The increasingly fierce competition between emerging market companies and established multinational companies is still the top priority of CEOs. Challengers have not only fundamentally disrupted many industries, but they have also increasingly become global leaders. This article is part of a new report, Duel Dragon 2.0: The next stage of global competition, analyzing ocean changes in global automotive supply, construction equipment, chemical industry and the impact of multinational corporations (multinational corporations) and emerging market players (emp ). The report and its recommendations are based on comprehensive quantitative and qualitative research, including interviews with more than 100 executives and industry experts in China, India, and Latin America.

We found that despite the significant differences in the nature and competitive landscape of these three businesses, multinational companies in each industry are facing urgent challenges from emp. Major executives of multinational companies and emp expect that competition in these three industries will further intensify. Therefore, improving global competitiveness is the top priority of CEOs.

The fact that the leading multinational companies in the global chemical industry and emp are roughly equivalent in terms of income indicates that the global competition in this industry has entered an advanced stage.

The current situation is: competing for global leadership
Like the automotive supply and construction equipment industries, the global demand for chemicals is also shifting to emerging markets. Currently, emerging markets account for about half of the global $5 trillion market. Major multinational companies in the chemical industry have considerable local production in emerging markets and have been familiar with these economies for decades. However, the balance of power has now changed: several oil giants — most of which have close ties to national oil companies — have become global leaders. For example, China's Sinopec had revenues of US$60 billion in 2013, surpassing Dow Chemical. Sabic is a corporate group headquartered in Saudi Arabia with a market value of US$50 billion, surpassing LyondellBasell Industries, DuPont and Mitsubishi Chemical. However, the sheer numbers conceal the huge differences between the various market segments. At present, emp is dominant in basic chemicals and basic plastics, while existing multinational companies are generally stronger in specialty chemicals, industrial gases, pesticides and fertilizers.
emp's global M&A activities have also become more active. From 2007 to 2012, EMPs’ spending on such acquisitions increased from US$7.9 billion to US$10.6 billion. During the same period, the transaction value of multinational companies' acquisition of emerging market chemical companies fell from US$4.6 billion to US$2.8 billion. emp is also making bigger deals. The average amount of overseas acquisitions by EMP is US$881 million, which is almost 9 times that of overseas acquisitions by multinational companies.

The vision of the future: the battle shifts to specialty chemicals
Global demand trends may continue to benefit emp, especially those located in Asia. By 2020, the Asia-Pacific region is expected to account for approximately 53% of global chemical sales. It is estimated that by 2020, the shares of North America and Western Europe will drop to 21% and 15%, respectively.

Therefore, it is not surprising that if emp manages to maintain a certain degree of growth, their scale will soon surpass that of multinational companies. According to our interview, we also expect EMPs to further expand into the specialty chemicals field, not only because they are more profitable, but also because these companies hope to have a large share of the rapidly growing local market for such chemicals. For example, China has identified new materials as one of the key areas of focus in the "Twelfth Five-Year Plan", which means that the government will support additional efforts in areas such as specialty materials, advanced polymers, inorganic materials, and composite materials.
Global leader in the chemical industry
To a large extent, because multinational companies and emp are roughly the same in scale, the executives from the two types of companies we interviewed in the chemical industry believe that they face a similar series of urgent challenges. However, their highest priority depends on the industry sector in which they compete.
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