Ok, I'm not a specialist on this and I don't have a Ph.D in economics or finance, but I'm pretty interested in economy in general so let me have a try.
Basically, the guy is in a sense pretty visionary. He actually purchased
many bankrupt and/or badly managed small and mid sized steels/metal companies and factories from eastern Europe, China and south and east Asia. He did a lot of restructuring (for example massive lay-off of the superfluous workforce) and put a lot of money into the modernization of the production so the products would be competitive in "modern" market. For example, steel products for the booming automobile industries in these countries. Within a few years, these once dying companies are bringing in a lot of cash. Although median in size at best when put one by one, but all together, they represent a non-negligible percentage of the world production.
Here we have a few factors that should not be neglected.
- Traditionally, most american and western european companies are
too "arrogant". On one hand, they didn't think the old factories/companies from the old eastern block and other dveloping countries would have any future so they didn't buy them, and on the other hand, they didn't think a company from a poor country like India would make it so big.
- The governments in those countries are very happy that some one comes in to "save" as much as they can of the national industry, so I believe he got a lot of privileges in terms of financing, taxes and legal greenlights (like laying off people, importing new machines, acquiring new land)
- In terms of market share, I've read his products are more geared to the low end and mid end market, but in terms of numerical marketshare, it's pretty big. He didn't intend to compete on the technology side with high high end products. It's pretty like the ship building industry. Although in terms of pure technology, the western world is pretty good, in terms of market share, the biggest countries are,
by far: Japan n°1, South Korea n°2, China n°3. Just remember this: your profit = unit margin x volume. You can do high end all you want, if you don't sell a lot, you're screwed. Another example is the car industry, just look at how many prestigious luxury brands went out of business or got bought by another brand.
- Transforming those rusty old soviet era industries with brand new high tech machines would be too costy, introducing new management methods is not. Instead, he went for the reasonably modern stuffs and the benefit/cost ratio was pretty good. Plus he was selling to the booming local industries which have no use of the latest high tech stuff themselves. Good/modern enough is simply sufficient.
- Being visionary/seeing is not enough, he had the balls to act on it before anybody else did. And he won. At the same time, we should
NOT forget that he took a lot of risks, he may have failed miserably.
- It's well known that the more profitable a business might be, the more risky it is. Because if there were something that's not risky and which would bring a lot of money, with 6 billion people in this world, many people would have seen that already and many would have done it already.
