If business is supposed to slacken during the sweltering days of August, that message has failed to reach Embraer, the aircraft maker based in Sao Jose dos Campos, Brazil. Earlier this month the company — it is the world’s fourth largest plane manufacturer — said it had doubled its net income in the second quarter to $134 million and delivered 52 aircraft, compared with 36 during the same period last year. At a time when airlines all over the world are reeling from the double whammy of high oil prices and a faltering economy, Embraer expects to deliver an impressive 200 aircraft. Its backlog of orders stands at a robust $20.7 billion.

Embraer’s growth during difficult economic times offers an example of the way that companies from emerging markets are reshaping global business, argue Harold L. Sirkin, James W. Hemerling and Arindam K. Bhattacharya in their new book, GLOBALITY: Competing with Everyone from Everywhere for Everything. The authors, who are consultants with the Boston Consulting Group, say that globalization has entered a new phase. The old model of globalization was about multinationals from Europe, the U.S. and Japan expanding into the developing countries, attracted primarily by low raw material and labor costs. In the new phase — which the authors term “globality” — firms from rapidly developing economies such as Brazil, India, China, and Russia are stepping out to challenge the incumbent multinational giants, often on their own turf. It is “a different kind of environment, in which business flows in every direction. Companies have no centers. The idea of foreignness is foreign,” the authors write.

Consider Embraer as a case in point. During the late 1980s, the company, which the Brazilian government launched in 1969, nearly went bankrupt. It faced intense competition, and demand for its aircraft was low. Though the government pumped in cash, Brazil itself was in poor economic shape — which meant future bailouts were unlikely. In 1994, Embraer was privatized, with investors putting in $161 million. A year later, Mauricio Botelho took over as the CEO. He focused Embraer on making small jets — planes with less than 120 seats — used primarily for regional flights. In this segment, demand was much higher than supply, and Embraer took off. The company then introduced a new design — called the “double bubble” — which gave the passengers more room without sacrificing fuel efficiency. Embraer also converted larger regional jets into upscale executive models — named Phenom and Lineage — whose sales were less vulnerable to swings in fuel prices. Following this strategy allowed Embraer to soar past its rivals. Today it is a giant with $4 billion in annual revenues and 24,000 employees, a serious rival to firms such as Canada’s Bombardier.

Challenger 100

Sirkin and his co-authors call companies like Embraer “challengers,” and they identify 100 of them. Among them are 66 based in Asia — 41 in China, 20 in India — 13 in Brazil, seven in Mexico and six in Russia. Total revenues for the 100 challenger companies were $1.2 trillion in 2006. This might seem to be a relatively small sum — after all, the combined revenues of Wal-Mart, Exxon Mobil and General Motors were $900 billion in 2006 — but it is rapidly becoming larger, year after year. The challengers’ revenues grew at 30% a year between 2004 and 2006, or at three times the pace of companies in the S&P 500 and Fortune 500.

The challenger companies are also highly profitable: Their operating profits were 17% in 2006, compared with 14% for the S&P 500 companies. “They’re fast growing, hungry, and have access to all the world’s markets and resources,” the authors write. “They’re showing up everywhere — in each other’s markets throughout the world, in markets that are less developed than their own and, increasingly, in the developed markets of Japan, western Europe and the United States.”

The book’s central thesis is that in the age of globality, these challengers will compete with every other company for everything. “And by everything, we mean just that — all the world’s resources. Everybody will be trying to grab the same things that everybody else wants, especially the most precious and limited ones: raw materials, capital, knowledge, capabilities, and most important, people: leaders, managers, workers, partners, collaborators, suppliers. And, of course, customers.”

Without a doubt, the most fascinating parts of this book consist of the stories the authors have collected about these scrappy, hungry firms — many based on conversations with their founders. For example, the authors write about the Tata Group of India, which was historically well known within the country but little known to outsiders. It burst upon the global scene when its steel subsidiary, Tata Steel, acquired the Anglo-Dutch Corus Steel for $13.1 billion in 2007. It was the largest international acquisition by an Indian company at that time.

Since then, Ratan Tata, the conglomerate’s Cornell-educated chairman, has led the Tata Group to launch the Nano — a car that costs $2,500 — and also to acquire the Jaguar and Land Rover brands from a beleaguered Ford Motor Company. “Today, Tata Group has market capitalization in excess of $50 billion, and more than 50% of its $50 billion in annual sales comes from outside India.”

Another example from India is that of Aravind Eye Care, the world’s largest provider of cataract surgery. Founded in 1976 by Dr. Venkataswamy — popularly known as Dr. V. — the company performs 250,000 surgeries and treats 1.5 million outpatients a year. According to the authors, Aravind Eye Care treats 60% of its patients for free and still makes a profit. The reason it can do this is that Dr. V. has “transformed the cataract-surgery model to suit market conditions in the rapidly developing economies,” the authors say. “Expensive medical equipment is scheduled for around-the-clock use to drive down the cost per surgical procedure. Doctors and staff are extraordinarily efficient and productive, carrying out more than 4,000 cataract surgeries a year, in comparison to an average of 400 performed by other surgeons in India.” Sirkin and his co-authors point out that “altogether, Dr. V’s ingenious adaptations of business processes and his reverse engineering of materials have positioned his company to provide cataract surgery operations at one-fifth of what patients typically pay in the U.S.”

Yet another fascinating challenger is Goodbaby, which has become the biggest maker and seller of baby strollers in China. Founded by Song Zhenghuan, a former schoolteacher, the company makes some 700 innovative products each year — or one every 12 hours. The company has been awarded more than 2,300 patents since 1990. The company’s innovations include strollers that can be converted into car seats. “The group held an 80% share of the Chinese market from 1996 to 2006, and has had the top spot in the U.S. for five years running — 2001 through 2006.”

Ties that Bind

What binds together companies like Embraer, Aravind Eye Care and Goodbaby? According to Sirkin and his co-authors, it is a strand with three threads. The first is their country origins. Brazil, China and India historically have not been — and are still not — easy places to do business. A company that wants to survive, much less thrive, in those markets must overcome a constant series of obstacles. One of the biggest is having to deal with millions of demanding customers, most of whom don’t have much money. Having come from such a business climate leads these companies to develop a kind of hardiness. It makes doing business relatively easy when they enter more business friendly and well developed markets.

The second factor driving the challengers’ growth is global access. “Unlike challengers of previous waves, the companies of the rapidly developing economies had amazing access to the wealth of resources the world had to offer — knowledge, intellectual property, services, talent, capital and so much more — as well as to the markets from which they could buy and into which they could sell.” The most critical resource, according to the authors, is knowledge. The founders and senior managers of several of these companies were educated in the U.S. In addition to formal education, the challengers have been able to tap into other sources of intellectual capital by working directly with for-profit and not-for-profit research labs, scientists and patent bodies, the authors write. “They have been able to contract with suppliers possessing specialist knowledge, license it from various types of owners or acquire companies with important intellectual assets.”

The third factor that drives the challengers is “insatiable hunger” for “achievement, success, and world-wide recognition,” according to Sirkin and his colleagues. “This hunger infused the culture, and people in the rapidly developing economies developed a remarkable business-mindedness — an intense entrepreneurial spirit and a near obsession with work and commercial affairs — that seems even more intense than that of the most business-minded of developed countries, the United States.” The authors describe office workers in Shanghai who are so driven by the desire to increase their incomes that they work after hours as street vendors. “One woman, a clerk at a travel agency, sells lollipops in the evenings after dinner and makes an average of 500 yuan (about $65) a week.” While the authors cite an example from China, this mindset will be instantly recognizable to anyone who has encountered it in any of the emerging economies.

If all this is true, what are the implications of “globality” for companies around the world, especially the incumbent giants in western Europe, Japan and the U.S.? Should they simply wait around until the challengers arrive to eat their lunch? Not at all, say Sirkin and his colleagues, who note that globality is both an opportunity and a threat. For those who deny the existence of the phenomenon — despite daily headlines to the contrary — it could well be the latter. For others, however, it represents a chance to bring about global transformation. The authors recommend several actions for companies that want to transform themselves to compete in the present environment: Evaluate your competitive position; shift your mind set; assess and align your people; recognize your full set of opportunities; define your future global shape; encourage ingenuity; and lead your transformation from the front.

If there is one seminal piece of advice the authors offer, it is to recognize and respond to the onward march of global challengers and not to ignore it. “Globality will affect everyone, everywhere, everything,” they say. “And that means you. One day it may be your company that Tata Group wants to acquire, your child calling home from Shanghai, your job moving to Mexico City, and your brand new Changfeng [a Chinese car] gleaming in the driveway. It’s just a matter of time.”