The proposed $23 billion merger deal between Bharti Airtel and South Africa’s MTN Group is proof of a new creature on the business landscape: the emerging market multinational.

Asian companies such as Samsung Electronics, Petronas, Singapore Telecom, Hutchison Whampoa and the CITC Group have a stronger presence in global corporate power lists than ever before. Most are emerging market companies that have invested in developed markets.

Illustration: Jayachandran / Mint

The Bharti-MTN engagement is of another sort altogether—where a firm from one emerging market invests in another. Such corporate marriages are part of a larger structural shift in the global economy—the rise of the so-called South-South investment.

The United Nations Conference on Trade and Development estimated in 2007 that intra-regional foreign direct investment (FDI) accounted for almost half the FDI coming into Asia between 2002 and 2004. Africa has since then emerged as an important destination of Asian FDI.

There are essentially two types of South-South investment flows. First, there are those that are led by the quest for natural resources. China has taken the lead here (especially in Africa) because of its willingness to do business with the most tyrannical dictators and warlords.

Second, there are the deals driven by business interest rather than national interest, both in manufacturing and services. The proposed Bharti-MTN merger falls squarely in this category.

It is in the latter category that emerging market multinationals can have an edge over peers from the developed countries.

Companies such as Bharti and ICICI Bank, to give two examples, have grown at home with business models designed and nurtured for economies with low average incomes. Such models can quite easily be transferred to similar economies in other parts of the world.

So, while multinationals from the US, Japan and Europe will often have access to superior technology and size, they could struggle in poorer countries. Tweaking business models can be a difficult task. In India, we have seen several multinationals strut in with plans of instant domination, but then stumble over the hard rocks of reality. That is something multinationals from emerging markets will likely be able to avoid, because they have an innate sense of how to operate in such markets.

Will a company from one emerging market do innately better in another? Tell us at views@livemint.com