BCG co-chairman of the board Carl Stern says many companies based in developing economies are going global quickly.

"In the last five years, there is a major shift in the attitude of these companies toward globalisation, changing from being defensive to offensive," said Stern. Stern recently visited Bangkok and met with executives of leading firms, trying to convince them they could win in the global market.

He pointed to the success story of Charoen Pokphand Foods and Thai Union Frozen Products, two locally based multinational companies.

Janmejaya Sinha, managing director of BCG's Indian office, said there were a number of potential areas.

"You can get the old things done in a new way," he said.

Local companies can also succeed in niche markets and then become globally skilled, he suggested.

Chris Suradejvibul, vice president and director of BCG in Bangkok, suggested local companies could improve their productivity and become more effective.

BCG executives see more firms from China, Brazil, India, Mexico and Russia expanding their investments abroad, and their role in globalisation has been increasing.

"If you decide to go global and play a long game, seeking opportunity to compete not only in the domestic market, but also overseas markets, you're going to win," said Sinha.

Thai firms are currently experiencing relatively high production costs compared with China and India, due partly to higher labour costs.

Sinha sees production costs in East Asia equalising in the next five years. He believes labour costs in India and China will rise soon, because the skilled-labour market has already tightened in India.

Capital is also cheap, since capital flows move round the world, so Thai firms would not be at disadvantage, he said.

Many observers are concerned that China and India will draw foreign direct investment away from Thailand and other Southeast Asian countries.

Sinha thinks otherwise, saying companies in China also seek outsourcing from other countries.

He also recalled that in East Asia, investors looked to newly industrial countries in the past, namely Taiwan, Hong Kong, South Korea and Singapore. They then eyed Malaysia, Thailand, Indonesia and the Philippines and are now investing in China and India.

The most important factor is that more opportunities for investment are available, and any government that can provide adequate social infrastructure, such as education and human-resource development, will win, said Sinha.

Stern believes local firms can compete with multinationals from developed countries. He points to the example of fast-growing South Korean electronics company Samsung, which has eclipsed Japanese giant Sony. The business cycle forces existing large companies out of business, and new firms emerge, Stern added.

Wichit Chaitrong

The Nation