China, India, and Multinational Enterprises Essay

Relevance According to the International Monetary Fund (IMF), World Economic Outlook, advanced economies with deficits will need to compensate for decreases in domestic demand with increases in international exports. Emerging markets such as China and India will compensate by shifting from international markets to their own domestic markets. The IMF has also projected that China will overtake the US economy by 2015 and India is expected to be equal in size to the US economy by 2020 (International Monetary Fund (IMF), 2011). It is clear that the continued expansion of China’s and India’s economies places them as a dominant economic forces that Multinational Enterprises will have to compete with for market share in China, India,†¦show more content†¦China and India need to not only be looked at as separate countries but also in relation to each other as major trading partners (Khanna, 2007). Cultural Relations Most Multinational Enterprises (MNEs) and consultants do not believe that China and India can mend fences due to differences in foreign policies and in competition for raw materials, technologies, capital, and overseas markets and to dominate Asia. However some companies have already developed strategies that make use of the capabilities of both countries. Indias Mahindra Mahindra developed a tractor domestically but manufactures it in China. Chinas Huawei recruited 1,500 engineers in India to develop software for its telecommunications products and China National Petroleum Corporation (CNPC) and India’s Oil and Natural Gas Corporation (ONGC), have teamed up to negotiate oil contracts (Khanna, 2007). Successful MNEs Multinational Enterprises usually find creating synergy across countries difficult. However a few companies have been quick to gain competitive advantages by developing a joint strategy. 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