforms, mobile banking, payments, disrupting the healthcare through digital transformation.

Also, for his expertise in nonmarket strategy

with regards to geopolitical risks, public policy, activists, NGOs impact on organizations’

strategy, scenario planning, corporate agility and digital culture needed for strategy

execution in the digital age-- where Cissoko Mamady has written extensively regarding the digital and future-ready organizations in his best-selling book mentioned above.

With his decades of experience and profound insights across industries, functions, and

geographies, Cissoko Mamady travels a lot to help his clients with a tailored and fresh approach that is specific to the organization or

executives’ circumstance by enhancing the top-and-bottom line.

For these reasons, he is the sought-after management consultant and coach of several dozen professionals who want to become CEOs

and executives by developing their skills while providing the necessary tools to become ambidextrous leaders ready for the digital age. That is, skills and competencies to manage and

lead in the digital platform economy, where the old tools and assumptions regarding the nature of management are inadequate while industries’ boundaries are blurring and, in many cases, do

not matter anymore. In other words, industry’ boundaries are becoming irrelevant.

As a staunch believer in philanthropy and making the world a better place, Cissoko Mamady uses his free time to contribute to

many charitable causes that are dear to his heart—from eradicating extreme poverty to enhancing literacy across the globe.

© Cissoko Mamady