The rate of penetration by multinationals into emerging markets: evidence from BRIC

Abstract

Purpose

The purpose of this paper is to provide an empirical assessment of the degree to which global firms have penetrated markets in emerging countries in the new millennium. The focus is on the “big four” emerging countries of Brazil, Russia, India, and China (BRIC), and the study examines penetration in three product categories: beer, hair care, and carbonated soft drinks.

Design/methodology/approach

The conceptual development draws on a normative‐descriptive framework, predicting the behavior of multinationals from normative models of their strategic behavior. Predictions are evaluated against market share data for the multi‐domestic product categories.

Findings

Multinationals with strong global brands will introduce their global brands and be successful also in multi‐domestic local markets where preferences differ across countries. However, the key to success is not always their global brands, but could equally likely be an acquired local brand. Some local brands successfully defend their markets, and even venture abroad into neighboring regions.

Research limitations/implications

Globalization does not mean the success of global brands as much as success of global firms. In the end, the penetration of local emerging markets is not necessarily from global brands, but from global companies with acquired local brands.

Originality/value

The paper establishes that any fear of elimination of valued local brands is overblown. It also helps dispel the myth that emerging countries cannot develop strong international brands on their own. But one issue remains: the financial clout of global firms is difficult for emerging firms to counter.

Citation

Johansson, J.K. and Leigh, L. (2011), "The rate of penetration by multinationals into emerging markets: evidence from BRIC", Multinational Business Review, Vol. 19 No. 3, pp. 272-289. https://doi.org/10.1108/15253831111172694