Council on Foreign Relations

A Corporate Program Series Sponsored by

Basic Element is Russia's leading diversified investment company striving to conduct business in Russia and around the world in an effective and responsible manner. Basic Element's main assets are concentrated in six economic sectors - Energy, Resources, Manufacturing, Financial Services, Construction and Aviation.

Basic Element through its affiliates owns significant stakes in and operates dozens of companies. Many of them play key roles in their respective market segments in Russia and internationally, including UC RUSAL, GAZ Group, Transstroy and Ingosstrakh.

Basic Element is one of the largest, most dynamic and effectively-run business groups of modern Russia. With more than 100 companies in six industry sectors, in recent years its revenues were consistently growing at a rate of more than 40 percent a year. As the global crisis unfolds, all companies in the group are implementing a cost- and expense-cutting program. With market demand falling, this effort is geared towards maintaining and improving profitability. About 300,000 people work at the Group's companies in Russia, the CIS, Africa, Australia, Asia, Europe and Latin America.

Books

• The Emerging Markets Century: How a New Breed of World-Class Companies is Overtaking the World, Antoine van Agtmael Antoine van Agtmael forecasts that key economies of the former Third World will dominate the future. In the 21^st century, the economic center will shift from the U.S. and Europe to Asia and Latin America due to demographics, globalization, and the ascent of India and China. The continued success of businesses in emerging economies is highly probable since many produce consumer goods, which are bought by the large populations of lower-income countries.
• Multinational Companies from Emerging Economies: Composition, Conceptualization and Direction in the Global Economy, Andrea Goldstein Andrea Goldstein explores the basis for the success of contemporary multinational corporations from emerging economies, arguing that the history of multinational business offers valuable lessons for the present. Today’s emerging multinational corporations are embedded in dense political, social, and ethnic networks, and must be analyzed within the context of a global economy.

Reports

• The 2009 BCG 100 New Global Challengers: How Companies from Rapidly Developing Economies Are Contending for Global Leadership
  This report first looks at the challengers' rapid rise to global leadership and what has propelled many of them into leadership positions around the globe. Then, as in BCG's prior two reports on new global challengers, the list of the 2009 BCG 100 new global challengers is presented. All these companies either have attained global leadership positions or have demonstrated credible ambitions and abilities to achieve sizable global footprints. The report examines the strategies employed by this group of global challengers to understand the fundamental reasons for their success and assesss how they have adapted and strengthened their businesses in response to increased pressures. Finally, the implications of these significant developments for the challenger companies and incumbents alike are set out.
• Grant Thornton Report: Emerging Markets: Reshaping the Global Economy
  Grant Thornton draws key insights from its emerging markets index. Mature economies should no longer confine themselves to domestic markets, given the import requirements and profit opportunities in emerging economies. At the same time, mature economies face significant competition from Latin America and Asia, as shown by comparisons of export growth rates. Privately held businesses must change their strategic thinking to reflect a global marketplace.
• PricewaterhouseCoopers Report: Beyond the BRICs: a broader look at emerging market growth prospects
  PricewaterhouseCoopers expects that the E7 (China, India, Brazil, Russia, Mexico, Indonesia, and Turkey) will be 50% larger than the G7 by 2050. The report provides updated analyses of significant emerging economies, to include Vietnam and Nigeria, and also highlights the potential winners and losers within the OECD due to global economic shifts.
• World Pay Report
  The Hay Group finds that senior managers in less developed economies have more disposable income than their western counterparts.
• BCG Report: How 100 Top Companies from Rapidly Developing Economies Are Changing the World
  Several factors in rapidly developing economies have contributed to their forming of capable and ambitious corporations: growing markets, inexpensive resources, challenging economic climates, and the presence of multinational corporations. The Boston Consulting Group identifies 100 companies from such economies which are expanding internationally and thus transforming global markets. Analyzing the overall strengths and weakness of these companies, the report provides advice for the challengers as well as the incumbents in the international business arena.
• OECD Roundtable on Freedom of Investment, National Security and “Strategic Industries”.
  Summary of Findings: This roundtable addressed rising concerns of national security, debating whether restrictions on foreign investment were necessary or harmful. OECD surveys were cited, showing that foreign corporate takeovers often have positive effects in the host country, and are not that dissimilar from other forms of foreign direct investment. Finding ambiguity in national definitions of “security,” the roundtable pledged to focus more attention toward developing sound national procedures regarding investment practices.
• World Investment Report 2007: Transnational Corporations, Extractive Industries and Development
  Due to higher commodity prices, there has been a recent revival of foreign direct investment in extractive industries. The World Investment Report stresses that transnational corporations participating in extractive industries can lead to economic development and poverty alleviation in the host country. In order to guarantee a positive and clean relationship, government regulation and stakeholder responsibility must be improved.
• Accenture Report 2007: The Rise of a Multi-Polar World
  Accenture reports that the current economic landscape heralds a deeper phase of globalization. Emerging economies are now both destinations and sources of foreign direct investment. Emerging economies are also pursuing more research and development, with an increasingly talented workforce and supportive government. As more multinational corporations are based in emerging markets, the West will soon have to compete for financing.
• Accenture Report: Brave New World
  The number of emerging market companies in the Fortune global 500 has more than tripled since 1995. Accenture points to 5 arenas of possible competition between emerging and developed economies: talent, capital, resources, consumers, and innovation.
• Inter-American Development Bank: Entrepreneurship in Emerging Economies – the Creation and Development of New Firms in Latin America and East Asia
  The Inter-American Development Bank qualitatively and quantitatively compares the entrepreneurial process in Latin America and East Asia to better understand how to promote regional economic growth. Finding that Latin America has fewer numbers of entrepreneurs and less growth of enterprises, recommendations are also provided to remedy these shortcomings.
• The Russians are Coming: Understanding Emerging Multinationals

On-line Resources

• The Winning Strategies of Emerging Giants
  Published by the Harvard Business Review and the World Economic Forum, this report was distributed at the Second Summit of New Champions at Tianjin.
  
• S&P: Beyond BRICs: Opportunities and Risks in Emerging Markets
  This special report from Standard & Poor’s looks at general growth trends in emerging economies and forecasts which countries will emerge the strongest from Central Europe, Asia, Latin America, and South America. The report also explains to investors why emerging economies now have less credit risk and more potential for high portfolio returns.
• Center for Knowledge Studies: Emerging Economy Report
  This report by the Center for Knowledge Studies profiles India, China, Indonesia, South Africa, Kenya, Egypt and Brazil. With these 7 case studies, the report provides insights relevant to corporate strategy, product and service innovation, and marketing tactics.
• Business Monitor International: Emerging Europe’s Frontier Markets 2008
  The Business Monitor International presents risk analysis for several unfamiliar frontier markets. These markets offer strong macroeconomic growth, rapid development, and the unique role to serve as diversification hedges. The report highlights investment opportunities in Kazakhstan, Mongolia and Azerbaijan, and also contrasts the growth paths of Armenia, Georgia, Ukraine versus Serbia, Bosnia, Macedonia.
• MITSloan: How to Win in Emerging Markets
  Emerging markets in Asia, Latin America and Eastern Europe now provide some of the strongest revenue and profit growth for global producers of consumer goods, like Colgate-Palmolive, Group Danone, and PepsiCo. Since multinational corporations still face hurdles in competing in these emerging markets, this report provides 6 tools for their success.

About Basic Element

Basic Element is Russia's leading diversified investment company striving to conduct business in Russia and around the world in an effective and responsible manner. Basic Element's main assets are concentrated in six economic sectors - Energy, Resources, Manufacturing, Financial Services, Construction and Aviation.

Basic Element through its affiliates owns significant stakes in and operates dozens of companies. Many of them play key roles in their respective market segments in Russia and internationally, including UC RUSAL, GAZ Group, Transstroy and Ingosstrakh.

Basic Element is one of the largest, most dynamic and effectively-run business groups of modern Russia. With more than 100 companies in six industry sectors, in recent years its revenues were consistently growing at a rate of more than 40 percent a year. As the global crisis unfolds, all companies in the group are implementing a cost- and expense-cutting program. With market demand falling, this effort is geared towards maintaining and improving profitability. About 300,000 people work at the Group's companies in Russia, the CIS, Africa, Australia, Asia, Europe and Latin America.

Visit Basic Element at www.basel.ru/en/