Wenzhou, a coastal city in the eastern province of Zhejiang, China, has a long history of producing artists, scientists, engineers and inventors. Zhao Shizhen, for one, a Ming Dynasty scientist, was famous for inventing a rudimentary form of multi-barrel “machine gun” some five centuries ago. One can say that the people of Wenzhou today still possess the same kind of ingenuity and drive. But, save for a few local historians, they have been channelling their energy into a decidedly different field from weapons design and production.

The hunger for invention and discovery that drove Wenzhou’s Zhao, has clearly turned into a huger of another kind – doing business. The city of nearly 8 million is today one of the largest wholesale centres in China, a magnet for producers and traders of all kinds of goods -- from lighters to umbrellas to sophisticated machinery. A poll, conducted by a local Wenzhou weekly, asked readers this questions: “If forced to choose between you business and your family, which would it be?” 60% of the respondents chose business, 20% chose family, and the rest were undecided.

The people of Wenzhou are not alone. They are joined by millions, or even billions, of their countrymen, and like-minded people in the fast-growing emerging economies of the world. Together, these “challengers” provide a stark contrast to the people and companies of developed economies – the “incumbents”. These classifications are put forward by co-authors Hal Sirkin, Jim Hemerling and Arindam Bhattacharya of Boston Consulting Group in their book, Globality -- Competing with Everyone from Everywhere for Everything, published last year.

“Over the past twenty years, the countries, companies, and leaders of developing nations have not only learned the lessons of globalisation well, but also developed their own expertise and applied their considerable entrepreneurial talents to challenge the developed world,” write Harold L. Sirkin, James W. Hemerling, and Arindam K. Bhattacharya, partners with Boston Consulting Group (BCG), a leading business consulting firm.

The “incumbents” -- who have been enjoying a well-trodden path of the last half century -- are companies from developed economies that have been planting their flags in overseas markets. Essentially, the “challengers” are now quickly, and surely, looking for places to plant their own flags. “They’re [the challengers] even beginning to shift and disrupt the entire economic balance. And they’re just getting started.”

“Globality”, in short, is what happens after “globalisation”.

BCG Challenger 100

The BCG Challenger 100 is a list of 100 companies selected by BCG as the best standard bearers of this globality trend from a total of 14 countries. Asian companies take up two-thirds (66) of the spots on this list. Of the rest, 14 companies are from Brazil, 7 from Mexico and 6 from Russia. China, with 41 companies, is the single largest originator of challengers by far. India, Asia’s other growing giant, contributes 20 companies to the list.

The common perception is that emerging market companies which do well must originate from industries where the main (and only) advantage is a low-cost base. However, this is not the case for these 100 challengers. Rather, they come from industries that cut across wide-ranging sectors including consumer durables, resources, food and beverage, mobile communication, IT services and, even, wind energy. In short, the incumbents face a broad-based, multi-pronged assault.

For now, the BCG 100 Challengers seem relatively small with combined 2006 revenue of US$1.2 trillion. In comparison, Fortune 500 behemoths such as General Motors, Wal-Mart and Exxon-Mobil alone booked more than US$900 billion in sales. But, if the growth rates hold (three times faster for the BCG 100), the Fortune 500 list looks set for a major re-jig pretty soon. Hardly any eyebrows should be raised by the fact that Asian companies form two-thirds of the BCG 100 Challengers list. This is a point clearly illustrated by the authors who conducted extensive studies including interviews with senior management from the companies in Asia.

Some of the Asian challengers discussed in this book are already well-known global names, such as India’s Dr Reddy’s, Infosys Technologies, Wipro Technologies, and the four Tatas -- Consulting Services, Motor, Steel and Tea. Other names are not yet well known outside their home markets) – for example, home appliances makers, Gree and Galanz, or Founder, which is in computer and IT components. Interestingly, these last three are all Chinese companies, yet with distinctly non-Chinese names. Perhaps they have been eyeing overseas markets, emulating the successful naming strategies of Sony and Canon.

Written perhaps more for the incumbents than the challengers, Globality does not dwell much on what the incumbents have been doing right. Rather, the focus clearly is on why the challengers can mount this push. Readers working in or leading the incumbents will appreciate how the authors have packaged the key issues and ‘how-to’ advice into seven distinct chapters, which they call “the seven struggles”.

Overall, Globality reads like a pretty enthusiastic cheerleader for the rise of the challengers. With the global markets tanking so rapidly and dramatically in the closing months of 2008, however, one cannot be entirely sure that many of the challengers will survive and thrive -- if and when economies recover. The unemployment situation in the coastal regions of China is worsening, no thanks to the growing number of bankrupted export-oriented factories. Thus, it is impossible to say, for sure, how many Grees, Galanzes and Founders of tomorrow will be snuffed out by the time the dust settles.

Making a Case for the Incumbents

At the same time this is not a book which condemns the incumbents into oblivion. There are also a few (morale-boosting) cases of incumbents that have successfully fended off the challenges – at least for now.

Take, for example, the story of Nokia, the world’s largest mobile maker, which had a clear lead in China, the world’s largest mobile market. That advantage was nearly squandered away when Nokia seemed inert in the face of challenges from local Chinese competitors. Names like TCL, Ningbo Bird, Kejian, and Amoisonic focused their attention on third and  fourth-tier cities as well as towns and villages, while Nokia continued its snug lead in the biggest cities, revelling in its top notch global brand name.

But the company was losing nation-wide market share rapidly. To its credit, Nokia quickly revamped its distribution system. From selling handsets one container at a time to just a few key distributors in the ten top cities, the company puts boots on the ground, reaching  more than 400 cities directly, and establishing some 40,000 points of presence.

So, from barely knowing who its customers were, Nokia now knows exactly how many units of each model are sold at each outlet, and more importantly, what its customers want, and not what the company’s engineers and designers want to build. “You have to work with local means to reach people – even bicycles or rickshaws,” says Kai Oistamo, Nokia’s executive vice president and general manager for mobile phones.

Of course, for every incumbent like Nokia that has so far succeeded in avoiding over-throwing by challengers, there are also other incumbents that are being nudged out of competition. The authors draw some similarities between the two camps to round off this book. They posed the question: what defines a successful challenge? Their answer, in compelling prose, is that “Like the challengers, they (successful incumbent companies) don’t talk about meeting quarterly earnings targets or cutting costs or beating rivals. They always talk about dreams. They speak about people they have known, in their factories and boardrooms, retail outlets and warehouses. They talk about their companies as if they are families. Above all, they say they want their personal and professional lives to be meaningful and rich journeys. They want to build something. And they want it to endure. Those measures of success will not change in the age of globality.”

Back to Zhao’s machine gun. Invented some three centuries before the first Western version, this “Made in Wenzhou” product was the “incumbent” of its day. Clearly, this position didn’t last as challengers, using better Western science and technology, overtook Zhao. Thus, “globality” is just one of many phases in the competition between incumbents and challengers.