| Type | Journal article (empirical study) |
| Title | “Emerging Multinationals: A Comparison of Chinese and Indian Outward FDI” |
| Author | Jaya Prakash Pradhan |
| Published | 2011 · International Journal of Institutions and Economies, 3(1), pp. 113–148 · University of Malaya |
| Data | Chinese and Indian outward FDI and its locational determinants · to 2008 |
| Read | Full text (open access) · PDF |
This is a plain-language summary of “Emerging Multinationals: A Comparison of Chinese and Indian Outward FDI” (International Journal of Institutions and Economies, 2011).
In short:
- China and India both became major sources of outward investment — but through very different models: China state-led and resource-seeking; India private-led and market- and technology-seeking.
- Their paths diverged over three waves, from modest regional beginnings to global ambition; China’s outward FDI stock alone leapt from about $12 billion in 1990 to $340 billion by 2008.
- Where they invest differs too: Chinese firms favour nearby, resource-rich hosts; Indian firms favour large markets and treaty partners, regardless of distance.
Two giants, two journeys
The world’s familiar multinationals are Western and Japanese — but by the 2000s, firms from China and India were joining their ranks. This study traces how the two countries’ outward investment originated and grew, and what determines where their firms put their money. Although both surged after opening up — China from the late 1970s, India through the 1990s — they did not travel the same road.
In the earliest phase, both were regional and modest — China’s state-owned firms clustered around Hong Kong, India’s private pioneers (the Birlas, the Tatas) made small ventures nearby. They diverged sharply in the second wave: China’s open-door reforms propelled a manufacturing-led expansion, while restrictive domestic policy held Indian firms back and tilted them toward services. By the third wave both were investing globally — China’s outward stock climbing from roughly $12 billion (1990) to $340 billion (2008), India’s firms increasingly buying their way into developed markets.
Two different models of going global
The contrast isn’t just timing; it’s character.
| China — the Dragon | India — the Tiger | |
|---|---|---|
| Driven by | Strong state involvement and strategic interest | Private entrepreneurs, market logic |
| Seeking | Natural resources and strategic assets | Technology and markets |
| Preferred destinations | Developing regions, closer to home | Developed markets, distance no barrier |
| In the 2008 crisis | Kept growing | More sensitive to global conditions |
What attracts their investment
Some pulls are common to both: firms from each country gravitate to hosts that import their goods, that have strong currencies and rising prices, that run liberal investment regimes, and that serve as offshore financial centres. But the differences are revealing. Chinese firms prefer hosts that are nearby, smaller, and rich in natural resources. Indian firms prefer large markets with skilled workforces, and are notably drawn to countries that hold a bilateral investment treaty with India — irrespective of physical distance. The Dragon stays close and chases resources; the Tiger ranges far and chases markets.
What it means
The rise of these two very different emerging-market investors is more than a business story — it points to a shift in global economic power. It is broadening South–South cooperation, introducing new models of how multinationals are built and run, and sharpening competition for incumbent Western firms. Crucially, it shows there is no single template for becoming a global company: a state-coordinated, resource-seeking model and a private, market-seeking one can both produce world-spanning multinationals.
Read the academic abstract
This study deals with the origin and growth of outward foreign direct investment (OFDI) by emerging Chinese and Indian multinationals, and examines the locational determinants of such investments. Both Chinese and Indian OFDI flows surged after the adoption of economic-openness policies by the home country — in the late 1970s and the 1990s respectively — and are now increasingly driven by wholly-owned projects and acquisitions abroad. Firms from both countries began their OFDI in developing countries and then expanded into developed regions in the 1990s. Among locational factors, both Chinese and Indian OFDI projects are attracted by host imports from the source country, stronger host currencies, rising host prices, and host status as an offshore financial centre. While Chinese multinationals showed a preference for hosts with locational proximity, small size, and high natural-resource endowments, Indian firms appear to choose countries that are large and that have a bilateral investment treaty (BIT) with India — irrespective of their physical distance from India.Cite this article
Pradhan, J. P. (2011). Emerging multinationals: A comparison of Chinese and Indian outward FDI. International Journal of Institutions and Economies, 3(1), 113–148.
Read the full paper (open access) → · PDF →
Related on this site
- A closer look at how Indian firms choose where to acquire — and the same BIT-versus-distance finding: Beyond Family Ties: How Business-Group Affiliation Shapes Global Expansion
- The broader story of India’s multinationals going global: Giants Awakening — The Story of Indian Companies Going Global
- On how “global” these emerging multinationals really are: Emerging Giants: How Indian Multinationals Are Shaping the Global Economy
