Donald Sull of the London Business School has a column in tomorrow’s Financial Express on the viability of firms from developing or newly industrialized countries that pursue international expansion to compete with developed nation companies:

Recent Chinese bids reveal a much broader phenomenon: the rise of fiercely competitive companies from the crucible of emerging markets, including India, Brazil and Mexico as well as China. These emerging market champions pose a much greater threat than most western managers recognise…

The harsh environment overwhelms the majority of emerging market companies. The few that survive the brutal process of Darwinian selection, however, emerge as fierce competitors that excel at efficiency, innovation and risk management. Having conquered local markets, they have strong incentives to expand abroad. Global expansion allows them to tap new markets, spread risk geographically, build economies of scale and compete in many places with multinationals…

The most critical element of these emerging market champions is their diversity. Here the facile analogy with Japan is at its most misleading. Japan’s push towards globalisation was co-ordinated by the government’s trade ministry, targeted at a handful of industries, and pursued by similar companies coming out of the same cosy home market. Emerging market champions, in contrast, vary in headquarter country and industry as well as their strategies to go global…

Executives who lull themselves to sleep with reassuring bedtime stories about Japan may sleep well for now. But they risk waking up to a very unpleasant reality.

Read the full piece for examples of innovative firms and more myth-busting.