fDi asked each company why it is successful overseas and what plans it has for further FDI. Five of the top 10 are technology companies, two are in healthcare, one is a consulting company, one is a sportswear manufacturer and one is a truck maker.

The similarities in their answers are startling: thanks to rapidly rising international sales, these companies are planning to expand their international operations in the next 12 months, despite fears of a global economic downturn.


Like Cisco (ranked number one), most of the 10 describe a shift in global economic power during the past decade and are investing heavily to be a part of it. And many are concentrating on the fastest growing overseas markets, such as China, India and Russia.

In the company’s last annual report, Cisco chief executive John Chambers described the 39% rise in emerging markets revenue as perhaps Cisco’s “greatest success of 2007”, helping to make it one of the most profitable companies in the technology sector.

Meanwhile, the president of Microsoft International (ranked number two), Jean-Philippe Courtois, tells fDi that his company’s future growth will surpass even its own impressive record. He expects 2008 to be a watershed for Microsoft in emerging markets and says: “There are over 5.5 billion people who have yet to experience our products.”

Nike has also placed overseas growth as the cornerstone of its ambition to take its business to $23bn by 2011. And the vice-president of US truck maker Paccar (ranked number nine), Ken Gangl, says that his company has not stopped growing overseas by any means. Even though the US truck market declined in 2007, Paccar has just had the second most profitable year in its 102-year history, thanks to returns on its international investments.

What marks out companies such as Cisco, Microsoft, Apple and the others, says Douglas van den Berghe, managing director of ICA, which published the research, is that they have a good feel for “the optimum level of globalisation”. He says: “The top performing firms seem to be able to manage their globalisation process, making it a successful business strategy in itself. Most of the exceptional performers have been able to find the right balance between their domestic activities and those off-shored or outsourced to emerging markets.”


Like many companies in the list, Cisco is looking to India and China as the engines of future revenue growth. The company is investing $1.1bn on a second global corporate headquarters in Bangalore and has made a further $16bn commitment to China. It has also appointed a chief globalisation officer based in Bangalore, who reports directly to the CEO.

Chris White, Cisco operations manager at the company’s new globalisation centre in Bangalore, says that India offers the ideal base for the company’s global growth, “it is the world’s largest democracy, 70% of its population is under 35, and it has free trade and intellectual property protection”.

“Cisco is getting more passionate about emerging markets,” says Mr White. “We see huge opportunities, for example, in the commercialisation of China’s massive domestic market. We want to be a part of the global economic shift, and this will take a slightly different business model.”

Cisco built its business in the US in the 1990s by investing heavily in a skilled network of partners that have remained loyal to its products. “Not many global technology vendors have built the same level of services, support and partnerships that Cisco has,” says Ken Dulaney, an analyst at Gartner based in San Jose, California. “It took Cisco 20 years to build this network of loyal partners and it has been hard for other companies to replicate.”

Mr White says the same basic approach holds in new markets. “Cisco has found that we can’t do everything ourselves, we need our network of partners. So in new markets, we begin by looking for local specialists to partner with.”

International acquisitions have also made it easier for Cisco to break into new markets. “Cisco is a bit like the Roman Empire in the way it acquires companies and integrates them into the company’s overall business,” says Mr Dulaney.

Cisco’s collaborative management system, where global strategy boards work together to make critical decisions, helps to avoid management bottle necks that thwart many companies operating in multiple markets and time zones. “This avoids the pinch point where everything flows through one person and has made it easier for us to grow internationally,” says Mr White.


Like Cisco, Microsoft is acutely aware of shifts in global economic power and sees emerging markets as the source of future business growth. “We expect 2008 to be a watershed year for Microsoft in emerging markets, which have become critical in terms of revenue mix and future growth,” says Jean-Philippe Courtois, president of Microsoft International, who heads the company’s international operations.

The company is confident about overseas expansion. “Microsoft’s growth history is impressive but this will be surpassed by its future growth: the company took 23 years to reach $20bn in annual revenue but only a further seven to reach $50bn,” says Mr Courtois.

Microsoft’s third-quarter results forecast double-digit revenue, operating income and earnings per share growth for both 2008 and 2009, and clearly underline the importance of markets outside the US.

Mr Courtois, who manages more than 14,000 Microsoft employees in more than 100 countries, is most excited by Brazil, Russia, India and China, and countries like Indonesia.

“We operate in more than 100 countries. Our geographic expansion in recent years has positioned us to reap the benefits of ongoing worldwide economic growth,” he says.

“One way to look at the opportunity is that we estimate that roughly one billion people have access to computers but, with over 6.5 billion people in the world, there are more than 5.5 billion people who have yet to experience our products. Another way to look at is at the growing range of devices that have a software experience,” says Mr Courtois.

International growth has presented challenges for Microsoft. One of the biggest is how best to tackle piracy and at the same time develop affordable products for lower income countries.

Microsoft has started to develop lower cost products for emerging markets and is now working more closely with local software developers.


Apple’s narrow focus on two or three key products has made it an agile competitor in overseas markets. By refreshing its product lines aggressively at the height of their popularity, the company has maintained a strong lead over the competition and achieved strong international sales growth.

Following the huge success of its UK stores, Apple is supporting its brand with a growing number of retail stores outside the US. “Sales at Apple stores are about $4500 per square foot, about double that of Tiffany’s in New York, which is quite exceptional,” says Van Baker, an analyst at Gartner in the US. “Apple clearly needs to expand internationally to continue to grow its business and the obvious opportunities are outside the US and western Europe, where most of its sales currently originate.”

Apple products are designed in Cupertino in California’s Silicon Valley, but their manufacture is outsourced around the world, including at major production plants in Ireland and China. Rising sales are likely to lead the company to expand its international manufacturing base, particularly in Europe and Asia.

This year, Apple plans to open 45 new retail outlets, many of which will be outside the US. “Apple already has 208 stores, most of which are in the US, so the biggest opportunity for Apple is now in international markets,” says Mr Baker.

Apple’s biggest challenge overseas is probably the fact that “it likes to play at the high end of the wealth spectrum”, says Mr Baker. Emerging markets such as China have a growing class of wealthy consumers but, in general, the populations are still less affluent than they are in western Europe and the US. “Apple may have to consider deepening its product lines and moving into price brackets it has not been [in] before to capture new markets overseas,” says Mr Baker.


Healthcare has historically been a heavily regulated sector but the fact that there are two healthcare companies in the top 10 – McKesson at number four and Cardinal Health at number seven – shows the extent to which deregulation and privatisation have made it possible for international companies to compete in foreign markets.

McKesson has built about 30 healthcare-related businesses around the world. Marc Owen, executive vice-president in charge of corporate strategy and business development, says: “Every healthcare system in every country in the world is different and therefore so are the opportunities. Once we have decided to invest in a country, we find a management team and build around that nucleus.”

These management teams are “the Lego blocks” around which the company builds mini McKesson’s in each country, says Mr Owen. “For example, in Canada we started with a pharmaceutical distribution business and then added biotech services, IT and other businesses. In Mexico, we invested in a small family-run business and grew with it.”

McKesson’s international growth began in 1993 in anticipation of the North American Free Trade Agreement when it made acquisitions in Mexico and Canada. Although the acquisitions have typically been small, each has given the company a foothold in new markets from which it has grown rapidly. In the UK, for example, it bought a small payroll systems company and used it to win a bid to manage all electronic records for the UK’s National Health Service. McKesson is now the payroll contractor for 1.2 million NHS employees.

Having built a strong presence in the US, Canada and Mexico, the company is looking at western Europe as its next opportunity for growth, says Mr Owen. It is also expanding into New Zealand and Australia (where it bought into a small local firm) and is studying the healthcare systems in the BRIC countries.


It should be little surprise that Accenture – a leading advocate of outsourcing business processes to emerging markets – makes it onto the list of most profitable companies overseas.

Accenture predicts that emerging economies will account for more than half of all global consumption by 2025, and that China and India will together contain 123 million middle-class households by 2010 – more than the total number of all households in the US.

Like many companies on the list, Accenture has been investing heavily in the fast-growing BRIC economies, and has signed up a growing list of emerging market giants, including Brasil Telecom, China Construction Bank, Korea’s Kumho Petrochemical Company and India’s Tata Steel. In mid-May, it increased its commitment to Brazil with the purchase of Brazilian IT company Atan.

Accenture’s aim for 2008 is to increase its overseas headcount significantly. In addition to established markets, such as Germany, Japan, the UK and the US, it expects India to play a key role in its international expansion, with up to 2000 management consulting professionals there by the end of 2008.


Last year, Nike made $1.39bn overseas and, unlike its US earnings, that figure has risen consistently in each of the past three years. Nike has been building its overseas business for the past 20 years in recognition that the US market for branded sportswear is mature. “The opportunities for extensive and rapid growth are now greater in markets like China, India and in emerging markets,” according to Nike spokesperson Charlie Brooks.

Nike has been going through a period of intense foreign investment since the end of the 1980s, he says. “Nike has invested heavily to grow its international business and in 2002, our overseas business became bigger than our domestic business.” The Nike brand has helped to create a huge appetite for sportswear right across Europe – including in Russia and Turkey – and now also in the huge domestic markets of China

and India.

Virtually all of Nike’s athletic footwear and apparel is now manufactured outside of the US. “Nike began importing footwear from Japan in 1968. Then, in 1991, we started distributing Nike footwear manufactured by contracted factories,” says Mr Brooks.

Nike has never owned its own manufacturing chain. Mr Brooks admits that its use of contracted factories to meet intense demand for its products “has provided challenges in terms of compliance with our codes of conduct in the past”. But he says: “This is something we have taken great strides in addressing.”

Raising compliance levels in overseas factories has come at a cost and Nike’s last annual report sounded a note of caution about rising overheads in emerging market countries. However, this has not dampened the company’s international ambitions. “We have made a commitment to taking the Nike Inc business to $23bn by 2011, and extensive overseas growth is one of the cornerstones of that commitment,” says Mr Brooks.


Cardinal Health is the second largest pharmaceutical distributor in the US after McKesson. Founded in 1971, it built its business in US pharmaceutical distribution, a sector that has traditionally been confined to domestic markets.

However, Rudy Mareel, president of international operations, says that as the company expanded into other medical products, such as intravenous pumps, medication dispensing equipment and respiratory products, greater opportunities began to open up outside the US.

“We think we have a great opportunity to expand our business further in established markets as well as in emerging markets,” says Mr Mareel. “Market dynamics, such as the ageing of populations, new treatments and diagnoses, create the same need everywhere.”

The company now has a substantial manufacturing capability outside the US, with facilities in Thailand, the UK and Mexico. “Success in international markets, like in the domestic market, is primarily about understanding customer needs,” says Mr Mareel. “We need to develop a portfolio with the right quality, the right value proposition at the right price for a given country. At Cardinal Health, we are continually exploring opportunities with countries that have manufacturing and product development capabilities that can deliver products that meet specific customer needs.”


Like most of the companies in the top 10, Hewlett Packard has maintained strong earnings despite a slowing US economy. It recently explained stronger than expected quarterly results (net income up 38% to $2.12bn) as the result of particularly strong sales growth outside the US, which now accounts for just one-third of its revenues.

Hewlett Packard has a long history of international investment. It opened its Moscow office almost 40 years ago and today leads the Russian IT industry with 10 offices across the country, and R&D and manufacturing facilities in St Petersburg.

Like other companies on the list, Hewlett Packard is concentrating on Russia, India and China. In the past five years, it has opened three R&D centres, most recently in 2007 in St Petersburg. It opened a research facility in Beijing, China, in 2005 and a centre in the Indian city of Bangalore in 2002. It also has research facilities in Bristol (the UK), Haifa (Israel) and in Tokyo (Japan).

Within months of opening of its research centre in St Petersburg, Hewlett Packard announced the construction of a computer assembly plant in the city. The plant, a $50m joint venture with Taiwanese company Foxconn, will begin operating in 2009, producing 20,000 units a year.


Even though the US truck market declined in 2007, US truck maker Paccar has just celebrated the second most profitable year in its 102-year history thanks to its growing foreign operations.

Paccar has a long history in foreign markets and has been shipping to China for more than 100 years. It has deliberately diversified into overseas markets to reduce its dependence on the heavily cyclical US market – last year 64% of its revenues were made outside the US.

Paccar vice-president Ken Gangl says that the company has identified several opportunities for overseas investment, particularly in Europe. “In mid-2008, we will be opening a new parts distribution centre in Budapest. We want to have a 15% market share in countries like Poland, the Czech Republic and Romania within the next two to three years,” he says.

Like many companies in the top 10, Paccar’s international success comes from a string of acquisitions followed by periods of intensive investment. In 1996, the company bought Dutch truck maker DAF, rebuilt its production plant and set up a $70m test facility, making it one of the most efficient operations in the world. Since the acquisition, Paccar is proud of the fact that DAF’s market share has risen from about 8.5% to 14% and DAF trucks have been named Truck of the Year for three of the past 10 years, including 2007.

Paccar did something similar in the UK, when it bought Leyland and invested heavily in increasing production efficiency. Even though productivity has increased dramatically by 15% to 20% with the increased use of new technology such as robotic paint facilities, Paccar’s European backlog is now running at between nine and 12 months. “We have are now taking orders for 2009,” says Mr Gangl.

With international demand so high, the company is confident about further overseas investment. “We haven’t stopped growing overseas by any means,” says Mr Gangl, who wants to reach a 20% market share in Europe once the company’s parts depot in Budapest is fully operational.


The Connecticut-based manufacturing giant United Technologies (UTC) owns businesses producing goods ranging from aircraft engines to air conditioners, and its Otis subsidiary is the world’s largest maker of elevators. Roughly two-thirds of its revenues, employees and manufacturing are now based outside the US. In the past 12 months, UTC has undergone a period of intense overseas investment as it expands its manufacturing capacity in Russia, China and Poland.

In 2007, UTC’s helicopter division, Sikorsky, purchased Polish aircraft maker PZL Mielec, expanding its European market share and giving it a strategically located base for producing its new Black Hawk helicopter for the international market. UTC companies made four further acquisitions in 2007 in Europe alone, not including the PZL Mielec deal; and its air-conditioning business, Carrier, announced the creation of a $50m global R&D centre in India. The company’s fire and security division opened a major production facility in Ropczyce, Poland, and Otis opened a manufacturing facility in China.

UTC’s airline engine business, Pratt & Whitney, broke ground on a new jet engine maintenance facility in Shanghai with its joint venture partner China Eastern Airlines. Earlier this year, UTC also bought an 11% stake in Japanese elevator and escalator maker Fujitec at a cost of $67m.

“About 20% of our revenues come from emerging markets at present, and this is not a huge share,” says Greg Hayes, vice-president of United Technologies. “But as farmers in these countries continue to move to factories, they will create a huge need for infrastructure growth. We are basically an infrastructure company and support this growth in urbanisation.”

Like McKesson and other companies on the top 10 list of most profitable companies overseas, UTC has built its overseas empire through local partnerships and it now has investments in about 40 other companies.