September 2006

Indian companies flex new muscles internationally

CFOsources predicted a few years back that Asian companies would start to expand beyond their borders as they gew from midsized to large MNCs. At the time we thought it would be more regionally and not globally. We are seeing India companies move into China, Europe and the US. The outsourcing industry was leading the trend but lately it has filtered into the Indian automotive and consumer goods companies.

Indian companies bought stakes in 130 companies last year and this year that number will be surpassed. Previously the deals were acquistions or stakes in little known companies in the midmarket but the trend is bigger companies and name brands this year.

Tata who we know as an outsourcing company in terms of brand regonition in the West , is actually a multi-billion dollar conglomerate that paid 677 million USD for Energy Brands, Inc. The New York based company makes the Glaceau flavoured water brand.

The trend hit the radar of the Boston Consulting Group which produced a list of 100 emerging market firms who are challenging the Global dominance of todays Global Corporations (mostly from the US and Europe). China had 50 firms on the list and India had 21 firms.

What does this mean for North American businesses?

It translates into the need to engage Asia markets more agressively. Far too long North American and especially Canadian corporations have focused on the domestic market. The result is China and India have produced competition to fill the needs in their domestic economies as these firms grow they expand into Global markets such as North America. We are seeing the North American market become ever more competitive as it becomes saturated with competitors from around the world.

The Chinese market has enough US and European MNC's in it to justify opening an office. Chinese companies have a need for IT and business expertise as well software. Who will satifisfy this need? At the moment it is looking like the Indian firms, they are agressively moving into China.