Increasingly it appears that emerging market firms are buying a rich world companies. The Halewood car plant near Liverpool was once notorious to strike. In the 1970s its seemingly Bolshevik workforce Frickley clashed with managers. In the peaceful interludes the plan turned out fleets of Ford vehicles, a popular family car. The plant is now part of the Jaguar Land Rover firm, owned by Tatung motors, the car division of an Indian conglomerate. These days is a cheerfully contented place. At one end of the plant workers examine the body parts shaped by one of the 10 giant metal presses. The other end, in the paint shop, a spray address in a protective suit squirts and Mr colour inside the back door of a car shell. For good buddies, owned by DHL, logistics firm with on-site operation, distribute parts from outside suppliers around the factory.
the reason the activity and the good humour is that production has recently started on the new land Rover, a mini sports utility vehicle. Before the car had appeared in the showrooms, the company had taken a 10,000 orders for it and it was already full sale on eBay. Thanks to the contract for the new vehicle, the plan's workforce has doubled to 3000 in the past year. Local suppliers will also benefit.
Two centuries ago the rise of the cotton trade in the mills around Manchester and the Port of Liverpool spell doom to India's textile industry. Today i terms owned large chunks of Britain's old industrial north-west. The standard oil refinery close to the plant just mentioned was bought earlier this year by Indian conglomerate. The chemicals firm started in 1873 just a few miles from the Quarry bank Mill, was bought by Titus chemicals in 2006. Blackburn Rovers, a founding member of England's professional foot ball league in 1888 is now owned by the age group, an Indian poultry.
These Indian outposts are part of a broader shopping spree by emerging market funds. They share of cross-border mergers and acquisitions rose to 17% in the seven years to the 2010, up from this 4% in the previous seven years, according to a recent report by the World Bank. They are the source of more than a third of foreign direct investment in other emerging markets. Typically this sort of foreign direct investment is organic which involves setting up a local fracture a branch office. By contrast, direct investment by emerging market firms in rich countries so-called South and North foreign direct investment tends to be acquisitive, which means one company buys another.
the bulk of the emerging markets mergers and acquisitions activity in rich countries comes from five countries, led by China but also including India. America is a rich world's main recipient, with Britain not far behind, even though its economy is only about one in six of America's sites. Other big target is a commodity rich countries like Canada and Australia.
Firms from America and Europe are falling over themselves to invest in fast-growing emerging markets like China and India to escape sluggish economies at home. But why are emerging market firms rushing in the other direction? The main reason is that, like rich world multinationals, they seek access to new customers. As a company you don't want to be confined to local growth, says one of the authors of the World Bank report mentioned above. You want to have the global economy as your market.
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