EmergingMarket.docVIP

Schumpeter Brand new Emerging-market companies are trying to build global brands Aug 4th 2012 | from the print edition AMERICANS can stop worrying about China’s plans to take over their country. The worst has already happened: on July 25th Lenovo, a Chinese computer firm, announced a deal to sponsor the National Football League. America will continue to provide muscle-bound linebackers, but the Chinese will provide the clever laptops and desktops that make their tussles possible. Lenovo was founded in 1984 by 11 engineers at the Chinese Academy of Sciences who wanted to supplement their meagre stipends. It spent years building its business in China. But then in 2005 it burst onto the global scene—and rattled America’s Congress—when it bought IBM’s ThinkPad personal-computer business. The company is now the second-largest PC maker in the world and hopes to grab the top spot from Hewlett-Packard soon. In this section  HYPERLINK /nodeThe college-cost calamity  HYPERLINK /nodeAll work and no pay?  HYPERLINK /nodeSpeak low if you speak God  HYPERLINK /nodeWork in progress ?Brand new  HYPERLINK /nodeCorrection: Omega  HYPERLINK /rights Reprints Lenovo is one of several emerging-market firms striving to become global brands. They are no longer content to do the grunt work for Western firms, for two simple reasons: non-branded companies typically earn gross margins of 3-8% and are constantly at risk of being undercut by cheaper rivals. Branded firms enjoy fatter margins (15% or more) and more loyal customers. Yet becoming a global brand is exceedingly hard. Emerging-market firms must struggle with limited budgets and unlimited prejudice. GfK, a consumer-research company, found that only one-third of Americans were willing even to consider buying an Indian or Chinese car. Wipro, a successful Indian outsourcer, points out that its total sales are roughly the size of IBM’s marketing budget. Only four emerging-