Western companies in emerging markets – Case Metso
The target location of the day was Metso’s production facilities at Sorocaba, where we were greeted with great hospitality. First, we were given an enlightening presentation about Metso in general and the company’s position in Brazilian markets. Second, we toured the main assembly facities and then moved on to Metso’s foundry, located few kilometres away. In total, the day reinforced our previous insights on Brazil and also gave us some new thoughts. The main point of the day for us was again the rapid rise of the emerging markets. Although this story is by no means new and is even partly self-obvious, some very interesting new topics came up.
Traditional Western companies, like Metso, are usually competing with know-how accumulated by long traditions and experience. These companies are then faced with fierce competition from local players of emerging markets trying to press prices down. Although, in consumer markets the kind of quality-oriented approach has usually been doomed, the B2C market might be quite different. Firstly, the level of technology major companies like Petrobras are using, is already completely comparable to Western standards. In addition, the trend of capital equipment markets is globally moving towards the ability to offer comprehensive solutions with functioning service and maintenance agreements. These two factors combined create enormous potential for technology and quality-orienteered Western companies in emerging markets.
In addition, people often deem many mature industries like paper-making as dying. Nevertheless, this is far away from the truth when talking about developing countries. For instance, the number of paper consumed annually per capita is 155 kg in Europe and 260 kg in North America. However, in Latin America the figure is only 43 kg, and 40 kg in Asia! Thus, although the paper-industry in Finland may be struggling, the industry is still booming in emerging countries.
Moreover, issues of corporate social responsibility seem usually to be just nice words on paper without no significant meaning. However, in countries like Brazil the social issues are much more imminent and companies can really make a difference by contributing to the well-being of the community in which they are operating. For instance, in Sorocaba, Metso has been actively promoting the education of young people and physical well-being of its employees.
All in all the visit to Metso’s facilities brought up some very interesting new thoughts about the economy in Brazil in general, and Metso’s positioning in particular. We would like to thank Metso very much for the visit, and look back at the visit with a smile on our faces.