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Infrastructure Companies Look Beyond Emerging Markets
Cisco’s CEO John
Chambers made it clear this week that the company is
banking on developing countries for future growth.
The company
launched its Globalization Center in Bangalore,
intended to be a second headquarters and a hub for
emerging-market business growth, rather than just a
local design center. The company’s investment backs
up the claim.
In recent interviews, Chambers says he plans to
triple headcount in India over the next few years,
base more senior executives in developing countries,
and
double their venture capital investment in Indian
companies (to
$200 million). Cisco also announced a long-term
expansion plan for
China
worth $16 billion - twice the company’s investment
over the past five years.
Cisco has good reason
to believe these investments will pay off; their
revenues in developing countries are already
climbing 30-50% a year.
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In fact, according to
one Cisco executive, the company no longer includes
India or China in the category of “emerging
markets.” For
Cisco, these countries have “emerged.”
Certainly, the company deserves credit for
its forethought, early investment and tenacity in
the face of hiccups like one encountered in Brazil
last week. But, early entry by infrastructure
companies is also part of a natural progression.
Companies like Cisco, Ericsson, IBM and
others take the lead in new technology markets,
laying the foundation for other technologies to
operate.
In the context of
emerging markets, IT and telecommunications firms
can benefit from the trailblazing of infrastructure
companies. As
global players like Cisco accelerate expansion, they
lay a path for broad economic and market growth.
Their initial investments and early growth
provide strategic indicators for subsequent market
opportunities for their industry counterparts.
Tracking the activities of infrastructure
technology firms can help global software and device
manufacturers avoid pitfalls and see farther ahead
in markets that may be less transparent than
developed countries.
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