Economic Globalization, as we know it today, was born just after the Second World War, and was a result of a series of agreements between the Western political leaders, who intended to lay down the framework for border-less international commerce and finance flows, and the founding of several international institutions intended to oversee the processes of globalization.
Globalization was also driven by the global expansion of multinational corporations (MNC’s), which emerged exclusively from the United States and Europe till the 1960’s (former being slower to go overseas), started from Japan in the late 1960’s, and from Korea and other East Asian countries (including China) in the 1980’s. This led to a worldwide exchange of new developments in science, technology and products, with many significant inventions. What has continued since then is a period of rapid development, innovation and evolution at a global level, aided by modern forms of transport, communication and media, resulting in significant interaction between global citizens and cross-border flows of capital and labour, in effect creating a global marketplace.
India in the Global economy
The emerging presence, growth, and competitiveness of the Indian economy and its companies, within the wider context of the global economy, have been a relatively recent phenomenon. The economic reforms (liberalization) programme of the Government of India, carried out in 1991 proved to be a crucial inflection point in India’s growth story. By opening up the Indian markets to global companies, the policy brought in the need among Indian promoters to be competitive — to defend one’s market position, and hence encouraged them to venture overseas.
India has long been engaged in the overseas markets – before 1991 India was mainly an exporter of traditional products like tea, coffee, iron ore, leather, apparel, and gems & jewellery. Post- 1991, India has emerged to become a preferred country for software, pharmaceuticals, auto components, engineering, R&D, outsourcing, to name a few industries in which India has established its core expertise.
India is today at the cusp of becoming a global economic superpower. It is the world’s largest democracy with a trillion dollar economy and remains among the fastest growing ones globally even today, at a time when some of the largest economies of the world are facing troubled times. India is rising higher each year due to its strong fundamentals, favourable demographics and the highly enterprising business promoters.
Indian Companies on the path to Internationalization & Global Growth
In the last decade, Indian companies have been seen scaling up their international operations, making their presence felt in the global market place by successfully,
- acquiring overseas ventures & natural resources,
- setting up manufacturing & marketing bases overseas,
- partnering with global leaders for technology & best practices,
- launching innovative business models & products,
- tapping the overseas capital markets for financing growth, and
- employing other expansion strategies such as licensing, franchising, distribution etc.
A careful analysis of the trends of the Indian companies which are venturing abroad, shows that such initiatives are not just for expanding sales in foreign markets, but can also sometimes be for reasons such as,
- enhancing overall capacity or scale
- achieving technology leadership
- gaining entry into a specific product category or service segment
- acquiring skill-sets / knowledge / wherewithal in a specific segment
- acquiring marquee foreign brands to the portfolio
- taking super-hit products from India to new markets, & others.
As Indian promoters consider the option of venturing abroad, it is imperative they are careful of the foreign playfield, and that they prepare well for the challenges that lie ahead. Some key issues that would be crucial in formulating an appropriate strategy, could be,
- timing of the overseas venture – ‘when’ to venture abroad;
- mode of internationalization – ‘how’ to venture abroad;
- local environment in the foreign territory – specifics such as business negotiation dynamics, consumer preferences, distribution channels, talent & workforce, and regulatory environment; and
- costs involved – in setting up the local operations, in raising finance, and in securing all regulatory approvals & licenses, among others
Trusted partner for Global Growth
We at ILO Consulting have very deep access into the local business environments of more than 55 countries worldwide, thanks to our strong partnerships in 40 countries, with leading local consulting firms, law firms, accounting & tax advisory firms, investment banks, and corporate finance and M&A boutiques. We can offer a wide range of specialized services to Indian companies as we leverage our deep understanding of the local business and regulatory environments across the globe.
We at ILO Consulting assist growing & ambitious Indian companies in their turnkey requirements for ‘going global’. From understanding the local playing field of an ‘alien’ economy (or industry segment) to setting up the legal, financial & operational structure, and from assistance in raising finance to managing the payrolls, ILO Consulting can offer a comprehensive yet customized suite of services and solutions to its clients in all the developed and emerging economies of the world.
India, with its several promising and growing companies, is in a crucial phase of growth, and ILO Consulting is well placed to be a catalyst and match the global ambitions of Indian companies with appropriate strategies & advice.
