Hidden champions are successful small to medium-sized companies that are not well-known to consumers or competitors. They produce commonplace goods and services at low costs, often exporting to foreign markets and private-labeling for other companies. They can be found in various industries and may focus on quality or producing cheap goods for low- and middle-income customers. Being under the radar can protect them from takeover attempts.
Hidden champions are small to medium-sized companies that operate very successfully in their markets but tend not to be particularly well known to consumers and sometimes their competitors. The goods and services offered by these types of companies, which tend to be somewhat commonplace and generic, are usually produced at very low costs and generate steady income for the companies. Sometimes, hidden champions will private-label their products for other companies, an approach that allows them to remain still under the radar.
There are several traits associated with hidden champions. Companies are often privately owned rather than publicly traded. It is not uncommon for companies to export a considerable amount of their products to a variety of foreign markets, often using brand names that are not considered to be major market players. Hidden champions sometimes focus on producing products for other, better-known companies, branding these products with top brands and using the production standards required by their customers.
For example, a hidden champion could be a family business that produces paper packaging for fast food restaurants. Thanks to the private label, the company is able to produce branded containers for many different restaurants operating around the world, without anyone knowing that the small company generates billions of units each year and earns a constant and significant volume of business. Likewise, hidden champions can produce other goods that consumers use every day, under a contract with a brand or even some obscure product name that consumers tend not to remember easily.
Hidden champions are found in virtually every type of industry. They can produce all sorts of aftermarket equipment and components, household items, clothing, and even grocery products. The quality of products produced will vary, with some champions focusing more on quality, while others will aim to produce goods and services of adequate quality, but also produced cheaply and intended for sale to low- and middle-income customers.
Operating with relatively little public recognition can have the benefit of allowing hidden champions to go about their business without having to deal with issues such as frequent takeover attempts or even hostile takeovers. As companies are not particularly well known to the buying public, hidden champions may go unnoticed by corporate attackers or at least be less viable, as there is no name recognition to generate publicity that would allow the attacker to sell the champion’s assets at a significant profit. .
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