Through Nokia Money, a cell-phone based service, Nokia aspires to offer mobile banking solutions to millions of Indian consumers who currently don’t have relationships with a bank or are underbanked.

Image courtesy of Nokia.

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As growth in developed economies such as the United States, Japan and Europe continues to languish, the fastest engines of global growth for several years to come will be the emerging markets of India and China. According to the International Monetary Fund, India and China may see growth rates of 9% and 7.5%, respectively, in 2012.1 Multinationals are stepping up their capabilities in emerging economies by opening more R&D labs, factories and sales and marketing offices that can design, develop and sell locally relevant products and services. Between 2003 and 2007, multinationals established more than 1,100 R&D centers in India and China, investing a total of $24 billion.2 The result: more and more products and services marketed by multinationals in emerging markets — such as General Motors’ Buick LaCrosse in China and Johnson & Johnson’s reusable surgical stapler in India — are being redesigned or entirely built from scratch using local R&D talent.3

By locating R&D and manufacturing activities in growth markets, multinational companies aim to design and deliver products and services that are both economical and better suited for the average local customer.4 (See “About the Research.”) This approach has clear advantages over importing and selling high-priced products and services developed and produced in the West. However, many multinationals that rely on “value chain localization” still focus on affluent, urban customers rather than the much larger population of urban and rural poor. This strategy does not adequately prepare them for the far greater challenge (and opportunity) of reaching the urban and rural poor.