INSIGHTS
Migrating
Emerging Market
MULTINATIONALS
A
proud South African can tell you that not only the global beverage company SABMiller (recently purchased by
AB InBev) but also the mining giant Anglo-American, are rooted in their home country. Both corporations were
founded in Johannesburg—in 1895 and 1917 respectively—and both have since become global leaders1. On the face
of it, BancABC, a bank operating in sub-Saharan Africa, and Econet Wireless, a Zimbabwean telecommunications provider,
have little more in common with the South African giants than a southern African heritage. Yet there is something that unites
them: these companies can all be termed migrating multinationals. The four firms are headquartered in different countries
to where they were established—and where they often still generate the bulk of their income.
But while migrating headquarters either regionally or globally
can be a positive move for some companies, it is not necessarily
the right approach for all. Professor Helena Barnard from the
Gordon Institute of Business Science (GIBS) at University of
Pretoria in South Africa, delves into the topic of migrating
multinationals, discussing the reasons why some emerging
mark et companies choose to leave their home bases—and
why some should not.
Emerging Markets Business (EMB): First of all, what drives
a multinational to migrate? Professor Helena Barnard (HB):
Before looking at migration let’s consider the multinational
aspect of the term. Per definition, multinationals operate across
multiple countries. Sometimes they are simply pursuing larger
markets, but sometimes they split up their productive activities.
When they do that, they tend to gravitate towards regions where
those activities can be best performed: In Italy for design, in
the US for marketing strategies, in China for manufacturing,
and so on. They often go to a location because of its known
strengths, and in turn reinforce those strengths within their
own organization. These scenarios, however, typically apply to
subsidiaries of multinationals. What about the headquarters?
We’ve known for about a decade that headquarters can do
exactly the same2. If a majority of shareholders, competitors,
or customers are based outside the home country, firms
1 Barnard, H. (2014). 'Migrating Multinationals and the Theory of the Multinational'. In
Ramamurti, R and Cuervo-Cazurra, A. Understanding Multinationals from Emerging
Markets, Cambridge University Press.
2 Birkinshaw, J., Braunerhjelm, P., Holm, U., & Terjesen, S. (2006). 'Why do some
multinational corporations relocate their headquarters overseas?' Strategic Management
Journal, 27(7), 681-700.
66 Emerging Markets Business Summer 2016 • Issue No. 1
SPOTLIGHT ON MIGRATING
EMERGING MARKET MULTINATIONALS
In 1999, Anglo-American and the then-South African Breweries
shifted their headquarters and primary listing to London. From
there, both firms have undertaken a series of global expansions.
In particular, in 2002 South African Breweries acquired Miller
and formed SABMiller, while Anglo-American embarked on a
series of expansions, especially into Latin America, but also
China and India.
Other migrating multinationals include a number of resourcebased companies. The following are now listed on the UK’s FTSE:
Vedanta Resources, founded in 1976 in India; Fresnillo plc, spun
off from the Mexican conglomerate Industrias Peñoles; and
Ferrexpo, the Swiss-based, Ukraine iron producer.
Firms from other industries migrate too. For instance, after
its establishment in 2002, Russian telecommunications firm,
Vimpelcom, listed on the New York Stock Exchange and shifted
its headquarters to the Netherlands in 2010. Meanwhile, the
South African insurance company Old Mutual joined SABMiller
and Anglo-American on the UK’s FTSE in 1999. Even HSBC is a
migrating multinational, having started life as the Hong Kong and
Shanghai Banking Corporation before it moved to London in 1991.
These corporations have their origins in low income countries,
but at some point, decided that they wanted a different primary
location. They chose to shift their country of incorporation or
primary listing to a more advanced economy.