A.T.Kearney’s Foreign Direct Investment Confidence Index shows China & India as preferred destinations, the same survey scored China low — much lower than India — for its rule of law and corporate transparency.
Somebody recently asked me how is business in Asia – I replied business is robust but us may be more robust. I recently wrote that Asian cultures, business and economic environments are very different and can be quite paradoxical - some of the best developed cities/countries -in terms of hard infrastructure may be the most difficult places to navigate through the business ecosystem and get business done effectively. In some developing nations, the pace of business/ mechansim of decision making can be back breaking. In some countries in Asia, government linked entitities may have the upper say/act as key influencers. While one may talk about the changing world order, the new Forrester report shows that western CEOs view emerging markets like Brazil, Russia, India, and China (BRIC) as Alice dreamed of Wonderland: a place of unlimited opportunities where profits keep going up while costs keep going down. Alas, as Alice did, CEOs must wake up and get realistic about BRIC nations' short-term potential and proactively deal with the noneconomic challenges of expanding and operating globally. Most MNCs are enacting a short-term global expansion strategy based on assumptions about emerging markets’ long-term potential. The report highlights the cognitive dissonance that is fueling a bubble that could burst when MNCs’ global mega investments fail to yield immediate returns (i.e., within 2 to 3 years). Several myths are getting busted therein - The so-called "affluent Westernized middle class" in BRIC nations is much smaller then expected. Consumers in the emerging countries are now realizing that foreign goods are neither affordable nor suited to their needs. Unlike the US or parts of Western Europe that embraced “entrepreneurial capitalism” which lets market forces determine industry winners, BRIC politicians are promoting “nationalistic capitalism,” in which the government only partially opens up select industries to foreign investments but keeps many others closed for ideological or political interests. The fact of the matter is that while the US is the leading investor in emerging markets, thus exporting capital, it is also the world's largest destination for inbound investments, importing billions of foreign capital — including capital from India and China! — which creates well-paid jobs in industries such as financial services, consumer goods, and pharma that boast huge, sophisticated markets and top-notch talent If anything, the US's knowledge-based trade exchange with BRIC will engage all nations in a race to the top and not to the bottom. An interesting perspective here. I wrote sometime back that the US is the economic engine of the world - the situation is unlikely to change for some more time.
Category :BRIC, Emerging Trends