Neither China nor India are easy to enter or operate in. Yet, global rebalancing may force companies to plunge in anyway, ready or not. It’s a tough decision.
I’ve been working on an IMA Asia paper on these two hot-spots on the global business map. Their markets are growing rapidly, and they’re a source of products (mainly China), services (especially India) and innovation. Chinese and Indian firms are becoming global players.
Western multinational companies (MNCs) probably should re-orient their strategies to this global rebalancing, strengthening their own positions in the mega-markets. But it’s complicated.
Based on interviews with Asia-based senior executives of Western MNCs, the paper finds four main reasons why their companies find it difficult to make their corporate strategies Asia-centric:
1. Head offices have a Western-centric mindset, and still think of Asian markets – even China and India – as add-ons.
2. India and China are probably among the world’s most complicated countries, but each is individually complicated. Experience in one doesn’t necessarily contribute to success in the other.
3. Both places need companies to commit massive resources to each if they’re to be successful, so only the largest companies may be able to roll out strongly Asia-centric strategies.
4. Planning a grand strategy is a lot easier than implementing it. Many MNCs entering China in the early days – when it became relatively open to foreign companies in 1979 – had Grand Strategies that failed spectacularly. This may contribute to Head Office caution about both countries, and skepticism in managers on the ground. These days, most of the companies interviewed prefer more gradual and incremental approach, based on organic growth.