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Outbound Foreign Direct Investment from China and India

Author

Listed:
  • Khanindra Ch. Das

    (Rajiv Gandhi Indian Institute of Management Mayurbhanj Complex, Nongthymmai Shillong kchdas@gmail.com)

  • Nilanjan Banik

    (Mahindra Ecole Centrale Bahadurpally, Hyderabad)

Abstract

Chinese and Indian enterprises have been increasingly involved in international business thereby attracting global attention since the turn of the 21st century. This article examines outbound investment experiences of Chinese and Indian multinationals and compares and contrasts the investment development trajectory for both the countries. The comparisons and contrasts are made with respect to government policy, motivations for outbound investment, financing of investment, success rate in overseas acquisition, sectoral composition, characteristics of multinational enterprises (MNEs), and the challenges and impact of such investments in the light of differences in economic and institutional parameters between the two countries. It can be observed that there are more differences than similarities in the trajectory of outbound investments by Chinese and Indian enterprises. These differences arise due to the economic and institutional structure and the development path chosen by the two countries. Due to the differences between Chinese and Indian economic development trajectories, which are unique in many ways, it is not meaningful to make a straightforward comparison of outbound foreign direct investment (FDI) experience of the two countries. Nevertheless, the main differences with regard to outward investment by Indian and Chinese enterprises can be observed in areas such as the degree of involvement of the public sector enterprises, financing of overseas investments, success rate of proposed mergers and acquisitions (M&A), sectoral composition of such investments, investment motives, and so on. Various challenges facing outward FDI from China and India are highlighted, some of which could be addressed by specific economic and institutional reforms. The tale of the two countries examined in this article taken together contains important insights for emerging country enterprises and governments on the challenges and opportunities of global business.

Suggested Citation

  • Khanindra Ch. Das & Nilanjan Banik, 2015. "Outbound Foreign Direct Investment from China and India," China Report, , vol. 51(3), pages 204-229, August.
    • Handle: RePEc:sae:chnrpt:v:51:y:2015:i:3:p:204-229
    DOI: 10.1177/0009445515587370
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    References listed on IDEAS

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    3. Tariq Hameed Alvi, 2019. "Outward FDI of Mainland Chinese MNEs: Its Drivers and the Way Forward from the Resource Dependence and Political Economy Perspectives," International Journal of Science and Business, IJSAB International, vol. 3(5), pages 163-172.
    4. Tamas Gerocs, 2017. "Internationalization of Indian multinational enterprises - motivations, strategies and regulation from the experience of Indian investments - a focus on Europe," IWE Working Papers 234, Institute for World Economics - Centre for Economic and Regional Studies.
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    6. Anochie Uzoma C. & Ude Damian Kalu & Opara Godstime I., 2015. "Managing Inflation in Nigeria: Challenges and Prospects," International Journal of Empirical Finance, Research Academy of Social Sciences, vol. 4(6), pages 372-386.

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