Changing the face of globalization
Consider this: Chinese company Lenovo bought the PC business of IBM two years ago. India’s Tata group bought the Boston Ritz- Carlton hotel chain two weeks ago. Malaysian road building companies are lso investing big-time in India. Even the UAE’s Emaar Properties is emerging as one of the largest global real estate players.
Clearly, a new breed of multinational company is rising on the world scene. These new contenders hail from seemingly the most unlikely of places - developing nations such as Brazil, China, India, Russia, even Egypt and South Africa. They are shaking up entire industries and in doing that, they are changing the rules of global competition.
Gone are the days when developing countries went around cap in hand, pleading for aid from rich nations. According to the World Bank, foreign direct investment (FDI) between developing nations is growing at five times the rate of investment into these economies from industrialised countries. South-south FDI (investment betweeen developing countries) now accounts for an estimated one-third of all FDI going into developing countries.
The main actors in this dynamic new trend are the ‘Southern Multinationals’ - companies from developing countries which are spreading their operations all around the world. Three factors are driving this trend: greater access to resources; easier access to financial markets; and access to strategic assets. After experiencing high economic growth in recent years, some of these firms are facing pressure to diversify their sources for raw materials, especially oil and gas. They are eyeing countries where there is no strong presence of the traditional MNCs.
China and India are cases in point, with growing investments in energy and mining in Africa, Central Asia and Latin America. While the investments right now are concentrated in energy and infrastructure, IT and services are soon expected to be included in that loop. Globalisation, as understood in the West until recently, was a one-way street. This explains the outcry against outsourcing in the US. Thanks to a handful of gutsy companies from emerging markets, international business is turning out to be a two-way street.

Article printed from 7DAYS: http://www.7days.ae