Asia’s biggest companies are taking a growing share of global revenues in every sector except consumer, highlighting the challenges they face in building high-value brands.
Blue-chip Asian firms such as SK Group, Samsung Electronics, China National Petroleum Corporation (CNPC) and Hyundai are all among the top 20 global companies in their respective sectors: industrial, technology, energy and autos.
The research, conducted by Citi as part of a bid to identify the region’s most attractive clients, shows that Asian firms in the industrial and energy sectors have more than doubled their share of sales within the top tier of global companies since 2005.
Five Asian industrial companies now generate 27% of sales among the world’s top 20, while four Asian energy firms account for 21.6% of sales among the biggest companies in that sector. Overall, the region’s energy firms now command 19.5% of total global sales, the most of any sector.
“It’s no surprise that energy is so significant, because China is the hub now,” says Arun Bansal, who led the research for Citi. “But it is still impressive. The contribution of the entire energy segment has doubled over the past seven years.”
Tech and auto companies have also doubled their top-20 share, to 24.6% and 11.4%, respectively, while Asian semiconductor firms now have a 19.1% share and telecoms firms 15.1%. Overall, the number of Asian companies that are among the global top 20 in their sectors has risen from 16 to 25.
But there is not even a single Asian company among the world’s biggest consumer names. LG Corp was previously among the top 20 but has since slipped to 34th, one place behind Wilmar International.
“I was surprised by that,” says Bansal. “One would expect that as disposable income goes up, Asian consumer names would make their mark, but it hasn’t happened yet. That is bound to change.”
Asian companies have spent $2.9 trillion on outbound investment during the past decade, according to Accenture, almost two-thirds of which was directed beyond the region in 2011. But many big Asian firms are still capturing market share thanks to lower costs rather than by moving up the value chain.
“Today, Asian companies make up 35% of the world’s largest businesses, but only one in 10 of the world’s top brands,” said Paul Gosling, senior managing director of Accenture’s management consulting arm in Asia Pacific, in a report released last week. “To close this gap and improve their relevance they will need to compete on more than cost and invest more in differentiation, understanding target customers and sophisticated talent management.”